All Forum Posts by: Jonathan Weinberger

Hey guys, 

So I'm heavily investing in SFH's throughout the Detroit markets. I've invested around $1.6M of my own money with capital partners interested in Real Estate matching $ for $.

I'm about to be 25 doors under management, and I'm looking to significantly scale this further. Here's a real deal that's closed under a capital partner where I matched $ for $. 

Year 1, cash on cash return at 9.46% 

Over the next 10 years, here are the projected overall returns with 5% year over year rent growth, 3% year over year appreciation of the property, and calculations for tax savings + debt pay down: 

I'm a buy and hold investor. My capital partner for this deal, we're $ for $ match. I'll never sell this property. 

$ for $ match is easy. I'm putting in my own money, which I am happy to do. In my network, capital partners are offering $500k match for match. 

The bank of Jonathan is drying up. 

I'd love to know how you would present a deal like this to a capital partner where I can be $0 in the deal. And after 5 years, I somehow own 100% of the deal. I figured this would be an exciting post to brainstorm how others JV on deals. I've heard stories about people saying because they source the deal and manage the properties, they get 50%....

I want to know how I can source the deals, manage the team, the properties, and in 5 years, I walk away with 100% of the property and my initial investment in the deal is $0.

What terms do I need to offer? How would this deal be structured?

If you have resources you recommend on using OPM -- I'd love to see them!

Additional info to help the discussion: 

Rent growth year over year:

Appreciation Growth Calculator (Conservative 3%)

 

Scenario: 


Total cash in deal from Investor: $29,010


Investor Contribution: 100%
My contribution: 0%

Goal: Figure out how in 5 years, I now own 100% of this property. Investor needs to somehow recoup their initial investment of $29k + whatever would have made this deal worth it for them.

Heck, maybe I could just do 50/50 partners and hold the properties for life together and still be $0 in the deal. 

Discuss :)

My advice Mike -- Get a team and interview property management groups. Find some folks you vibe well with. I've spent nearly $2M in detroit. You can read my previous forum post to explore my journey. 

Find the people on the ground you vibe well with and get started. Send me a dm if you'd like to chat.

 I'll provide an end of year update on my portfolio. We'll see how it does :)

 That's awesome, David! Congrats on 100! That's my near future goal. My experience, we're investing in sub 100k markets, expect more than normal wear and tear. Proper vetting of tenants is important. 

 affordablehousing dot com! No shortage of tenants. Also fb groups dedicated to section 8. People post their voucher amounts and what they're looking for. Inspection process can take 2-3 weeks. Depends on the housing authority and how backed up they are.

I'm seeing $1200-$1600. It depends on the voucher. You can check the FMR by zipcode. Each voucher is different. Some section8 vouchers only cover 50% of the rent, while others include 100% + utilities! (Those are the ones I target!)

 Thanks for the comment! Detroit brick homes were built like tanks. Outside of heating issues, I don’t expect much. I check for solid plumbing, electrical, and foundation issues. 

The rest economy of scale takes care of.

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! 

Alright! Long awaited update. I promised on the 5th, I'd let you know how the portfolio stabilization is going. If you haven't caught up, here's the tl;dr - I acquired a bunch of properties last year with a turn key company called Own It Detroit. We got solid properties, but questionable rehabs and really crappy tenant placement. After a year of not seeing any cash flow and rent excuses, I terminated them and wanted to shed light on the experience. 

I interviewed some property management companies in the new year, and like you would expect, most are just basic intro conversations, etc. I spoke directly with Drew Sygit - the founder of LogicalPM and we spent a good portion of 60-90 minutes chatting about the current portfolio, the issues I've faced, and how his company plans to solve it. 

We agreed on a section 8 tenant stabilization plan, and after their first full month of taking over, here's how we're doing: 

Total Properties: 11

Total Rent To Collect: $10,240

Historically, under Own It Detroit (Mutual Property Management) -- monthly totals of rent collected on the first and before the 5th was typically $1200 

LogicPM has inherited tenants who for the past 6-8 months were told as long as payments come in before the end of the month, partial payments included, you're okay. They created a safe space for my tenants to screw me lol 

On the 5th of last month, we sent out seven 7 Day Notices. For the first time, our tenants learned that I'm not a charity. We went from a historic less than 50% collection month over month, to our highest collection of 80% in a given month.

Today is March 6th and we collected 32% of the rent - A major increase. Today, without asking, LogicalPM has auto sent 7 day notices to tenants. We have an eviction court date scheduled for one, and hopefully more will follow. 

I can't fault LogicalPM on not being able to collect 100% of the rent by the 5th. They didn't place the tenants. But they are doing a good job at enforcing collections and trying to improve it. What LogicalPm has been excellent on is their communication. I receive almost daily communication on the status of my portfolio, units, etc. They're in the process right now of doing video inspections for me on the homes, and they have been quick to inform me on any issues, etc. 

Right now, I'm annoyed with market tenants in detroit. I've come to find out that Own It Detroit (Mutual Property Management) put people with below 600 credit scores in their clients homes. Quite annoying lol 

The plan moving forward is Section 8. Section 8 is guaranteed income on the first, allowing me to scale my business. Right now, I'm sitting on refinance offers to cash out $600k+ and I'm hesitent to do so because the rent collection just isn't stable. 

In the meantime, I'm  enjoying the appreciation. I have a property we picked up for $65k all in, and It's currently under contract for $90k. I'll use that to re deploy into another rehab project down the line. 

Here's what's Impressive: 

Own It Detroit had one of my properties listed for rent for 90 days. Couldn't get a tenant. This is also the property that took 4 months to rehab because I think they forgot about it... 

Magically, LogicalPM took this property over, went inside, cleaned it up, took new photos, and had this Rented within a WEEK! (To someone with 740 credit score!) and priced $200 HIGHER! 

Extremely impressed and willing to give this market tenant a shot while I section 8 the rest of the portfolio. 

That wraps up my update. This will be my last post using Own It Detroits name. I did this to shed light on my investor experience and to help steer other out of state investors into making better decisions. I received many DM's about how my post have SAVED them from working with Own It Detroit and it feels good. 

My advice - Avoid Own It Detroit. But if you're wanting to rehab a cheap property, Do 1 deal with Own It Detroit.. If it doesn't cash flow positively within 3 months, avoid them and find someone else. I dove head first into them and now I'm fixing my entire portfolio.

I'm experimenting with a few other groups in Detroit right now for both turnkey buying move-in ready units, rehabbing, and tenant occupied. I'll provide updates on that experience after some data has come through. 

Send me dm's if you have questions about getting started in Detroit. Happy to answer any questions you might have. Also welcome to comment below and I'll respond with full transparency :)