All Forum Posts by: Felix Wong

     Hi Everyone! It has been a long journey. I moved to Detroit 3 years ago with big dreams, a pocket full of cash, and was naive about what I could expect and produce here in Detroit on my first project. 

     When I moved, I found work as a Property Manager with a tech-enabled PM company that managed over 700 units in Metro Detroit. My previous experience in real estate before then was a year in sales back when I was 18, and that was in NY. Other than that, I had some basic understanding from my family's dealings with real estate in NY and Texas with managing commercial tenants. 

     Simultaneously, while I was working as a PM, I bought my first off-market, completely distressed historic duplex in Southwest Detroit for a meager sum. I had budgeted $220,000 for renovations, received multiple bids at $400k plus which completely threw me off. I eventually settled with my roofer who did a pretty decent job on the roof, to help me to GC the project and promised he could tackle it within my budget. This was one of my first mistakes.

     Eventually as the project slowly moved on, I needed to be on site more often to manage the contractors he hired. I had to fire 3-5 drywall crews. The project went overbudget by $250k and I was struggling to get the job done. The project took 2 years and during that time as a PM, I learned a hell of a lot dealing with maintenance, contractors, tenants, etc. If I had to do it again, I know I could have saved an immense amount, but the reality is, I would not trade that experience for anything. It taught me that even under immense pressure, I would not crack. 

     At the end I was able to secure tenants, drawing in $57,600 gross a year with 0 vacancy (mind you, I only signed 2 x 1year long lease cycles, and yes, I had new tenants come in the literal next day after move-out so 0 vacancy. I prepped the homes myself with the wife in 1 night). These first 2 years were a net zero due to some minor compliance issues and a plethora of upgrades I decided to do (already included in the $250k cost overrun). Next year, I will be cashflow positive.

    This 3 year ordeal taught me so many things:

1. Do not go for the cheapest bid, you get what you pay for and then some

2. Always negotiate on the price. Everyone is out to milk you.

3. Do not be afraid to pay more for quality work if it means it will save you money in the long run.

4. Do not be afraid to threaten to sue, to fire people, walk away from a bad deal and to withhold money

5. Learn to repair, it will save you money but also teach you how to effectively gauge workmanship and deal with contractors

6. There is no one right way to get tenants. I currently gross almost $5K a mo on a duplex in Southwest Detroit because of how I market the unit and cultivate relationships.

7. Under whatever circumstance, treat your best tenants well and they will stay and work with you under the most stressful situations

For those who are wondering, OPEX is currently $5,400, and if we add in a 10K reserve fund and assume its used each year, that's $43K NOI or 9% cash on cash ROI. We have no debt. I believe this is be fairly good considering all the failures we had to overcome during the 2 year rehab.

As I head into a new year and a new fresh start with positive cashflow on this property, I am searching to start my next project with a sharper mind attached to a set of more determined and stronger shoulders. I am currently searching for loan options (quite possibly HELOC) for drawing equity from this property to get into commercial real estate. If anyone has lender recommendations, I am open to receiving them.

As I continue on my own personal mission to build a small real estate empire, I'll keep everyone posted. Perhaps I will bump into some of you in the future.

TLDR: I am a noob who has a lot of stuff going on and need some info to not fall flat on my face.

Hello everyone, this is my first post. I am currently involved in property management. I am moving at rapid pace and have had to learn everything on my own and will need to keep learning in order to sustain growth.

I currently am working on my first rehab project it should be in service this year for rent. I have just been given shares to a series of commercial properties through my family and will be trying to spearhead some changes this year at a partners meeting to pick up performance in the portfolio. I am learning on the job and have big shoes to fill though no one expects anything of me.

While all of this is going on, I wanted to pursue a redevelopment project in NY but am headed in butt first as I have never done this before. 

Situation: My family has owned their home in NY for decades. It is mixed use, and sits in a very popular main avenue. They live in the 2 units above, and the retail downstairs has not been vacant for over a decade and generates over 70k a year in rental income. It does well, but not well enough vs where it can be. I am trying to get a redevelopment project started but we are cash strapped due to our other ventures. I feel this will set my parent's retirements up even more so and is important for me to accomplish this for them.

I have always had a vision and I would like for you to give me some advice to get it going. I have spoken with a premier architect and the final build will look like retail on basement, first level, and mezzanine. 2 residential apartments for the 2nd and 3rd level. Projected project cost is $650K. Projected NOI is 160K to 180K conservatively adjusting for a myriad of factors including lease up scheduling. Market in the area for retail and residential occupancy is insanely strong so I am not worried on that end. What I am worried about is finding financing. I am wondering if its possible to get 0% financing with such strong projections. The land and building currently is worth about $2.5M. My naive instinct tells me some decent bank somewhere will lend, but Chase and HSBC does not touch these types of redevelopments to my knowledge.

How would I go about financing this project? Anyone have experience in redevelopment projects can give me any insight? Is this even possible or should I just save up a bit before starting the project?

I feel like the added income, even after debt service, would totally outstrip the whole save until I can afford thing, at which point I would have lost hundreds of thousands on potential income. Any insight is greatly appreciated.