All Forum Posts by: Eric Wilkinson

I use Beal for my rentals in Ypsilanti.  I have had a positive experience with them. 

They have a significant presence in Ypsilanti, Toledo, and Jackson.  I don’t know about Adrian.  

Beal Properties www.go Beal.com

@Shane Short. Property taxes are something that people can overlook. Michigan is similar to Oregon in that there are limits to how much property taxes can go up on the current owners year after after. Once a property sells, the taxes will be based on the current assessed value. If the property has been owned for many years by the seller, that could mean a significant increase in taxes. Also, if the home is non-owner occupied then you also pay a rate 18 mils higher generally.

When assessing properties, look at the tax record for the SEV. This is the unconstrained value for the home and would more closely represent what your new assessed value will be. You can use this website to get an estimate. https://treas-secure.state.mi.us/ptestimator/PTEstimator.asp

I would also tack on a little more because the home’s assessed value will likely have risen more when they do the annual assessment after you purchased the house. In a year like this one, I suspect assessors are going to be very generous with their increase.

Getting taxes wrong can easily wipe out your perceived cash flow.

All those markets you mentioned are different from one another. There are some cash flow rich areas in Michigan, but they could be in C areas if you are not familiar with the neighborhood. I am sure there are those on this site that can prove me wrong, but Ann Arbor for example is not as likely to have such huge cash flow with typical renting. It is more of a market for appreciation. If you are looking at short term rentals, you must use caution because some areas like Ann Arbor are looking to impose restrictions.

Some cities in Michigan require a rental inspection/certificate. This is $100-200 every year or two. The inspections may also lead to more repairs. I am not advocating being a slumlord, but some cities are more nitpicky and burdensome to deal with than others.

Property Management is going to be in the 8-10% range. Check your tax and rent assumptions again to be sure.

@John Cannon. As @Joshua B. Mentioned, the market is really hot right now. I live in the western side of the county near Chelsea, but invest in Ypsilanti so I familiar with both areas. There are frequently duplexes that come on the market in Ypsilanti which are older homes that have been split into 2-3 units. Chelsea is about 20 minutes west of A2, but will have a handful of homes come on the market each year that has an extra unit.

Thinking long term, a lot of the communities are considering zoning changes to allow ADUs in areas that have been previously zoned single family. This might be something to watch.

If you have any interest in those areas, I would be glad to help out. Feel free to reach out to me. It would be helpful to know how much of a “project” you and wife would be willing to take on.

With a traditional land contract, you do not have title.  That happens when the land contract is fulfilled.  If you fall behind on payments, the seller can simply evict you instead of going through a foreclosure process.  The taxes will most likely be in your name and it may count as a property sale for property tax purposes.  That means the taxable value will reset to the assessed value.  If the seller has owned the house a long time that can mean a big jump in taxes.  

I am not an attorney, so speak with an attorney if you have questions before signing something.  

If you refinance the home, you would be paying off the land contract and have the new loan.  You would not have both.  I am assuming you are doing a land contract because you are putting less than 20% down meaning you have little to no equity.    When you refinance, you will likely be able to get a loan that is 75-80% loan to value.  So either the value has to increase or you have to bring money to the table. 

From your question, it sounds like you are expecting to refinance in order to pull cash out to use on another deal.  If you are starting with no equity, how do you plan on raising the value of the house to get a refinance loan in the first place let alone pulling anymore cash out?  If you can’t rehab the property, I don’t think you can bet on appreciation raising the value that much, that quickly.  
  

I live and invest in Washtenaw County.    It is a large county geographically and the housing types and markets vary depending where in the county you are looking.  You have the full spectrum of urban to rural in the county.  

Taxes are going to be 18 mils higher for a non owner occupied home and the previous poster did a good job of explaining how it is calculated.  You absolutely must understand the change in taxes that will occur after a purchase otherwise you can easily see your expected cash flow disappear.  

I had a house that I flipped last year that was full of junk that needed to be cleared out.  I hired a junk removal service.  They came out to look at what all needed to go and provided a quote.  I think their quote was based on the cubic yardage of stuff they were having to remove.  

You may need to take a pause and consider what you have before you.

1.  The market is very hot right now.  In the Ypsilanti area for example, Houses needing a significant amount of work are receiving multiple offers above asking and going under contract within just a matter of days.  Here you have a seller willing to do seller financing at a price probably lower than what they could get on the market.  Why?  Maybe you got lucky.  Maybe there is a bigger problem with this property that you are not aware of?  Maybe the terms of your agreement are not as good as you think?  

2.  No leases with the current tenants could be a problem.  The last year has seen a lot of restrictions placed on evictions in the state of Michigan.  These tenants may not be paying their rent and have not for some time.  You may find it challenging, time consuming and expensive to get the property vacated to do the remodel.

As other have said on this site, real estate investing is about solving problems.  You need to make sure that you know what problems you are signing up for and that you are prepared to take them on.