Properties, Networking, Advice,

[Rae Chris]

Hello, I’m a newbie investor with one rental property in a different state. I just moved to Michigan and I am looking to get another property-could be a single family rental or multi family, duplex , or anything for cash flow. Any advice on where to look? Currently looking on Zillow and Redfin, but no lack-good opportunities. Any recommendations on agents and off market deals or networking with other investors. Looking forward to hearing from you all. 

[Jason Wray]

Rae,

I would keep checking the sites including FSBO, FaceBkMarktplace, and driving neighborhoods. We are in the last month of 2024 and usually in December and around January through March properties tend to pop up faster. You should see more deals and price reductions as we roll over into 2025 as well.

If you need any help or have specific questions feel free to reach out or send me an email.  Feel free to check out my profile for my info and contact.

[Jared Smith]

@Rae Chris sounds like you are off to a good start. Some things you may want to consider is how active you are looking to be in your investing. Sounds like you are already on the path to being an out of state investor and with the right team that can be powerful. 
 
there are multiple cities across the Midsouth that make for solid investments and you are still able to even see some cashflow even in today's environment without buying just straight up high risk properties. 

If you want to learn more about the markets in Memphis, Dallas, Houston, Little Rock, OKC, Tulsa or various locations in AL, I would be happy to share what I know about those locations and what types of price points and returns you may be able to find on quality rental properties!

Best of Luck!

[Drew Sygit]

@Rae Chris Ann Arbor is pretty expensive, so difficult to find cashflowing rentals.

You may want to look in Ypsilanti - if you want to stay in your area.

Otherwise, Metro Detroit offers a LOT of options.

Read our copy & paste below for some helpful info:

---------------------------------------------------------------------------------------------------

Recommend you first figure out the property Class you want to invest in, THEN figure out the corresponding location to invest in.

Property Class will typically dictate the Class of tenant you get, which greatly IMPACTS rental income stability and property maintenance/damage by tenants.

If you apply Class A assumptions to a Class B or C purchase, your expectations won’t be met and it may be a financial disaster.

If you buy/renovate a property in Class D area to Class A standards, what quality of tenant will you get?

Similarly, if you put several Class D tenants in a Class A 4-plex, what do you think will happen to the property?

So, when investing in areas they don’t really know, investors should research the different property Class submarkets.

Here’s our OPINION for the Metro Detroit market (use as a template for your target area!) that we’ve learned in our 24 years, managing almost 700 doors across the Metro Detroit area, including almost 100 S8 leases.:

Class A Properties:
Cashflow vs Appreciation: Typically, 3-5 years for positive cashflow, but you get highest relative rent & value appreciation.
Vacancy Est: Historically 10%, 5% the more recent norm.
Tenant Pool: Majority will have FICO scores of 680+ (roughly 5% probability of default), zero evictions in last 7 years.

Class B Properties:
Cashflow vs Appreciation: Typically, decent amount of relative rent & value appreciation.
Vacancy Est: Historically 10%, 5% should be applied only if proper research done to support.
Tenant Pool: Majority will have FICO scores of 620-680 (around 10% probability of default), some blemishes, but should have no evictions in last 5 years

Class C Properties:
Cashflow vs Appreciation: Typically, high cashflow and at the lower end of relative rent & value appreciation. Can try to reposition to Class B, but neighborhood may impede these efforts.
Vacancy Est: Historically 10%, but 15-20% should be used to also cover tenant nonpayment, eviction costs & damages.
Tenant Pool: majority will have FICO scores of 560-620 (approaching 22% probability of default), many blemishes, but should have no evictions in last 2 years. Verifying last 2 years of rental history very important! Also, focus on 2 years of job/income stability.

Class D Properties:
Cashflow vs Appreciation: Typically, all cashflow with little, maybe even negative, relative rent & value appreciation
Vacancy Est: 20%+ should be used to cover nonpayment, evictions & damages.
Tenant Pool: majority will have FICO scores under 560 (almost 30% probability of default), little to no good tradelines, lots of collections & chargeoffs, recent evictions. Verifying last 2 years of rental history and income extremely important to find the “best of the worst”.

Make sure you understand the Class of properties you are looking at and the corresponding results to expect.

The City of Detroit has 183 Neighborhoods we’ve analyzed.

PM us if you’d like to discuss this logical approach in greater detail!

[Julia Lyrberg]

Hi Rae, i'd recommend joining local Facebook groups. There's many off-market deals posted directly by sellers or wholesalers!

[Todd Anderson]

Rea,

Congrats on getting the first one, that is the toughest.  Most of the investors I talk with have a hard time finding deals that work on the market.

The investors that I work with are finding that New Construction is a good option.  In working right with the builder I can offer the investors properties that are off market but have incentives that on market properties can't offer.  With these incentives the properties also are able to cashflow day one.

let me know if you may have interest in this off market inventory.  

[Steve K.]

Hey Rae,

I'd highly recommend you find investor meetups in the market you are looking in and start going to them. If there isn't a meetup currently, you can start your own one. That is going to be the best way to meet others in the industry from that market. 

I'd also recommend finding an investor-focused agent in that market, sharing with them your buy criteria, and then having them set you up with an email list for properties that get listed. 

If you are searching for offmarket, you can network with local wholesalers, and also use something like dealmachine to generate leads. I use dealmachine for cold calling and for sending post cards and that has worked pretty well.

Good luck!

[Rae Chris]

Quote from @Jason Wray:

Rae,

I would keep checking the sites including FSBO, FaceBkMarktplace, and driving neighborhoods. We are in the last month of 2024 and usually in December and around January through March properties tend to pop up faster. You should see more deals and price reductions as we roll over into 2025 as well.

If you need any help or have specific questions feel free to reach out or send me an email.  Feel free to check out my profile for my info and contact.

[Rae Chris]

Thank you all for sharing all this information. I’m definitely going to look to connect with other investors in the metro-Detroit and Ypsilanti area. Thanks everyone for sharing-truly appreciated!

[Robert Bell]

Memphis has plenty of opportunities. I recommend Jordan Ray at EXP Realty for a good Agent who knows the Memphis investor market well. 

[Jordan Ray]

Quote from @Robert Bell:

Memphis has plenty of opportunities. I recommend Jordan Ray at EXP Realty for a good Agent who knows the Memphis investor market well. 

 Thank you for the shoutout, Robert Bell! Right back at you, sir!