All Forum Posts by: Caleb Raymaker

Hi @Charlie Green, 

I am extremely interested in hearing more about this strategy. How did you find the deal? Was it vacant? What is this strategy called?

Thanks, 

Welcome to Bigger Pockets, 

Out of state (OOS) investing would be a wise decision, with Californias market is so highly appreciated. That 450k could build you a lot more wealth else where in the country. I suggest looking into IN, OH, MI, WI, MO, ID, etc. Look for places with population growth and employment boosts. Short term rentals tend to have a higher yield (quick money) but higher turn over, long term rental lower yield or cap rate (long money) but more reliable tenants. 

You could potentially "House Hack" the ADU you mentioned, instead of renting. Hope this helps!

Thank you for sharing your valuable insights on Bay City and Detroit. Your perspective on the challenges of smaller markets versus the opportunities in larger, revitalizing cities is well-taken. I appreciate your emphasis on considering factors beyond just initial numbers, such as property management availability and long-term appreciation potential.

Your point about Detroit's attractive price-to-rent ratios and ongoing revitalization is intriguing. Have you invested there yourself? I'd be interested to hear more about your experiences if you have. Your input definitely adds an important dimension to consider when evaluating investment opportunities in different markets.

Hey BP investors! 👋

I've been researching Bay City, Michigan, and I'm excited to share some potentially lucrative opportunities I've discovered. This often-overlooked city might just be a goldmine for cash flow-focused investors. Let me break it down for you:

Why Bay City is catching my eye: 

1. Incredibly Affordable Entry: Average home prices around $70,000-$80,000. Yes, you read that right!
2. Impressive Rent-to-Price Ratios: Average rents for 3-bed homes are about $800-$900/month, potentially yielding 12-15% gross returns.
3. Economic Transition: While historically industrial, Bay City is diversifying into healthcare, education, and service sectors.
4. Revitalization Efforts: Downtown redevelopment and community initiatives are breathing new life into the city.
5. Strong Cash Flow Potential: Low property taxes and insurance costs contribute to robust monthly cash flows.

1. Let's crunch some numbers on a hypothetical deal:
   

Purchase Price: $75,000 Down Payment (20%): $15,000 Mortgage (4.5% interest, 30-year fixed): $304/month Property Tax: $100/month Insurance: $60/month Estimated Repairs/CapEx: $100/month Property Management (10%): $85/month

Total Monthly Expenses: $649

Potential Rent: $850/month

Estimated Monthly Cash Flow: $201

Cash-on-Cash Return: About 16.08% (not including appreciation or tax benefits)

These are rough estimates, and individual properties will vary. But it illustrates the potential in Bay City.

Key Considerations:

1. Seasonal Tourism: Bay City sees an influx of tourists in summer. Could this be an opportunity for short-term rentals?
2. Flood Zones: Some areas near the river are in flood zones. Always check flood maps and factor in flood insurance if needed.
3. Historic Homes: Bay City has many beautiful historic homes. These can be great investments but may require more maintenance.
4. Job Market: While diversifying, keep an eye on the local job market trends.

Has anyone here invested in Bay City? What's been your experience? Any local insights to share?

I'm particularly interested in hearing about:

• Best performing neighborhoods
• Property management recommendations
• Any challenges specific to this market

Let's discuss and uncover the potential of Bay City together! 🏘️💰

This is an interesting project with several aspects to consider. Let's break down your questions and address each point:

Profit Split:

The 60/40 split seems reasonable given your significant involvement in the project. You're taking on the bulk of the work and management responsibilities, which justifies a larger share. However, consider that your partner is taking on significant financial risk. You might want to include clauses that adjust the split based on performance or time invested.

Potential Risks:

Market volatility: The Georgian real estate market might be subject to fluctuations.

Regulatory changes: Laws regarding short-term rentals or foreign ownership could change.

Currency risk: Since you're dealing with EUR in a non-EUR country.

Overestimation of Airbnb income: Ensure your projections are conservative.

Renovation overruns: Both in time and cost.

Partner relationship: Ensure all terms are clearly defined in a written agreement.

Regarding the 70% rule, remember that this is typically used for fix-and-flip properties in the US market. Your situation (different country, Airbnb income, longer hold time) may not fit this model exactly.

Negotiating Better Terms:

With the bank: Shop around for better rates, consider a larger down payment for better terms.

With real estate agents: Offer exclusivity for a lower rate, or consider handling the sale yourself if legal in Georgia.

Holding Period: Given the strong Airbnb cash flow, holding longer could be beneficial, especially if the market is appreciating. However, consider:

Long-term market projections

Your personal financial goals

Tax implications of holding vs. selling (consult a local tax advisor)

Partnership Structure:

Clear, written agreement detailing responsibilities, profit sharing, dispute resolution

Regular financial reporting and meetings

Exit strategy for both parties

Consider forming a legal entity for the partnership

Full Bank Financing: If the bank would finance the entire project including renovations, this could potentially be more advantageous. You'd retain full ownership and profits. However, consider:

Higher debt and monthly payments

Increased personal financial risk

Potential need for personal guarantees

Additional Advice:

Conduct thorough due diligence on the property and local market

Have contingency plans for various scenarios (e.g., lower Airbnb income, longer renovation time)

Consider professional property management to reduce your workload

Ensure you're compliant with all local laws and regulations

Factor in potential capital gains taxes or other tax implications

Remember, while the potential returns look attractive, real estate investments always carry risks. It's crucial to thoroughly analyze all aspects and consult with local legal and financial advisors before proceeding.

The ideal asset allocation for someone in your financial position depends on various factors, including your age, risk tolerance, retirement goals, and current lifestyle. However, here's a general guideline that you might consider:

1. Stocks: 50-60% Stocks offer the potential for long-term growth and can help protect against inflation. Given your high net worth, you can afford to take some risks for potentially higher returns.
2. Real Estate: 20-30% Real estate can provide steady income and potential appreciation. This could include rental properties, REITs, or your primary residence.
3. Fixed Income: 15-25% This includes bonds, CDs, and other low-risk investments. These provide stability and regular income, which can be crucial in retirement.
4. Cash: 5-10% Keep some liquid assets for emergencies and short-term needs.

Consider these additional points:

1. Diversification: Spread your investments across different sectors and geographic regions to reduce risk.
2. Tax efficiency: Consider the tax implications of your investment strategy, especially with your high net worth.
3. Regular rebalancing: Adjust your portfolio periodically to maintain your desired asset allocation.
4. Professional advice: Given your high net worth, it's advisable to consult with a financial advisor who can provide personalized recommendations based on your specific situation and goals.
5. Risk management: Consider your risk tolerance and adjust the allocation accordingly. If you're more conservative, you might want to increase your fixed income allocation.
6. Income needs: If you plan to live off your investments in retirement, ensure your portfolio generates sufficient income to cover your expenses.

Remember, this is a general guideline. Your ideal asset allocation should be tailored to your specific circumstances and goals. It's always best to consult with a financial professional for personalized advice.

 Looking for more of a niche brokerage into the investor sector. From Bay City not Detroit. Thx

Hi Randy, thank you for insight on the delay. I'm actually from the Bay City area, just wasn't an option to select. 

I've been searching for advice from some of my fellow Michigan agents, only found one buyer complaining lol. Any investor friendly brokerages or any investor meetups ?  I've been an agent for about a year and finally found my niche of investors, doesn't seem like I am finding many like minded people in my area.