Newbie looking for some guidance

[Adrienn S.]

Hello!

I`m interested in investing out of state and have a few questions to understand the Detroit market now and figure out my budget. 

- Do you think Trulia crime rate map is trustable for Detroit area? I m asking bc even my super safe neighborhood in NYC has almost the highest level crime rate just like half of the city even Manhattan. Is there any tip how to search more efficiently and to avoid warzones? I walked through the streets in Google maps checking the neighborhoods but would be happy to listen to better solutions.

- Is Detroit a hot market now? What is the average closing period? Are the asking prices in Zillow/Realtor.. close to the final selling price?

- Does any of the non local investors have experience with major rehab? Would you recommend it for first project? 

- Is it hard to find refinancing for smaller projects (under $100k ARV)? Just read in other posts that out of state investors faced issues in other states? Did anyone have similar experience in MI?

- Do you think 2%+ cash flow is still achievable? I saw couple of posts about it but this is a different market I guess than was 1 or 2 years ago.

Thanks,

Adrienn

[Scott M.]

As Drew said there is a lot that can be said about these questions, I will try a very brief answer for each.

- Do you think Trulia crime rate map is trustable for Detroit area? I m asking bc even my super safe neighborhood in NYC has almost the highest level crime rate just like half of the city even Manhattan. Is there any tip how to search more efficiently and to avoid warzones? I walked through the streets in Google maps checking the neighborhoods but would be happy to listen to better solutions.

Like everything else in Zillow is it right 2 times a market cycle.  It is right once on the way up and once on the way down.  Same for crime rates.  They get their stats from a good source but how they categorize them is anyone's guess.  Also, this is generally done in a larger area.  This Zip Code has a crime rating of X.  Okay, well that might be because 20% of it is a warzone and bringing the stats down for the whole zip.  Very few areas in Detroit will show you a positive crime rate so if that is something that is concerning to you Detroit may not be the place to go.  

- Is Detroit a hot market now? What is the average closing period? Are the asking prices in Zillow/Realtor.. close to the final selling price?

Yes.  Every market is a hot market now, including Detroit.  Everything else you asked, yes and no.  Detroit is a massive market, like asking what is the closing cost for NY.  Well, do you mean this neighborhood or that.  Massive differences.  Homes for 40K homes for 4 Million and everything in between, below and above.  Can't think of it as one entity...need to get down to the neighborhood level, and sometimes by the block level.  Detroit is a block by block city as well as many of the inner sub's.  

- Does any of the non local investors have experience with major rehab? Would you recommend it for first project?

As a broker, licensed builder and the owner of a full service property management company who has been doing this since 1999 with investors from all over the world, no, I do not suggest you do major renovation out of the gate.  Even if everything goes smoothly you will not enjoy the experience.  You want to find either a tenant occupied home that has been very well inspected or a rent ready or close to rent ready home.  We handle major renovations all the time so it is no big deal for us, but we have done this hundreds and hundreds and hundreds of times.  It is best, in my humble opinion (and my opinion only) for a first time investor, first time out of state investor to pick the path of least resistance.  Get a good experience under your belt and then go from easy to hard.  The first surgery a surgeon performs generally isn't a complicated one.  go easy on yourself : )  Get a win and move forward.  

- Is it hard to find refinancing for smaller projects (under $100k ARV)? Just read in other posts that out of state investors faced issues in other states? Did anyone have similar experience in MI?

No.  Plenty of banks working in this market no matter what others will have you believe.  We can make suggestions.  

- Do you think 2%+ cash flow is still achievable? I saw couple of posts about it but this is a different market I guess than was 1 or 2 years ago.

Yes, and depends.  40K to 4 Million and everything in between remember?  So it is possible you just have to find the right deal that fits your goals. 

Thanks,