All Forum Posts by: Jamie Parker

Hey guys, 

Wanted to drop this deal I just closed. I've been chatting in DM's with so many who want to get started with investing in Detroit. Doing things a bit different now. I've learned my lesson about relying on turnkey acquisition & management. Got to separate them. 

Detroit is a tough market and you need boots on the ground who know what they're doing. I've been working with a few partners on the ground, and we're currently under contract on 9 properties and I'd like to share one of the deals with you here.  You may need to click the images to enlarge them.

Summary of the Year 1 cash flow: 

The details: 

$82k purchase price, 25% down payment, 25% reserve for maintenance, vacancy, and management. And of course factoring in insurance and taxes. This property is a DEAL!!

Here's why I love Real Estate. 

This deal is a year one, cash on cash return of 23.71% 

Let's now factor in 5% rental increases, guaranteed by section 8 as well as 3% appreciation year over year. (That's conservative. I have a few properties that have increased 30% in the last year), and of course the tax savings + the debt paydown from the federal government or tenant.

Overall returns are insane: I'm a buy & hold investor. I'll never sell this, but let's look at the year by year breakdown over the 10 years:  

For $24,000 -- year 1 is a 33% overall return. I can't think of any other asset class where you'll find gains like this. By year 5, I will have a 100% overall return on my initial investment of only $24k!

What's even more exciting, is I'm closing on 9 more just like this! The past year, I've learned market tenants in sub 100k regions are a pain in the ***. I have a few good ones, but with Section 8, rent is guaranteed on the first of the month. I can continue scaling my portfolio with confidence.

Any questions about this deal? Ask away!

If you're thinking about the detroit market, how to get started, and you're looking to buy your first Section 8 deal, send me a dm. Happy to get you started! 

How do I find wholesalers to make deals 

@Jamie Parker  I would start talking to local banks/credit unions that do investment property construction loans once you have identified the project and have some details.  Just asking about vague concepts is likely to get no good responses (banks might think you're just dreaming).  You will need to big picture things like, house area/neighborhood, size, costs, timeframe etc. 

I think most banks will require you hire a GC/Builder prior to closing the loan.  You have not mentioned all your numbers, but if you pay cash for the land, you should be able to use that as part of or all of your required equity in the project.  Unfortunately, building houses is very cash intensive.  

Lastly, I personally think right now is a hard to build houses.  High interest rates make the costs of the construction loans very high (~10% at a bank) and with mortgage rates so high, there is little buyers out there which could lead to long holding times.  I build to rent, and currently find it very hard to make the numbers work right now with new builds in my area.  In addition to the rates, material and labor cost remain very high.

@Jamie Parker The answer to your question is money.  If you need to borrow money to build the project, how will you get the financing.  With no experience and not crazy strong personal finances to pledge to the bank/lender, its doubtful many banks/lenders will provide the construction loan on a spec build.  Simply too much risk for the bank.   

If you can do the finances, simply hire the builder.  If not, then you will need to find a builder that has access to capital to fund the project.

Personally, I would never partner with a builder, I hire them.  That puts all the risk and all the reward on me.

Currently most banks want 25-30% of the total costs in cash/equity/downpayment.  Most will take the value of the land as part or all of the cash/equity/downpayment.  I don't know of any banks any more that will do a construction loan on investment properties based on completed value (i.e the finished value with the built in equity).

In my experience, a hobbyist builder (i.e. you), would want to hire a GC to build their project. If no construction lender can get comfortable with you as the builder (aka principal, sponsor) regardless of you hiring a well-qualified GC, then maybe the solution is to give some piece of the equity to another builder/principal who would oversee the GC, and whom has the track record to satisfy the lender. Not sure if you can easily find someone like that or not, but that's the only solution I can think of. The lender may want that co-GP/experienced builder to be a guarantor on the loan, too, which they may nor may not be comfortable with.

Hey guys!

I am under contract for 3 properties, however there is one thing about it, one of them, its located in South Memphis zip 38109 (Mallory area).

I know I know I live in Memphis, I know that the area is bad, however I am feeling that the market it pushing investors towards the hoods of memphis because it is getting expensive (even Frayser is getting crazy expensive which I find crazy), I did a few visits in that specific neighborhood and I honestly didn't feel it was really really bad as the rest of South Memphis, I am really not worried about tenants paying on time in my rentals because I always focus on Section8.

Was wondering what are peoples insight in regards to investing in those areas with section8 tenants? Would love to hear someone experienced enough with section8 in the bad hoods to give some opinion? 

TIA

Hello, I'm going to be closing on my first SFR investment property soon via an all cash deal. After closing I'd like to do a delayed finance to use the cash for a second property. The property is in Memphis TN. I am open to any lender recommendations from those that have done the same. My thoughts are to wait until the May timeframe since I believe rates will drop a bit by then and I'll still be within the 6 month threshold for a delayed finance transaction. Is there a difference between a delayed finance or a cash out refi? They are ultimately the same thing but I know that many lenders require seasoning. Would I be better off waiting until the 6 month mark or later to do the refi? Is there a difference in rates or process? I don't have my second property picked out yet but will work with a turnkey provider once I have the funds. Any recommendations are appreciated. Thanks

Hello everyone. I recently purchased a two unit duplex about a month ago and I’m looking to connect with as many people as possible in real estate investing, property management and the making of a landlord. Please don’t be a stranger and kindly follow back! :)