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All Forum Posts by: Christian Hutchinson

Christian Hutchinson has started 45 posts and replied 346 times.

Post: How To Identify Bad "D" Or "F" Class Areas

Christian HutchinsonPosted
  • Investor
  • Detroit, MI
  • Posts 360
  • Votes 354

I gauge a neighborhood and its quality by a few items.  Obviously, I run census data, get some reliable numbers for socio-economic data.

Then it becomes more of an art:

How many people are riding bikes, exercising, etc

Do running, cycling, fitness groups pass through on routes

How many people walk their animals

Do I see obvious illegal activity spots. Multiple people standing at a store/corner for more than 10 minutes.

How many homes have their windows open?

When I(or my wife) pull up in a car how much attention does it draw. Whats people on the streets body language?

Is a neighborhood full of old people who are fixed income? Or do I see large numbers of prime-age males not doing anything? Playing basketball, football, talking to girls, working on a car/bike is fine. But just standing in front of a property, on the porch, walking up and down the street not headed anywhere. Obvious gang-affiliation tattoos.

A high amount of cars with too much put into it. I'm not talking about a 7-series in front of a $8000 house, I'm talking about a 10 year old Chevy Tahoe, with $15,000 rims, a $8000 paint job, Chrome finishings. Not 1 or 2 of these cars but multiple. The contractor I use his building is in The Hood for real for real.  I tell people I have to go meet him over there and people's ears/eyes perk up. He keeps his classic cars there behind a 20 foot fence with barb wire, then he removed something from the vehicles so they can't start. I use to hangout in that neighborhood in my late teens and early 20s, and if someone offered me 200 houses for $50K I wouldn't take them, even if they were livable. I knew a guy who was Contract Killer (he's dead now)  who lived in a half-boarded up burned-down house in that neighborhood. I get wholesalers trying to sell me properties in that part of town saying its "close to, not far from". Which I laugh.

Do I see any schools, or many closed schools? Really bad neighborhoods/areas often require far travel for schools particularly HS. 

How old are billboards in the area? Not one or two, but if I see several advertising events that come and gone 5+ years ago not a good sign, I know one neighborhood in Detroit still with a Final Four 2009 advertisement, an Obama 2008, and personal favorite a billboard for failed rapper from 2007ish who actually grew up not far from me in a ritzier suburb(its consistently named top-50 places in America for families) than I grew up in (Eminem making fun of a guy going to Cranbrook where guys like Mitt Romney went, its a real thing locally).

If I see no police in the area riding by or walking over the course of a few hours. Really bad sign. Meaning they don't care, The Citizens don't want them around, and even worse someone has someone paid off at the local precinct.

We often just sit on houses in shifts (once we target one), and navigate the neighborhood walking, driving, biking several times over a couple months prior to targeting a neighborhood.

@Ali Tayeh

Find the house people want to live in drive a mile away from the house and start working back towards your starting point.

Adjust your cost/rent expectations accordingly.

kiss enough frogs you might find a prince.

Post: Are We Causing the next Bust?

Christian HutchinsonPosted
  • Investor
  • Detroit, MI
  • Posts 360
  • Votes 354

The low end of the market has been completely been eaten up by investors. Here in the MW specifically Metro Detroit, 50% of the properties in B-/C+ neighborhoods are owned by investors.  A typically family in Michigan could get into a starter home in numerous suburbs around Detroit under $100K build some equity and moveup to the next home in 5-10 years. Now, its all owned by investors, banks, and shell companies.  The entry-level house for a family is now $150K, which wouldn't be a big deal, but median hh income is 58K meaning they are stretched.  People are selling these "starter" homes for $80K with multiple cash offers stuff selling for $110K, these cash buyers are investors who are late to the party in many ways, but completely crowding out the run of mill working family.

Its creating locally it sees an artificial price floor for owner-occupied housing. 

Post: Are We Causing the next Bust?

Christian HutchinsonPosted
  • Investor
  • Detroit, MI
  • Posts 360
  • Votes 354

my biggest scare right now is when all this shadow inventory returns to market. Average people on the street at own multiple properties, banks and hedge funds are sitting on 1000s of homes each.

Very little building is happening and cash is very available. What happens to home prices when people release these homes back to market. The asset pricing will fall rapidly.

Post: Would you buy a duplex with no central air system?

Christian HutchinsonPosted
  • Investor
  • Detroit, MI
  • Posts 360
  • Votes 354

buy some windows units to start, after 3-5 years upgrade to central air.

go up on each unit $50/mo too

Post: Detroit - Dexter & Elmhurst - How bad is it?

Christian HutchinsonPosted
  • Investor
  • Detroit, MI
  • Posts 360
  • Votes 354
Originally posted by @Michael O.:

Dexter & Elmhurst is a tricky area... 

You have Russell Woods to the northwest which has homes starting to come back (this old house did a show in the neighborhood) & Boston Edison / Virginia Park to the Southeast with rehabs fetching in the mid $300-$400's easily. 

I don't know if I would necessarily invest a lot into the area just yet. There are no signs that the particular intersection, or anything close by, are seeing any types of development currently, nor in the near future. 

As @Christian Hutchinson said, if you are going to purchase I would make sure your security is top-notch and be prepared to market to Section 8 for now. I do imagine the area will come back, but how long before that happens is the question. 

You might want to take a trip out here to check the different neighborhoods and see what you truly feel comfortable investing in. Google maps and other sites aren't going to give you the best picture of what is really happening in Detroit right now.

Good luck and let us know how it goes!

Tongue in cheek comment but semi-serious if you have $500K in cash you could take complete control of that neighborhood between listings, tax sales, and land bank in about 18 months. Lots of the stuff for sale is over there for 35-70K are big 2-4 unit brick buildings that are just short of turnkey, they prob just need paint, refinished floors, and a new vanity in the bathroom.

@Michael O. Russell Woods could be interesting our churches parsonage is there, and those homes have been VERY well kept. Lots of people there are the old Black Middle Class (think shop owners, or Union guys) that bought those homes during White Flight and have refused to leave the City or let people turn their neighborhood homes into halfway houses, adult foster care,etc. That area survived YBI and the Chambers Brothers basically unscathed when you consider Dexter and Davidson was basically ground zero for crack and heroin boom of the 1970s and 1980s, those people fought for their neighborhood, and basically won.  IDK if they will be happy someone wants to give them money for their house, or they are of the mentality after everything they been through they want their family's to hold on to it? I do not think this will be a place where people will just take $30k from the first person who knocks on the door offering to buy.  They might lose the house to taxes, or maybe get caught up in a tricky mortgage, but I doubt they will "take money and run" unless its some real money.

Post: Detroit - Dexter & Elmhurst - How bad is it?

Christian HutchinsonPosted
  • Investor
  • Detroit, MI
  • Posts 360
  • Votes 354

The Wife and I were just scouting out that neighborhood last Sunday.  Our conclusion...doesn't fit our strategy.
That said were impressed with the housing quality on Dexter itself.  So without knowing the address, I would say the closer to Dexter the better, and I would argue the streets closest to W. Grand Blvd are worst than the ones heading towards Joy Rd or Chicago.

I would go ahead and invest in some quality security in terms of fences, lighting, and upgraded locks. Thats not "The Hood" but I could never imagine someone paying more than $700 for 2 bedroom market rate or $800 on a 3 bedroom market rate Section 8 yes, but not market. Its far for from the schools, hospitals, and Downtown, so your renter pool will be interesting.

Post: NEXT STEPS? after HELOC

Christian HutchinsonPosted
  • Investor
  • Detroit, MI
  • Posts 360
  • Votes 354

why quit your job? Get the units rented out, and keep working. Once you have tenants placed you have nothing to do really.

Also, until the rental income is aged 2 years most banks won't accept it as income.

Now, just save you job income and put it towards the next purchase.

6 months will get you aged with many banks

Post: Self manage, or hire 3rd party

Christian HutchinsonPosted
  • Investor
  • Detroit, MI
  • Posts 360
  • Votes 354

Self-manage, PMs provide no value, they accept no-risk.  I would suggest grooming one of your kids, nieces/nephews, cousins to help.  Have them first start with something small like scheduling work.  Then, move into marketing and working a sales funnel. My Sister-in-law is going to school for Actuary Science. I spent 2 years trying to explain how what our family does with our rental portfolio. She looked at it as its not her thing, or she has other "options" (she goes to an elite business school). Then she got an internship working on a marketing campaign for a major financial services firm.  No we are not a multi-million dollar operation, but she actually understood what questions to ask, how to ask them, how to qualify a lead, etc. Only then did she realize what business concepts were being practiced in real-time. Basically use this as an educational tool for those close to you.

Also, when you self-manage you can control for personalities in your units that will be issues. PM's due to their detached position, and laws/regulation have to take anyone who is qualified.