All Forum Posts by: Alex K.

 Add at-least 15k to that 20 if you want something reasonable in Detroit that you will be able to collect on. 

Or Like everyone else has said $20,000.00 tenant occupied is more along the lines of squatter occupied and needs rehab. 

Feel free to reach out anytime and I also encourage you visit the city,
this way you can get a better understanding of what to expect for 20k occupied. 

Where are you pulling these statistics and numbers? 
Zillow? 

Can you please clarify your statistics and numbers and if they’re based off Of 1 or 4 units ? 

My point is that a 4 unit that is occupied @ $800 pm per unit is annual gross $38,000+ which you will not find for $162,000.00  (unless it’s a shell) 

Let’s assume rents are low At $500 Per month and it’s a crappy neighborhood with 4 units, you’re still averaging $20,000+ annual after accounting for vacancy considering the neighborhood. 

I hate to break the news to you young man..... Your numbers aren’t accurate or clear on this study for Detroit. 
 They may be accurate for other areas but for the city of Detroit they’re not accurate at all and if you’re relying on these numbers for your study it may be a good idea to start from scratch. (At least for Detroit) 

 I’m an investor in the Detroit Market and I do it all fix, flip, rentals and everything in between. My family has been investing in the city of Detroit and the Surrounding suburbs since the early 70s (Long before I was thought of) and we still have parking Lots Downtown that Cashflow daily so we know a thing or 2 of what we are doing here in Detroit. 

The numbers you have posted are similar to a SFR you will find in a Detroit Suburb such as Dearborn or Southfield etc but not in Detroit proper.

Come on down for a tour and we’ll show you! 

It all depends on where they’re located.  Detroit can be tricky if don’t know what you’re doing And  end up with the wrong tenants. 

We have a few in west Dearborn and Dearborn Heights, that area may be a better fit for you but the value on those will be 100k+  and rent will still be $900-$1100. 

You can send me a message and if I’m able to help I will. There isn’t a shortage of investors looking to get in the Detroit Market that’s for sure. 

No more Full Rehabs, Only Prehab! 
this has been great for us in  Detroit and Some surrounding suburbs.

We do also wholesale a lot of deals but when there's great spreads (our acquisition is less than 50% of ARV) and enough interest in the property and area we close on it and do a simple clean out with a 30yd dumpster or 2, Mow the lawn and just make it much more presentable to our investors.


The pros:

1. Great returns

2. Actual Control of the property Instead of what some people refer to as “equitable interest” 

3. No dealing with contractors, inspectors etc. 

4. Enough time to close without the seller going bezerk! 

5. Can sell to an investor that wants to leverage and finance the property. 

6. Sell Via Contract for deed/ Land contract and ability to offer Owner financing with 25% Down and Cashflow + shortly there after. 



The Cons: 

1. Paying twice for Closing costs

2. Holding costs (Insurance, utilities, etc) 

3. Tying up Cash 

4. Time and Liability. 

5. Occasional evictions. 

We usually know from the minute we sign the contract if we will close on it ourselves or easily assign it.  If we are unable to assign it within the first 14 days or so we just close on it ourselves. We also don’t sign any contracts which we cannot perform on ourselves.  Many times it only takes a day or 2 After we close on it to get it cleaned out and put it up And a week after that it’s at title for the new buyer with a deposit. 
The longest it has taken for a property was 6 months But it was also purchased for $3,500 QCD Cash for Keys and sold for $25,000 With a WD and all we did was a clean out, took responsibility of taxes and water, paid insurance for 6 months. The profit on that was near 17k after we cleared 22k from the sale.  

 Detroit Michigan! 

If you can be a bit more specific as to “Michigan Area” ? 

I’m in the Detroit Market and the surrounding Suburbs For Cashflow and appreciation. B+ to C- is ideal.
Any A+ Cities/ Areas for a rental will just not make any sense. Maybe for a flip but like you said they’re hard to find and when we do find them they’re sold usually the first couple days. 

 

 Hey I’m curious as to what those courses are going for nowadays ? 

I’m local if you find a great potential deal run it by me and we could possibly do the deal together. 

See how they keep track of inventory once’s it’s purchased

The Key thing to to look for is How they account for inventory purchased on the books.

Are they listing new inventory on the books at retail price  or the price they purchased the bulk order for? 
compare your findings with what’s on POS. 

How often is POS updated and by who. 

Taxes for 10 years. P&L for 10 years. 
5 minimum. 

Check lottery and bill payment for sales and Any delinquent balances and if the same named entity matches for lottery licensing and business licensing for Liqour throughout the full period of ownership. 

The pattern they purchase fuel at. 

Have an attourney or consultant review and verify any and all contracts and accounts Including fuel supply contracts, Wholesale distributor contracts and other vendors such as  Frito lay, Pepsi etc. 

Make sure the Inventory coming in and going out is all aligned within the books at the true rate it’s purchased and sold. 

How long have they owned the property and business? How many times it changed names or franchises over the years. 

Phase I Esa 

Phase II esa 

who manages the business? 
are employees W2 or not? 

Check with local municipalities especially with Planning and zoning if there are any new proposals for grocery centers like Kroger or Meijer with fuel stations or any new developments being proposed in the local vicinity that would affect the business. 

Any road work or long term construction projects in the near future that would  affect traffic to the business. 

The pumps. 

Camp out the traffic for 20 days. Early morning rush, Midday, after work, weekends and evenings. 

Any Decent fuel station with Liqour should be a minimum of 1.5m+ or else you may be buying a full time job. 

A lot of moving parts and a lot of loopholes in that business especially if owners have been planning to sell. I’ve seen many inflate numbers and dump and repeat in my market. 

If you don’t know the business I would find someone that does Know the business. The ins and outs and pay them well for the due diligence process. 

Seriously?