All Forum Posts by: Christian Hutchinson

I suggest you find a money partner or a private lender, you are sitting on a serious goldmine.  I'm talking with about $100-150K you will have a $400-$700K property.  I'm talking about the Works in terms of renovations.

Or maybe just spend $50-$70K and you have a property worth $300K and you can hold it for a rental at $3k-4K a month.

If you dump in the 100K sell, take the money and run, and if you put in half that just sit and wait, and collect your money for the next 15 years then sell it.

Also, maybe call some medium-size construction companies they might be interested in partnering with you, they do the renovations with the idea to sell it. For them its one part advertisement, second part it gives them some work during the slow winter months. Get a RE Lawyer to help you facilitate the deal.

Whatever you do DON'T list this property on the MLS for $200K and hope to get any offer. Unless you have no interest in making money. The fact you are posting makes me believe you might try to maximize the potential of the asset.

 Majority of apartment buildings in many big cities that rent to market-rate tenants do that same.  They have dusk-to-dawn lights on their buildings, premises, and parking.

I get it may seem like much, but security and lighting costs maybe $1200, for $300 more you stop criminals from compromising the physical security of a 6 figure asset.

Trust me its worth it.  I do that in nice neighborhoods or bad ones.  MFH housing has the risk of having lots of activity because of "more" people living there.  Some lights and video cameras stops lots of problems before they ever start.

Also, add in motion sensor lights and/or dusk to dawn lights.  Dusk to dawn on traffic area( front yard) and entry points. and Motion sensors on non-traffic (backyard and between houses where there is no door/driveway).

In case the wires in steel so they can't be cut easily.  Also, put a camera on the sidewalk infront of your house and any entry point.

This will cost you maybe $1500 with 30 day DVR backup.  You will make your money back in tenant quality, and lazy criminals trying someone else's property.

until you are $5M liquid you are not rich

Portland is a growth market, Detroit is stagnant.  I love my city but this like getting a job offer in Nashville, TN versus Cleveland, OH.  Cleveland is more like home, but Nashville has way more to offer opportunity wise.

Biggest thing Metro Detroit has going for it is if you land $80-$110K year job (and there are a decent amount depending on career field) you can pretty much live like a king.  Now culturally its lacking, Hamilton is just making its way to Detroit Theaters and it was popular 4 years ago. A flight to NYC is $300 or you can drive to Chicago in 4.5 Hours.

We actually target properties once they are 60+ DOM.  Typically the Owner/Agent realizes the price is a little too high, neighborhood not just right, house missing that certain thing. They had 1-2 price cuts.  Most likely retail buyers cant/wont buy it so its investors.  Plus, closed sales from the time they listed start become public.  Thats the real ammo, you have data.

I put in an offer of a 3 unit property in a Detroit suburb.  We put in significantly less than list price, about $50K less, list was 299,900, accepting cash, fha, va, conventional, land contract.  We called the listing agent directly to make the deal.  He lowers his commission, he is working the seller to take our pretty fair, but lower than what the seller desires offer. The property will have some appraisal challenges in current condition, plus our funds are limited (less than $80K) we can put towards the deal. Our intial offer was $215K, he refused to even counter our offer.So we offer a 2 days later:

• $250K purchase price
• $50K down
• 3 years Land Contract with balloon at 36 months, with a 30 year amortization
• 7.25% rate
• We cover taxes, insurances, water, etc

He said he would think about it, that was Jan 12...

14 days ago, the listing Agent schedules a call, for me to speak with the seller directly to negotiate the deal, seller was stuck on $270K, and wanted for me to come up.  So after pleasantries I get right to it.  I tell him your property is worth x dollars because of this data, there is no current comps, but there is a direct comp selling for $200K more than yours 1500 ft away and it went pending 3 days ago.  But its in perfect condition, completely upgraded, and 500 sq ft larger. I tell him your place though up to code is visibly undesirable, beat up interior wise, and thats why this place hasn't sold in 6 years (been on and off market without sale since 2013) you been trying to sell it. He became defensive and said

"I use to get $1200/mo for the lower unit". - Seller

And I fired back "Yes you probably did 10-12 years ago and you had nice reliably families, now lets be honest I saw your tenants not from the top echelons of society. You probably get $900-$1000 per month and you are barely getting it I bet at this point. I don't need to see your rent rolls.  The market has passed you by, you selling because its not getting the money its use to the tenant quality is down.  You don't have to take my deal but when that sale down the street becomes public in 90 days, the next offer you will get will be a string of $150K-$180K Cash Offers, and you are going to come back to me asking for this deal and my war chest will be empty on another deal.  One investor to another you are not going to get your price and everyday you don't take this deal you run the risk of losing $50K or more, from what I'm offering you, no one is dumping $300K cash into this property (Offering $230-$260K cash then doing $40-$70K in rehab) because you need margins to pull your money out via a refi".

He said "Who are you? He asked his Agent if we are serious/legit" The agent confirmed we sent him a listing of our property holdings plus our cash balances there is no reason to believe we are not serious. He then explains our plans are to renovate the property to go to $1500/mo on each unit because thats what renovated places go for now.

He tells the agent to send him some comps because he believes he is getting the raw end of the deal.  I explained he gets $1300/mo, $1100/mo being interest so he essentially keeps a unit for 3 years, gets $50K right away and if I screw up, or a market downturn hits(causing an inability to refi) he now gets a fully renovated property with premium rent and a desired property to sale. So he is insulated from risk, a title company can hold title when we close the sale too, if he wants another assurance.

Over the next 4 weeks the seller does not accept the offer.  But instead slow walks warming up to the deal. I have a construction partner, lined up to do the work, and 6 times the day of or day before the "tenant" decides we can not have access to the property(sick, caught at work).  The construction partner needs to give me the final numbers on the job, we have a rough estimate, but our first visit was done in the evening at an open house. So the roof, kitchen plumbing, bathroom plumbing, etc couldn't get checked out.

The tenant was suppose to be out Feb 1, but finally its suppose to be today. Just called and refused entry.  I told the listing agent this is done, I can't wait any longer. It makes me look like a fool, and unreliable. I told the seller and listing agent as much. So I told him I am pulling this deal. The listing agent is trying to get me to reconsider. But I view this as if the seller wanted this deal he would have accepted or told the tenant to grant us access (I understand it was a long-term tenant of 7 years, but come on)

Am I offering a fair deal, or this a situation that the Agent sees a big commission check on both sides of a potential deal and is a pushing this on Seller, and the Seller is playing this smart? Waiting to the house is completely empty and maybe he gets a buyer who will offer his price. Also, am I being emotional pulling the deal. Lastly, was it a bad idea to speak directly to the seller and be transparent of my intentions for the property so they can understand my point of view and reasoning for my offer.

The typical cycle is:

Homosexuals/Alternative Lifestyles, Artisans, Prime Age Service Workers, Graduate Students/New College Grads, Young Families, Empty-Nesters, Regular-Families.

Typically the time to jump in Service Workers going to Grad Students.

Didn't do the deal, the debt service was too high.  We would need 8%-12% appreciation every year for 5 years to justify the carry cost and sale.

I rekey every other tenant, but I also use upgraded locks so you cant just go to HD, you need a locksmith to get a key cut.  So I issue the key, and if they get a locksmith to cut a key for $50 good for them. For them to hold onto that key after they move out (they return the 2 issued) means they were a criminal anyway and they would prob leave a window unlocked to break in if they could.