All Forum Posts by: David Kenny

I'm in Royal Oak, and own a home in RO and Oak Park. I moved here about a year ago for work and was really surprised. The suburbs are very wealthy and get a really bad reputation from an outdated stereotype. We were in Detroit Friday night for a concert and it felt safer than many parts of Atlanta (where I'm from).

I am targeting flips in RO, and rentals in Oak Park/Hazel Park/Madison Heights. Prices are climbing quickly here though, I bought a home in Oak Park in July for 129 and there is nothing that quality on the market (all listing 135+ already).

DK

 
Hey Dorian, I am investing in the area as well. Curious as to why you think it will "correct soon." Is this just because the prices have increased rapidly (from one of the worst real estate bubbles we have seen)? I don't see pricing coming down in the short term. There is very little new construction and the only alternative is to move to the suburbs, or rent a new apartment in Detroit (which are extremely expensive). With the huge changes in Detroit, strength in the auto industry, and the potential for major new employers (Amazon), Royal Oak is where I am betting. I think there is still a lot of room to run in RO and the surrounding areas. Closed on a rental in Oak Park recently, and am closing on a home in RO today.

Good stuff John! To @Kevin Phu's point, the general % rules are a guideline to see if its even worth looking into. Then you can get into the details and budget cap ex and other items specific to that property to get a really good idea of how it looks. Good luck!

DK

No problem John, more importantly you jumped in which is the hardest part!

Vacancy:  1 month or 8% of rent 

Cap Ex: I have a breakdown of major components, estimated useful life, and the cost to replace. For example, HVAC $4k over 15 year life is $22 a month. I do this for all major components.

Maintenance: I just budget 5% of rent

Hey John, I think the deal is really tight personally. I shoot for (as we all know) 1% min, which would have put you around $180k purchase price. LTV also affects the deal (higher pmt if you are financing more than 80%). Is there an HOA fee, and if so what does it cover?

This deal may be better as your personal residence, and trying to find something with a better spread for a rental. $300 a month doesn't leave you much for vacancy, maintenance, mgmt, cap ex, etc.

My last deal was $129k purchase, put 20% down and just signed a lease for $1.5k/mth for example.

DK

welcome Matt! I am new to real estate investing as well, bought my first rental Nov 15, and found out last night it looks like I have a flip under contract. I don't know if you listen to the podcast but there us so much great info there. I found bp Feb 2015 and listened to all the podcasts until I was caught up and now I wait anxiously for Thursdays to get here. Anyway my point was this last podcast was great, a few tims the focus was about imperfect action instead of perfect planning. I think you just have to jump in if the numbers make sense.

The catch is, how do you really know if the numbers make sense if you've never done a deal lol. Learn all you can from bp, then take the leap and progress wth every deal!

I'm also in atlanta by the way. 

Good luck!

congratulations! I also invest in gainesville ga. We should grab coffee some time! 

We are currently looking for flips in the 120-160 arv range if you come across anything.

welcome! I'm in atlanta as well, specifically hall county/gainesville so a little north of you. Keep us posted on your progress and let me know if you pursue wholesaling. I'm always looking for deals ;P

Thanks guys! I have a very good family friend who has built several houses and I am comfortable he can do the job well. My worry is budgeting/forecasting the costs and things like soil issues @Kyle H. Is there a general process for finding and analyzing land? Without any hands on experience (only everything I can read and listen to online) I have come to the following approach...

1. Find potential land

2. Sketch drawings on the lot to send to the zoning and planning department

3. Get approval for designs, then get property under contract

4. During the due diligence period begin applying for permits (septic and anything else needed before construction can begin) while having the soil tested and surveyed.

5. Close on the deal and begin construction.

Is there anything I am missing or anything out of order? Any help is greatly appreciated!

Hi everyone,

I am currently looking into developing small plots of land and putting starter homes on them. Im seeing very little homes available in this price range (150ish) and the big builders aren't competing here since it doesn't make sense for their business models. My plan is to purchase the land cash, and then take a construction loan to finance the land dev and construction costs. 

My concern is this is very new for me, and development is particularly scary. I am comfortable with $80 a ft construction costs, but is there a general way to budget land dev per foot? I know it will vary wildly depending on the lot, but for initial valuation, purposes a rough per foot cost would be very useful. 

Also if anyone has any nightmare stories or tips for developing land, they would be greatly appreciated!!