Hello from Michigan!

[Victor Cooke]

Hi everybody!!! I stumbled across Bigger Pockets a few months ago from a personal finance podcast I was listening to that mentioned the Bigger Pockets podcast which I then gave a listen to, which lead me here. I have been listening to all the podcasts while I have been working on our current house to sell in the spring, which I was hoping to have had done in early fall. I am currently in the Metro-Detroit area, but after we sell our home I will be joining my wife back in our hometown of Alpena, MI. My wife was able to get a teaching job up in Alpena and moved into our "rental" project house that we had bought about 10 years ago.

I many a jack of trades. When we first moved to the Metro-Detroit area I got into construction in the early 2000's. The one company I mainly worked for did it all, from breaking ground to the finish. I learned a lot and then moved on to a few other companies that I picked up some more production style construction skills. I eventually got my builders license and started doing legit side jobs and eventually went on my own. But then the small remodeling jobs started drying up just before the meltdown, so I got my real estate license. I figured that I might be able to get some side work by working with buyers and sellers and maybe make a few bucks selling houses at the same time. I struggled for about two years and finally admitted defeat and went back to a 9-5 job. During those two years we bought two houses in our hometown that we were going to rent.

Attempt #1

My dad had gotten 7acres of basically cedar swamp on land contract. After he skipped town, I contacted the owner and assumed the land contract. After getting a building site prepared, I went to the township to get a building permit to build a small "cottage" there. I had to get a survey done because the area was a drain area for the nearby lake. After saving up was able to get that done and was told that it would be ok. Went back to the township with the survey and was told that I then needed a survey for a septic field and well done. Saved up more money to have those done. Finally was able to have those done and found out that I would have to have a deep well drilled min 100ft through large amounts of limestone and I would have to have an engineered septic field built. After getting some pricing found out that just these two thing would be 3x the price of the land. So I informed the seller that I was breaking the contract and why.

Take aways:

1) Don't build in a swamp

2) There is a lot of government loops you have to jump through to get anything done.

Attempt #2

Shortly after attempt #1 I found a small house just outside of the city. It had fire damage, but looking in it none of the framing had been damaged. I tracked down the owner through the county public records. I drove out and met with the lady that owned and talked with her for a few hours. She agreed to sell me the house and granted me permission to start cleaning it up before the sale. I went to the credit union and applied for a loan and talked with the loan officer. I got them to agree to fund the purchase plus funds to fix it with only a couple hundred out of my pocket. the total loans was going to be about $38k. I got some friends together and after work we went out and started gutting and cleaning up the house. I had a couple of contractors out to bid work, electrical, plumbing and heating. I made deals with the guys to reduce the labor cost if I did the work and they just told me what to do and over saw everything. Then the CU called me that there was an issue with title, the lady's ex was on the title even though she had gotten the house in their divorce. I went back to her and told her what the issue was and offered to pay an attorney to draw up the needed paperwork to resolve the issue. She refused and the deal fell through. Today the house is for sale and I could buy it for less than what I would have back then.

Take aways:

1) Don't work on property until its yours

2) People can be stupid

3) You can negotiate almost anything

Mistake #1

After moving to the Metro-Detroit area I had an apartment the I shared with my future wife who I had followed and was going to school. During this time I wanted to get something because I felt like I was just throwing away money by renting. At the time houses were expensive and no way we would qualify for a house. We decided to buy a trailer, at least we would be not be throwing away all the money each month. Well that didn't work out so well. wasted a ton more money.

Mistake #2

Having been in construction I figured why would I need a house inspection. So the first house was a large house that we thought we could easily split into a duplex. The previous owners installed cement board siding and all new vinyl windows, so a couple of framing thing and boom duplex. Well one day we made the 4 hour drive up north right behind a heavy rain storm. When we got to the house we started unloading the car and we heard dripping coming from the upstairs. Having not turned on the water yet, I went up to see what was going on. Part of the ceiling in the upstairs bath was in the tub, and water was pouring from the now exposed attic. Long story short I removed the 2x4 roof rafters, the 6 layers of shingles, and framed a whole new roof in about two weeks. Then when we came back in the fall found the furnace had a cracked core and was kicking CO all over the house. Then the hot water tank bottom rusted out and flooded the basement. Had a lot of learning experiences with this house.

Take aways from this ordeal:

1) ALWAYS have an inspection done

2) Prepare and expect the worse

3) Repairs in old houses will be 10x more expensive than you think and take 10x longer to get done

Mistake #3

During Mistake #1 a house a block from the house we already had came on the market. It was trashed the people that lived there were not good people and they did a lot of damage to the house. The house was a foreclosure, every window was broken, the plumbing was removed, the aluminum siding was removed as far as they could reach, the electrical was cut at every other joist space though out the basement, the roof was very old cedar shingles. The bank wanted $42K for the house I offered them $2K. We went back and forth on the deals for over three months, I walked away twice during this time. Finally we got an accepted offer of $11K. I was able to put together the cash from savings and personal loans, basically begging friends and family. Since then it became a either I had the time with no money or no time with money with this house. I had to get a new water supply line put in because of the original was lead pipe, this was way before Flint's issues. I had new electrical put in, again I made a deal with the electrician to over see my work for reduced cost. I put on a new roof and all new windows. My brother and girlfriend asked if they could stay here and that he would finish up the work like the drywall, trim, paint, etc. Well this didn't work out so well for me after 4 years of living there very little got done and what was done I need to redo. This is the house my wife is currently living in and will be the one we use as our base of operations for the first bit when I get up there.

Nightmare #1

A couple of my friends had gotten excited about tax lien auctions, and talked me into it. I was supposed to meet them downtown Detroit and we were all going to go to the auction together, well they never showed. I went to it myself since I was there. There was only a couple of properties that I was interested in, as my wife and I were looking to buy a home to live in. All the houses were getting bid up really high in my opinion, 2006. Finally the one house that we wanted came up. It was a 2 bed 1 bath single story on a slab with 2 acres of land, one of those skinny and long lots. the bidding was slow because this was at the end of the auction and many people had left already. I raised my number at $500, then the bidding started. I went quickly up to $2750, my limit was $2500. As I was putting my number down the auctioneer called my number at $3000. I tried to say no, but he said my number was still raised and of course going, going, gone to the idiot that didn't have enough to pay. I called my wife and told her we got the house she wanted, but $500 over what we had in the bank account. So, after a bit of scrambling around I was able to pay for it by the end of the day. We went out to the house and started getting a plan together. I used my universal key to open up the boarded up door and we got the first look at inside of the nightmare. My stomach dropped looking at the house, it was trashed. We started cleaning up and then put together a plan, gut it. The city started trying to nickel and dime us on every little thing possible on the property. After two months of hell, we decided to ask the neighbor if he wanted the property. We sold it to him for $6k which we got our money back plus was able to pay off my wife's car note.

Take aways:

1) Dealing with some cities is just not worth the headaches

2) Be very careful at auctions and know exactly what your getting into

Finally our current home

We finally saved up and decided to buy a home to live in and get out of "The Trailer". I had let my real estate license go back to the state at this time, but the broker I worked for let me use her MLS at night to find houses that we would be interested in. We would pour over the listing every night and then make a short list to go drive by on the weekend. Our house my wife vetoed from the MLS pictures and didn't even want to drive-by. We found a few houses in the area and we drove-by them. When I drove by our house my wife asked about it because of the sign in the yard, but she could not find a sheet on it so assumed it was not within our price range. After telling her this was the house she had vetoed the night before, she wanted to see it.  called my broker and she arranged for the showing. My wife loved it as soon as we walked in. I saw that there had been a lot of neglected repairs and it was outdated, but normal for a little old lady's house. We bought it and have loved the house ever since, not the neighbors but the house. This is the house I  am currently trying to get done so we can sell it. We bought it at the bottom of the meltdown and are figuring that we will be able to clear $30-40K when we sell it.

Take aways;

1) Check neighbors at different time of the day and during the week.

2) Be prepared for hording when buying from old ladies

Our future plans

We are currently thinking about using the money from the sale of our house to either make a large dent into our student loans or as seed money to buy some rentals in our hometown. I am leaning towards seed money my wife is leaning towards debit reduction. If we do the seed money then we would look at trying to get a SFR as soon as possible to start learning land lording. Then continue buying SFR in the local area. We hear all the normal stories about land lording in our hometown, but we figure there are still people doing it so something must work. The area is no Detroit but the local economy is difficult and lots of part time work with most of the factory jobs having been lost to automation. We want to get about five SFR and see what happens, if they don't do so well then we are thinking about using a turn key company like Memphis Invest or looking into a better local-ish area like Traverse City.

Between my crazy work schedule and my "home"work schedule to get the house ready for spring I would be interested in meeting up with people and bouncing ideas around over coffee or beers.