All Forum Posts by: Joe Hammel

Metro Detroit has what 99% of Real Estate Investors want. Couple hundred bucks a door monthly cash flow, double digit ROI, and yes the prices appreciate and you build equity.

There are 2 types of people who dog on Detroit..

1. People who don't actually own property in Detroit

2. People who did it wrong and weren't able to execute.

If you do it right, it’s statistically the best market in the country for cash flow.

I cash flow $100k a year off 20 doors and have built a ton of equity in a short amount of time.

Purchase: $80k-$130k

Rent: $1100-$1500 (no rent control in MI)

1% rule: 1%-1.4% rule deals

ROI: 10-14%

Cash flow: $200-$300/door (after all expenses and budgeting for maint, capex, vacancy)

Appreciation: 3-10%+ (has been double digit for a decade)

Location: C+, B-

These numbers are based on the "sweet spot" in Metro Detroit. These are largely in the suburbs and some markets within the city. You can find higher ROI (on paper) here and probably in other cities…but the probability of actually collecting rent significantly decreases. Where these numbers are found, there is a very high rate of rent actually being paid.

We have over a dozen Fortune 500 companies just in Metro Detroit with huge Healthcare, Auto, and mortgage industry National footprints. Ford, Rocket mortgage, Beaumont hospitals and more. All complimented with Amazon fulfillment centers, google, and more tech manufacturing jobs.

The bad reputation of “Detroit” comes from OOS investors wanting sub $40,000, D class properties. We don’t buy those. We have found what works and repeat it as much as funds allow. Detroit is known as the highest rent to price ratio in the country…and we’ve found the perfect balance of price/location within the area.

Here is a picture of my portfolio...

coffeeclozers . com has some decent data to study.

Other than that, i think it heavily depends on your goals. 

Clearly i'm somewhat biased on the market, but Metro Detroit has been ranked #1 in cash flow for a long time. You just aren't going to find better, more consistent, more available cash flow.

I have 16 properties cash flowing over $100k a year here.

I have a few section 8 in my Metro Detroit Portfolio. Great Price/Rent ratios (technically #1 in the country...just saying lol) For real though, it has a very strong rental demand, low price to entry, plenty of jobs....and did I mention low price to entry? Just can't beat the cash flow.

$100k a year off 16 properties. Started buying 2019. Here is my portfolio for proof....

1. One strong argument to invest now, is that interest rates being "high" (relatively to the last couple years) has surpressed prices. So rates goes down, prices will shoot up even higher. However, if you buy now, you can (and should) just refinance the interest rate down the road if they're ever lower, and even just to pull out equity. I've closed on 6 (I think) so far this year and have 3 offers going out today on more to purchase.

2. If you live in an expensive area. The #1 strategy is to househack. Pretty much regardless of where you live. Buy a duplex and live in one unit and rent out the other. Or buy a house and rent out some rooms, etc. You can continue to use primary residence loans and do this every so often. The con, is that it's a lot of packing up and moving which most people (understandably) aren't willing to do. 

If you're looking for stronger CASH FLOW, then you would want to look at a market that has better price/rent ratios. If you have good boots on the ground for purchase and a good PM, many people have had success doing so. 

My portfolio of 16 properties cash flows $100k/year in Metro Detroit.

I have a few section 8 in my Metro Detroit Portfolio. Great Price/Rent ratios (technically #1 in the country...just saying lol) For real though, it has a very strong rental demand, low price to entry, plenty of jobs....and did I mention low price to entry? Just can't beat the cash flow.

$100k a year off 16 properties. Started buying 2019. Here is my portfolio for proof....

 Sure thing Mohamed, I sent you a PM.

My portfolio is in Metro Detroit. I cash flow over $100k with 16 properties...a few BRRRRs in there. They usually end up a little over $100k just to be in the locations that I want. I also tried the midterm route on a few. 2 of my multifamily units are furnished midterms. 

@Jose N.

Every method is used…I think a lot of others use electronic. We tell tenants the only method we accept is electronic. Payments are made through rent redi out landlord/tenant software. In my opinion it’s a pain to do it any way else.

Auto late fees. They can pay bank account or credit card.

I truly feel like it’s harder for them to not pay when they’re getting pinged with auto reminders every day and it’s showing how much additional late fee is getting tacked on.

@Adam Eckhoff

Hey Adam, I think for the most part the 1% rule gets you close. You always want to run the analysis with exact numbers budgeting for PITI, maint, cap ex, vacancy, PM, etc afterwards…..but you'll find that this rule often times gets you looking at the right types of properties.

We target 1-1.5% rule deals. Most of the time 1% doesn't quite cut it. But 1.2%+ does.

I have a 16 house portfolio that cash flows $100k/yr in Metro Detroit.

Clearly I'm biased on the location...living here and having a cash flowing portfolio that works.

But...it does work....so If I were you I would be using $100k to buy 3 of these…

Purchase: $80k-$130k

Rent: $1100-$1500 (no rent control in MI)

1% rule: 1%-1.4% rule deals

ROI: 10-14%

Cash flow: $200-$300/door (after all expenses and budgeting for maint, capex, vacancy)

Appreciation: 3-10%+ (has been double digit for a decade)

Location: C+, B-

attached is my portfolio.

It's kinda like they say...Real estate is a get rich scheme...but it's not a get rich quick scheme. (I'm "they")

BRRRR method is the best way to recycle the same money if you have no additional (or not a lot) of replenishing income from a day job. The ISSUE with BRRRR is that even in the best markets it dramatically reduces cash flow.

Here is my portfolio. It's no secret Detroit is the best market in the country for cash flow (That's fact, not bias), however, you will see in my portfolio that on my BRRRRs my ROI is great but my cash flow is very low. I've put most (rarely ever all) of my capital back into my pocket but that comes at the price of a higher mortgaged amount, and right now an 8% interest rate...sometimes really wiping out most cash flow.

The BRRRR method for cash flow can take years to decades to mature back into a cash flow giant.

Note: it's still the highest ROI method of investing...because if you only have $5k-$10k of your own money in a deal, it doesn't really matter if it's only cash flowing under $100 a month. But you have to REPEAT, ALOT.

Take a look at my highest cash flow property, 12 mile. Why is it my highest per door? Pretty much soley because it was my first. A solid deal in a great area bought in 2019 and rode the COVIC explosion up to $1700 a month in rent. That deal looked very "average" on paper in 2019. I have a decent amount of equity in this property at this point. I don't need the cash, so I'm just waiting on lower interest rates...knowing that when i do refinance it's going to kill my cash flow just like it does on all BRRRRs.

I think my encouragement, is to allow yourself to be patient. Getting rich quick, could make you do something that is closer to gambling than investing. 

Instead, trust how good of an investment real estate is, pick a solid market that cash flows with solid ROI, invest your money, pull your equity out if you want, and just let 1. Cash flow 2. Appreciation 3. Loan pay down and 4. tax benefits do it's thing.

After being pretty theoretical, here are some direct answers:

Here is a thougth on the HELOC....now i haven't thought through this a ton...but the HELOC is already like a mortgage, hopefully at a decent interest rate....you could buy 2, $125k houses cash (not really cash, but with the heloc money and no 2nd mortgage) it will cash flow a lot, plenty to pay the HELOC and still cash flow.

The $100k in cash you could finance 3, $100k houses each cash flowing like $250 a month or so...so there's another $500.

So in total you would buy 5, single family homes around $100k-$125k each with a couple hundred dollars a door cash flow. Maybe you were hoping for 10s of thousand of dollars a month cash flow...but if that was out there..I'd already have my money in it.

Best of luck!