All Forum Posts by: Christian Hutchinson

 I think we are saying the same thing.  Two of the people you mentioned are a part of the 'creative-class'.  They do not punch a clock.  The 3rd person is 'gray-collar'.  Again doesn't punch a clock, clocks lots of hours, but plenty of MB at QL come and go as they wish while working 70 hours a week, lol.

Factory workers making $17/hr versus a Operations Specialist at the Rock Connections making $17/hr are two very different people.  One person, gets off of work in a casual polo/dress short, slacks and is pretty clean and has not broke a sweat. They can scurry over to Central Kitchen with co-workers once 1-2 times a week, blend in for 90 minutes and go home.

The other person wore work boots, maybe a t-shirt or sweatshirt, got some liquid/fluid on themselves.  They wear the same 5-8 shirts and they are slightly soiled dirty. They wear jeans that again have stains. They were on their feet 9 hours and are going to be tired, and maybe did sweat just a little just because they were moving all day. If there is a little place next to plant with all the other workers and everyone is a little dirty fine, but they will hesitate going into a "nicer" place, just for the fact they are a little dirty and will look out of place. So they will most likely look to go home, shower, then head somewhere.

So then it turns into "where" they go home too.  There is no value for them being near their job, because its a factory, who wants to live by that? Throw in the economic considerations and I see these people leaving Detroit. So you get the EEV, Morningside, etc they is no advantage for them being in those neighborhoods financially, and at their pricepoint the extra costs of $200/mo for a car insurance versus $100 the $30 vs $60 per check for Detroit income tax, plus the general quality of life issues

Detroit's biggest challenge the next 30 years and the last 30 years is providing neighborhoods and services for households making between $40-$90K per year.  Because of things we can't discuss in this forum that are politcal, social, etc its just easier for these households to head into inner-ring suburbs, you can't get around the math.

Remember they will be at that plant 10-30 years, with a very defined salary schedule, the people at Rock Connections will be there 6-36 Months, and their income is very unpredictable.

So that Chrysler play...those new hires with be $17ish/hr.

So lets call it $42K with shift differential, OT, incentive pay, and profit sharing.

IDK if there is a play IN Detroit for these people, for more than 1-2 units.

There are plenty of living options at that wage in Metro Detroit, particular if you pair it with another earner within the household.

Historically, people in these types of jobs/wages are not going to care about being in a "hip-neighborhood". Its going to be more "practical" bread and butter type of housing. I see moves into SCS, Warren, Roseville but not Detroit. As these people get seniority, they will move to Macomb Twp, Clinton Twp, Fraser, or Chesterfield. They will top out at $33/hr. I just don't see these factory workers choosing Detroit in any density until SFH become reasonable in price, condition, with an attached school thats decent.

People at this wage will be very sensitive to car insurance, residential city income tax, property insurance rates in Detroit. This isn't a situation of two White Collar(Grey Collar workers even)workers with very flexible schedules with a HHI of $140K saying "My bang for buck is way better in University District, compared to Novi, Troy, Shelby, etc, I'm 15 minutes from my office and I'll just pony up $11K a year to send my kids to U of D for better or similar education".

I have 6 Units in Midtown and North End.  In 6 years I have gotten inquiries maybe 3 times from Poletown or Jefferson North. Frankly, people in those wages/line of work don't desire that type of housing. 

@Chen Zhou

@Chen Zhou

@Chen Zhou

@Chen Zhou

@Chen Zhou

@Chen Zhou? Upgraded locks, lighting, fencing, security windows, camera systems. I self-manage.  I sometimes bring up the camera feed to my properties.  Get an idea of whats happening. 

Core Cities neighborhood can get rough, I mean really rough.  I go to church on 24th and Butternut.  I can tell some homes have been rehabbed the past year or so. On a good note most the notorious troublemakers are either, old(50 years+), dead, or prison at this point. The "Number Streets" have such a bad history locals will probably stay away.  Even people feeling adventurous.  Of course the areas closer to MLK and Grand River are more desirable. But it falls and very quickly.

Did you purchase the materials? Don't let contractors purchase stuff.  They offer to paint at $75/rm they buy Glidden Paint, buy the better stuff.  Buy mid-grade stuff. Don't buy $.99/sq ft tile, buy $2-$3.  Everyone is in it to make money.  Everyone cuts corners to "manage expenses".

Also, I have a duplex in Islandview I bought in 2016 for $600.  I've been letting it sit.  Well I went by the property this past weekend for the first time in 4 months. It appears several people went to work on my street and rehabbed their houses.  Good for them! So now I am moving towards funding my project.  This is why locals are "wary" of your strategy.

You are buying a home for $70k in neighborhoods where homes are being bought at tax auction, land bank for $500-$4000.  Lets be fair and say $10K.  Then some rehabber is putting $20K-maybe $30K of bare bones materials and labor into it. Then because they are so "knowledgeable" they place your tenants (for a fee of 1 month's rent), then provide property management services (another $100/mo).  Then of course the property they rehabbed from "top to bottom" needs repairs. New window might run $400 to buy plus install (really costs $300).  Your appreciation will come in 3 years time, but if things go sideways remember the listing fee is 6% to unload, the end buyer will surely be investor and not retail...so yea that will get fun.

Historically this never ends well for the investor.  You have assumed all the risks. Even if you fire your PM, his group has pocketed a good $50-$70K of your money in the process within 3 years. We all understand people on the coast have more money due to salaries, and HELOCs that they can borrow against to fund these ventures.  But sit back and really think. Why would numerous of locals pass on this deal and it comes to you?  If you say your cousin, or friend from college plugged you in, then sure.  But $70K with light rehab ($6k-$15K), you are paying nearly double what someone local is paying.
I hope this works for you because I root for my city, but please be careful with who you trust.  This is a hands on market.

Also, your reasoning, is nice and all. Its standard "Opportunity Detroit" marketing blotter (UAW is fighting tooth and nail for $28/hr on strike right now). Even with the Big 3 Autos moving towards EV and autonomous vehicles thats going to decimate unskilled and skilled labor wages locally.  Next, component parts for EV are much less than internal combustion engines.  Those are made by the suppliers.  The whole supply chain will be disrupted by EV. Delphi, Visteon and numerous other major suppliers are shells of what they were even 10 years ago. IDK, what pricing you are expecting in rents but median household income in Michigan is $54K = $170K for home values or $1500/mo for rent.  Do the math, not a lot of room to wiggle.

Good luck

I bought a property in an affluent suburb of Metro Detroit recently. It was zoned for 2 units, it has been operationally 3 units for 18 years based on utility records (DTE Planning Department keeps extensive records).

I performed extensive cosmetic renovations on this property. House turned out pretty good.  The city, neighbors, seemed to leave us alone...Then we posted our home for rental.

Well, I assumed wrongly that 3-units means hey 3 families, and who cares. Esp since ALL the properties are 2 unit+ in this neighborhood

Well I was wrong...

I basically set a new market for the area, proving there is a place for "luxury" rentals. I raised the rents $500/month/per unit. Well as soon as I listed the property things got weird...

I would get calls asking "Hey is this Christian at (insert address), how many units you have available?" I would say "3", which one do you wish to see? They would say I want to see a unit.  I would say meet me in 30 minutes..no show, call the number back goes straight to voicemail.

I would receive phone calls asking if the property was for rent, I would say "yes" they would then hangup.

I would receive inquiries by email, again a simple reply of yes, and income requirements/move-in guidelines. The person wouldn't respond or say they were not interested.

I would get inquiries from Real Estate Agents by phone or email.  They would then not respond or if I did get them on the phone, they would say they don't want to see the property.

The real kicker was I would get calls saying "My parents are downsizing" or "my kid is moving back in town from out of state". I believe all leads are potential leads.  Then I would meet the people, and they would would start asking very probing questions "How many water meters are on this building? is it split at house or inside?" "How old is the furnace? How old is the hot water tank, isn't it (insert some newer technology)". Any single of these questions not a big deal,  but several people came through asking about infrastructure related setup of the property.

I would answer the questions and then after 1-2 days follow up and they would say "Oh we are waiting on a closing date, or transfer date".

So I figure I introduce myself to my neighbors, or talk to people walking down the street.  Tell them my name, give my contact information, let them know to call me if there are any problems.  Very eye-opening conversations:

General conversations I have had in the last month

"You buying that property is lowering my property values".

Another person said "You think you just come here and list rentals for all that money and people won't get upset? People see what you did online, tenants are asking questions".

3 people were ecstatic renovated the property because it was in disrepair, with broken windows, unsanitary living conditions inside. The previous owner refused to do maintenance, and subsequently only certain types of people would live in such conditions. Which greatly disrupted the neighborhood.

I was told I would let someone move into the property then "Their nephew would want to attend the local school system".

If I couldn't rent for the money I wanted I would rent "Section 8" to get more money, than the going market rate.

I had a complaint that by me fixing my property up, the City is now on their back about their's.

Then all of a sudden I started getting calls from the the local city, saying the house is zoned for 2 units and you have 3 units listed. I stated well there are 3 meters. They say they have no record of that which is non-sense because the meters are on the outside of the house. Its impossible not to know. Mind you I cross checked with the utility companies and service records for 3 separate units dates back since 2001.

I flatly asked the city and couple neighbors where was their concern for zoning, and quality of life when a house had numerous broken windows on the front of it, or when there was a city inspection performed the basement was so filthy and had so much debris the inspectors could enter the basement. And why didn't they remove the tenants from the property then? But now, everyone is worried about zoning, laws, code, etc.  I said why would I dump $100K into a house to then rent to "low-income" people in a census track with a median household income of $85K?

I pointed out "The previous owner behavedly badly for 20+ years, now you are coming after me when I'm fixing the problems". Why didn't you go after him.  No one at the City or neighbors can give straight answer.  They are hiding behind "code", once I bring this issue up.

The kicker is I see several properties with 3 meters, I know landlords have more units than zoned.

I also pointed out how is have 6 people living in 3 units more disruptive than 8 people (2 family of 4) living in 2 units? That was after someone said that I would have "20 people living in that house".

So in this rant...

Has anyone dealt with neighbors like this?

Has the neighbors than banded together to start a whisper campaign against you?

Then called the city to have them come after you?

Lastly, am I took close to this situation to think clearly? Am I in the wrong? I am considering retaining legal counsel to fight.  If this is about "code" then okay I am wrong.  But I clearly see that this rule has not been in enforced or equally enforced. So is it really a rule?

I see this issue as a bunch of neighbors who have ulterior motives, not about tenants.

I have a prospect who was a strong candidate for a 2b/1ba house on Detroit's Eastside in EEV.  We offered another prospect.  Prospect can afford up to $800/mo.

Please message me for details. Background check completed and income verified.

 This happened outside the city of Detroit

Here in Michigan, I've ran into an issue of a 2 unit that has been functioning as a 3 unit for 19 years. It has separate meters. I bought this spring, and began renovating. When I went to rent, several neighbors called the City and reported me.

They claimed I am devaluing their property values. Not remotely the case because of my investment then raising rents $500 / unit. I also refused to accept Section 8. They also made comments I will rent to dozens of people, or rent to someone and allow their "nephew" to attend school in the district.

Another person said it wasn't fair for me to make more money than them and I just bought there.

This property sat for at least 3 years with several blight violations, that I have addressed. It appears several neighbors have started a whisper campaign and are now using the local building enforcement to stop me from renting period. I told the building inspectors I have no issues bringing things up to code, but I find the property owners concern around my new property disingenuous considering how long the property operated as 3 units, had 3 meters, and the numerous violations that were unaddressed. This property sat on the market 5 years, and several people tried to buy it, but we were willing to pay more money to the seller. I estimate hundreds of people had been inside the property between all the sales attempts. I know several neighbors were aware on the interior condition.

Based on length of operations can I request a variance? Its obviously was operated as a 3 unit and zoned a 2 unit. But going on 19 years, I was able to verify with records from energy company, this is surely a grandfathered issue.

Here in Michigan, I've ran into an issue of a 2 unit that has been functioning as a 3 unit for 19 years. It has separate meters. I bought this spring, and began renovating. When I went to rent, several neighbors called the City and reported me.

They claimed I am devaluing their property values. Not remotely the case because of my investment then raising rents $500 / unit. I also refused to accept Section 8. They also made comments I will rent to dozens of people, or rent to someone and allow their "nephew" to attend school in the district.

Another person said it wasn't fair for me to make more money than them and I just bought there.

This property sat for at least 3 years with several blight violations, that I have addressed. It appears several neighbors have started a whisper campaign and are now using the local building enforcement to stop me from renting period. I told the building inspectors I have no issues bringing things up to code, but I find the property owners concern around my new property disingenuous considering how long the property operated as 3 units, had 3 meters, and the numerous violations that were unaddressed. This property sat on the market 5 years, and several people tried to buy it, but we were willing to pay more money to the seller. I estimate hundreds of people had been inside the property between all the sales attempts. I know several neighbors were aware on the interior condition.

Based on length of operations can I request a variance? Its obviously was operated as a 3 unit and zoned a 2 unit. But going on 19 years, I was able to verify with records from energy company, this is surely a grandfathered issue.

I bought a property on land contract.  Renovations are going, and there have been some hiccups.  I have a 3 year note at 6.5% and a 25 year amortization. We have a monthly payment of $1750/mo and it reduces the principal.

During the taking inspection period and taking possession. there have been some items directly attributed to the previous owner that caused some problems.  Such as:

• He had no security deposit, personal information, or payment history on tenants (tenants said he did).  Tenants said they paid he said he hadn't been paid but these tenants were there for 3 years.
• These same tenants abandoned the property once I took possession and introduced myself
• On multiple occasions during the purchase process the tenants cancelled access to the building, showed up late, or said we couldn't see certain places due to privacy.
• These tenants because of their abandonment and repeated sporadic contacts delayed renovations because I couldn't remove their property. For instance saying they would come Tuesday not show up, then call Friday to come Sunday not show up.
• Once I removed all the tenants items I found several mattresses covering sewage openings (cleanouts, drains, etc) that concealed the sewage overrunning along with bottles of bleach and freshener. Basically, the basement flood due to storms, so the mattresses soak up the water.  It concealed the evidence.
• Lastly, the garage (3 car) was rented to a storage company, we were going to throw items out called the previous owner.  He stated that wasn't his stuff and he receives rent for storing the items.  That was the final straw.

So instances of money collected post sale, purposely concealed issues on the property, and not enforcing the tenants to provide access needed to the property and it appears he maintains a relationship with said tenants, it appears like he was in on the caper.

Can I request a lower buyout amount.  How do I approach a renegotiation of the buyout. Of course we agreed to a price and legally we are bound to it. But what are my options? I'm looking for a $10K reduction.  Also, I have 32 months left on a 36 month LC. Can I use leverage of cashing him out faster(by Dec 2019)?

It was still a good purchase, but had I known some of these issues, I would pushed harder for a price reduction.  Also, the previous refused to evict prior to our possession of the building.  We had requested the building is empty on possession.  Which all the tenants were out but one unit. So could we claim non-performance?

with that size of mortgage, I would be trying to move, and then invest in RE.

Otherwise, just put your money in an INDEX Fund