All Forum Posts by: Joshua B.

So the issues I'm having is how the heck do I comp this type of property? I am looking to wholesale it so would a potential landlord want to rent it out per room? The other issues I can see is the fact that he has just a verbal month to month lease. No background checks or anything.

With a bit of work getting the people leased up and such this thing could cashflow really well! Just need some input.

Thanks, BP peeps

Be very careful over by EMU. Prices change very quickly block to block (I assume you know this as you're from Ypsi). Not a lot that goes for over low $200s no matter how big.

But if it truly is cash flowing $3k/month and you can get it for $150k or less, seems like one you may want to keep.

Comps generally would be on an income basis for this type of property. I don't know Ypsi but I'd assume the cap rate you'd want to shoot for there would be 10+%.

0 Votes

Ann Arbor, Michigan

Originally posted by @Chad Lamb:

Originally posted by @Joshua B.:

Originally posted by @Chad Lamb:

Hey all!!! Thanks for your help ahead of time! So my question is about the benefits of using a commercial loan for a SFR. Here is some information on my situation.

We are nearing the end of the rehab on a SFR with the ARV of 50-55K and are looking to refinance. This property is in Michigan, all banks in this area do 15 year mortgages around 5% interest rate for rental homes with traditional mortgages. When speaking with the banks they are pushing us to explore commercial loans. Their terms, depending on negotiation, range from 5 to 10 year balloons (possible renegotiations of terms after this timeframe) and 15 to 20 year amortization schedules with 75% LTV.

Okay so now that I'm done blabbing, do you see benefits to using commercial loans on individual residences? Building rapport with the lender? Positioning us to move on bigger deals more quickly since we have a track record? Am I missing something important?

Thanks for your help!!!

I have a 4-unit under contract in Ann Arbor with a locked-in rate of 4.625% for a 30 yr conventional. Could've probably gotten it down to close to 4% for a 15 yr. If you can go conventional, you should absolutely do it.

Honestly, i'd be surprised if a bank was even willing to do a commercial loan on a property with a $55k ARV since that's end up being such a small loan assuming a 75% LTV.

I would definitely do conventional if they offered a 30 year mortgage. Our cashflow would be amazing! I'll push for it more. We are in rural Michigan, 60K houses all day. With that, the banks are used to it out there. Who does your financing out there??? We plan on checking out Ann Arbor soon! Good luck with your 4-plex!

Lake Michigan Credit Union

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Originally posted by @Benjamin T.:

Hello -

I am a bit of a newbie here, I accidentally got into rental properties when I moved away from Ann Arbor and couldn't get the price I wanted for my house. It is now my only rental, but I'm interested in more.

Anyway, the house has low water pressure and the tenants this year complained. The water works, it is just if the washer is filling up or something, the faucet will be very weak for those few minutes. Roto-Rooter says I have a galvanized water main line that needs replacing, and after checking with the city of Ann Arbor and reading city code I find that I am responsible for this even though it is before the meter.

The first estimate to fix this came back around 7k. I am working on getting more, but have two questions:

1. Does anyone have a good excavator recommendation in Ann Arbor?

2. Am I obligated to fix this right now? Or at all? The water works and has always been low (even when I lived there), but these are the first tenants to complain. I want happy tenants, but these ones are likely gone come summer as it's a college rental. The next ones might not care at all. At the very least, it would be a lot easier to take care of after the holidays for both fiscal and travel reasons.

Any insight at all is appreciated, thank you very much!

The guy who did my inspection in Ann Arbor said Olde Town Plumbing in Ypsilanti is very reasonably priced and does a good job. I've never used them myself, though.

http://oldetowneplumbing.com.s59565.gridserver.com/services/

1 Vote

Originally posted by @Chad Lamb:

Hey all!!! Thanks for your help ahead of time! So my question is about the benefits of using a commercial loan for a SFR. Here is some information on my situation.

Thanks for your help!!!

Honestly, i'd be surprised if a bank was even willing to do a commercial loan on a property with a $55k ARV since that's end up being such a small loan assuming a 75% LTV.

2 Votes

Originally posted by @Keri Middaugh:

This thread popped up when I searched for info on Adult Foster Care. I love that real estate investors are talking about kindness and providing high quality housing (as opposed to just the bottom line). Also, it's good to discuss the level of skill and pay required to care for a vulnerable segment of the population (hinted at in a previous comment).

I am in southeast Michigan and just starting to learn about this type of home, and eager to learn more, and possibly partner. Please PM me, if you'd like to discuss further.

There's a building in Farmington Hills for sale that's already set up to be assisted living. I think it could be turned around quickly for someone who has experience in that field.

Also, happy to see that the assisted living buildings at Geddes and Prospect are finally being put back to use. Looks like some renovations are under way.

0 Votes

Originally posted by @Gary Cobb:

Hello BiggerPockets, I’m a real estate investor/landlord. I’ve been buying and rehabbing homes for about 5 years now. I own 16 homes ( 22 doors) I have about 12 rented out and about 7 left to rehab. Ok, what I need is good reasonably priced contractors working near the metro Detroit, Michigan area. Contact me if serious, I’ve got plenty work. Thanks, Gary Cobb

@George P.

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Way to go @Keith Jourdan! Those numbers are awesome. Plus, seems like you won't have to put any money into reno since the owner is used to what he's living in already. Best scenario there is. Totally agree about finding the unique/messy off market deals. That's my approach too.

You've got me pumped to go get more. I'll be closing on 4 units in Ann Arbor some time in November, but I've gotta bit of work to do if I'm gonna catch up to you.

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Originally posted by @Brock Hoffman:

Do you need your RE license to buy and sell RE and make a profit off it in Michigan? If I would rather use a realtor for veiwing, buying and selling properties anyways, is it at all beneficial for me to get it? I would rather not get it, but I want to make sure I can still invest in any property!

Thanks for the help!

Brock

Good real estate agents bring three things to the table (#1) relationships in the area with other agents and sellers/buyers, (#2) negotiating skills, and (#3) pricing knowledge.

Now, if you're young and new to RE, you probably won't have #1 right away. You probably won't have #2 either, though it can be learned over time. However, if you're diving into RE investing, it's a massive mistake fnot to have #3 from the get-go. You should be able to talk comps and pp sqft with your agent by the time you're seriously considering buying something, and the agent's pricing opinion should be more of a sanity check than anything else. A "good deal" can vary greatly depending on what the plans for the property are.

It's probably a good idea to hire an agent for your first couple deals for items #1 and #2; but do not be overly reliant on your agent's pricing knowledge. Once you feel more confident with regard to #1 and #2, and your pricing knowledge is solid, you can ditch the agent and save some money.

1 Vote

Absolute Title is good in terms of price. Not sure how they are in terms of non-conventional types of closes.

1 Vote

Ann Arbor, Michigan

1% is all over the place in Michigan. Heck, thanks to @Sarah Lorenz, I'm under contract on a small multi in Ann Arbor (probably the best rental market in michigan) that's seriously under market rent and it's 1% even before I bump the rents up.

0 Votes

All Forum Posts by: Joshua B.

Joshua B. has started 28 posts and replied 287 times.

Post: Help on deal analysis

Post: Commercial Loans for a SFR??

Post: Low water pressure in Ann Arbor - Excavators or Advice

Post: Commercial Loans for a SFR??

Post: Turning a property into an assisted living home.

Post: Looking for contractors in the metro Detroit Michigan area.

Post: #20 rental property closed!!

Post: Michigan RE License Rules

Post: “ Investor friendly” title companies in Washtenaw County?

Post: First purchase advice