Questions About the Saginaw / Bay City Market

[Jeff G.]

I want to pick up my first rental property by the end of the year. I'm getting some cash together, which will take a few months, to buy my first SFR; all cash if possible.

I've been scouring Zillow / Trulia and Saginaw and Bay City have caught my eye. I've seen some respectable looking houses for ~25k. A few appeared rent ready, but most needed some work. I'm out of state (CT) but I'm originally from Michigan so investing there has some appeal to me.

At this stage I'm putting together a "punch list" so I can act as soon as I have the money together. What do I need to know about that rental market that isn't obvious on Zillow?

Some more specific questions:

• Which parts of the city should I avoid? I don't mind somewhat rough, I grew up in Flint so I'm not exactly easily intimidated, but I do mind "war zone" and not getting paid on time.
• Even a "rent ready" house is going to need something before I put a tenant in it. My thought was replace any carpet with inexpensive engineered hardwood, make sure the place is well painted, and slap some epoxy on the basement / garage floor and be done with it. Is that the right line of thinking?
• What are some "rules of thumb" when dealing with the mechanicals? I'd much rather replace a furnace / water heater upon acquisition and expect to not have any issues for x years than wonder when a Cap X event is going to happen.
• Any recommendations as to a good property management company? 
• For CYA purposes my first impulse is to require tenants to have renters insurance

  — if they cause a fire it gives me someone to go after with deeper pockets than a tenant. Would that be a problem in these markets?

• Is there anything specific I should do to keep good tenants longer?

I'm sure there is a bunch of questions I don't even know to ask. Anything anyone can add that's about the rental market, maximizing cash-flow, etc. would be welcome even if it's not in my list of questions.

One last question... is there anything specific I should do to improve the house's equity? I do plan to get a mortgage on it and "wash rinse repeat" at a reasonable clip. I'm not looking for a long term appreciation play, just cash flow.

PS. I'm listening to Brandon's book on rental property now.

[Tanya H.]

Hi @Jeff G. ,

I just bought a couple of houses in Bay City, and got one turned around and rented (Sept 1).  

I had to do a bit of work to the now-rented one - it was quite old and had not been updated much - so I redid all of the plumbing and a lot of the electrical.  New windows, and fresh paint throughout.  The place has beautiful wood floors, and they were in mostly good condition, so I just cleaned them up a little.  

I live in CO, but I've got family in Bay City.  So I thought it was going to be easy to get work done.  Not so.  For such a depressed area of the country, you would think it would be easy to find people to do work and at a reasonable price.  Again, not so.  Everything costs so much more to do than here in CO, and I really cannot tell you why.  The trades people just are not motivated to do any work - it's hard to find someone to even give an estimate.  And then the estimates are so high.  Even non-trades work, for example getting the air ducts cleaned, is 3 and 4 times the cost here in CO.  Why?  It just doesn't make sense.  And the quality is unbelievably bad.  (If you ever need duct cleaning or carpet cleaning - I can tell you who NOT to use).

I'm sorry to sound so negative.  I had really planned on buying a lot more, because I think Bay City really could have a lot going for it.  But wow - the work ethic there is so bad.   So I have to say that I am really reconsidering buying much more there.

There were a few exceptions.  If you need a home inspector, I found a guy who is unbelievably awesome.  Very honest, very reasonable, and just a great guy.  He actually turned into a bit of a handyman for me too, and he is working on building his "rolodex" for better references for the various types of work.  He saw all the trouble I was having, and he really is searching to find reputable contractors for all kinds of workers.  

If you have questions about any areas in Bay City, let me know.  I'm going there again in October, and I think I'll look at a few places, but I think I will avoid anything that needs much work.  I think the value is there, but unless I can find something that I can do most of the work myself (meaning paint, carpet, etc), it's just not worth the headaches right now.