All Forum Posts by: Christian Hutchinson

 HI Shaun,

Welcome to the The Game.

You are looking for your first property? I don't know what type of cash and credit you have.  But I'm three years deep in this.  So I'm just past training wheels.

I highly suggest anyone doing this the first time if you are not flush with cash.  Go Duplex in a working class/middle class city.  So your side of town, Westland, Garden City would be solid. If you have some extra cash and can stand higher monthly expenses Ferndale is good too, if you are coming back east.

Or you could go Middle Class/Upper Middle Class Area, condo with low fees. Canton, North Farmington, Commerce, even Novi might have a deal you can score.

Try to avoid anything requiring a lot of work on your first time around.  Paint, carpet, etc is cheap, and labor is easy to come by.  But electrical, plumbing, and other "guts" related stuff on your first go around I would shy away from. You want to close the property and have a paying tenant in less than 30 days.  You have 60 days until the first mortgage payment so, those first two months rent help you with cash reserves, and offsetting renovation cost.

After you do one or two properties, then try stuff more risky.  The amount you learn on your first 1-3 rentals is insane.

Good Luck!

Roof and Plumbing...

I don't have the cash or the reserves to bring the house down to studs and really correct the problem with plumbing. Its a ticking time bomb.

Roof issues, its one thing to have to do a small repair.  But replacing a roof, I rather pass. 

 Thats a tough break, I would suggest owner-occupied duplex.  Some solid choices under $120K between 8-16 Mile off Woodward.  We are poking around trying to find something now.

Welcome to real estate...

My Wife and I have been at this for 3 years.  I don't know how much money/credit you have.  But I tell anyone who is getting started. Your first try should be a condo with low fees, or a duplex in an area you know well.

So many things to learn, keep it simple and low risk to start. Being in Plymouth, there is a couple of great markets to start off in Ypsilanti, AA, Westland, and Canton.

Good luck

"Greed is Good"

If you don't understand that, its very difficult to make money.

 The $600/month market is a tough market...I have two places in that realm...SO far this is what we always do.  Washer/Dryer in the unit, I still charge a higher security deposit, and I still require 3 times the monthly rent.  Essentially if the Washer and Dryer magically disappear I have enough deposit to get a new one.  So far it has never been an issue.  I get people who might have been looking at $800 to come down to $600 because they get a Washer/Dryer and a yard versus an apartment in a nicer area. Of course my $600 unit gets some special applicants who I don't get on my $900 units.

 How do you Owner carry?
I imagine they can't get pre-approved.  They have unreportable income. I made their parents(doctors) co-sign their lease.  So I'm really thinking this is ultimately a deal with their parents.  Basically, do their families want to cut their kids housing expenses in half?

Biggest obstacle, is the tenants are not married, they are about 24, so I could see them being shy about a long-term investment.

I have a rental...It was originally occupied by myself and wife.  We moved 2 1/2 years ago, and turned it into a rental.  We notified the tenant, we would not be renewing the lease(expires August 31) and will sell the property in Q4 this year.  The tenant doesn't want us to sell.  Whats some ways to sell them the house?  I want this done easy.

I am willing to give up putting it on the market and gaining money on the sale, because I get to cut out the Realtor...Comps are $85K in our area, and but I am willing to sell for $75K, if this can be done quick and easy, with minimal cost out of pocket, for either party. FYI, the tenant would save $400 per month if they took our offer of $75K based on what they are paying for rent, they pay $900, and they cover their own utilities except water.  The water Bill is $45/month.

We bought the home as a short sale in Nov 2009, so we make pretty good money either way.

Suggestions?

 I would do this deal.

Your Initial investment is $16,000.

Your yearly payment is $24,149

One unit gives you $15,600

Once your PMI Falls off, you get a new home, and add the second unit. The PMI will probably be equal to the increase in Property Taxes because its no longer the primary residence. Which gives you $31200 a year in revenue, and about $7000/yr in income before repairs.

I measure my deals in Cash Out Flows. Remember you can get 7% return by putting $10,000 in an Index Fund, and just keep breathing. You are considering this transaction because you want a higher ROI. Well you will have a healthy return on your initial cash investment, plus all you need is 19 Rent payments per year to break even.

We would do a deal like this, as long as there was no: structural issues, major repairs coming due, or evidence the area was in was headed towards a downturn(major employer leaving, falling rents/property values).

So far we have have position ourselves for several rental flips...Our first set are coming due to sell in 6-18 months.

We put 8-15K into a rehab, we knew going into it the money needed to flip it was not there.  So now the comps are there.

I've read and heard to flip a house its $10K profit every 60 days you are holding.

We decided to rehab, rent, then sell.  Because it appears we will get about $30K on the sale after holding 2-3 years.  In the mean time we have cleared about $900 a month on the property. So we will make $$33K in rental income, plus another $30K on the sale in three years.  Of course there is a real risk in holding property for that long. But we try to inspect for major repairs, and we are properly insured.