All Forum Posts by: Kenneth Jenkins

Great overview.  Thanks, we have multiple entities and QBO has turned very costly as a result.  I will definitely be checking out REIHub.

Where are your properties in Detroit?

This is just a brief post to give some insight into the local maintenance costs in the Metro Detroit area.  Maintenance costs are a huge factor in the profitability, or not of any investment property.  A little background about me, I have just over 200 doors in my current portfolio and our company manages just over 250 doors for third party investors in addition to those.  We have seen maintenance costs skyrocket over the past 2-3 years and every case is different but here are some general guidelines for reputable (non-crackhead) investor level pricing in our area of operations:

Furnace and A/C replacement with lineset for standard 3 bed 1 bath bungalow. Licensed with permits ~$4,000.

Full replacement of all water supply lines and shutoffs from the interior water meter with PEX and an open basement.  1 kitchen 1 bath 1 laundry.  Licensed with permits ~$3,250.

HWT standard gas single family low efficiency without exhaust retrofit $900.

Sand and stain hardwood floors, natural stain $3 per sf.

Paint interior walls, ceiling trim and doors 3 tone paint scheme 2 coats $3.20 per sf (floor area cost includes paint)

Click lock LVT flooring install overlay inclusive of prep and quarter round $4.50 per sf (materials and labor)

Asphalt roof installation 3/1 - 800 sf bungalow with 2 layers of shingles - ~$7,900

Standard porch cap replacement with 2 new precast concrete steps ~$2,500

Used stove or refrigerator delivery and install $350

New stove or refrigerator delivery and install $HD model specific

Use this as a general guideline.  YES, you can get the work done for less than this on occasion, in particular if you are doing some or all of the labor yourself, not pulling permits, or purchasing stolen materials as a starting point.  If you get a quote significantly below the numbers above you need to ensure that the contractor will actually execute the work and perform it to the required standard.  For instance we have seen dozens of sand and stain jobs on hardwood at $2/sf that needed to be completely redone. 

Knowledge and use of this information should help you to make a more realistic cost estimates for your models.  Happy investing!!!!

@Rishi Kaila if you want some PM advice I'd be more than happy to jump on a call with you.  In particular I can discuss the different areas of the city and the PM services that we provide to investors such as yourself who are out of state.

What city specifically are your properties located in?  There are a few managers who specialize in Detroit proper and others who focus on the suburban areas to the North, South and West.  Being more specific will get you a better answer.

The Metro Detroit area can be great and very profitable.  Boots on the ground here are required in order to succeed.  There are basically two types of pm companies in the area: Those who manage in Detroit and those who don’t. 

Those who don’t manage in Detroit manage in the suburbs which are significantly larger by population than the city proper.  The suburbs are also (generally) more affluent and the housing prices are higher.   Rent can be higher too, but that’s not always the case. 

If you’d like to know more feel free to message me. 

Quote from @Billy Farley:

Quote from @Travis Biziorek:

Quote from @Billy Farley:

Quote from @Travis Biziorek:

Finding decent contractors is probably going to be your toughest battle.

If you aren't used to renovating in Detroit there will also be a learning curve in keeping the house secure.

Permits aren't a big deal in my experience. That said, most work is done without permits (like most cities).

The questions is overall pretty broad, so those are broad stroke answers. But understanding the market in general can be a big learning curve for folks. It's block-by-block and I don't think most folks really understand what that means. 

The city is also 150 sq miles, so lots of ground to cover/understand.

 How would you recommend finding solid contractors to handle 3-5 renos a year.

Start networking!

 You're absolutely right. Once I get there in January, I plan on being a networking machine.

In your experience, did you subcontract out yourself or get a GC to handle the project? I feel like I could manage subcontractors myself, just dont have experience with cost difference in either or.

Do yourself a favor and only work with licensed builders and property managers.  In Michigan both professions are regulated and for good reason. You need boots on their ground here like Leroy or our company to avoid getting burnt. 

We get calls daily from people who didn’t take this advice and it’s often a pretty sad situation.

Quote from @Danielle Rosenscruggs:

Quote from @Kenneth Jenkins:

Quote from @Danielle Rosenscruggs:

My husband and I are looking to get into REI but feel a bit overwhelmed. We are hoping to invest around $50,000 - $75,000 (e.g., downpayment, closing costs, initial maintenance), would like to be somewhat local (we live in Ann Arbor), and don't want anything that would be a massive project (don't mind minor cosmetic improvements). We have been looking at SFH properties in the $250,000 - $350,000 range in Detroit (Bagley, Jefferson Chalmers, Piety Hill, etc) and some of the surrounding suburbs (Ferndale, Madison Heights, Royal Oak, Farmington Hills, etc). Still, we feel torn/confused about the city vs. the suburbs. We are focused on long-term appreciation, although we would want the monthly rent to cover our expenses (e.g., mortgage, insurance, taxes, PM) plus a small amount to put aside for maintenance. We'd also like to be able to charge at or slightly below market rates to help improve our chances of securing long-term tenants (we've had success with that approach in the past). We'd love to hear any advice folks have to offer! We don't know what we don't know, so any guidance is appreciated!!

Definitely think about buying from wholesalers and not on the MLS.  It will improve the purchase price which is your primary goal.  With the amount of money you have you should be thinking about one or two properties in a c class suburb of western wayne county.  

The cash flow is better and prices are stable.  Let me know if you want more info.  I’m local.

 Thanks for this tip! This is a total newbie question, but how do you find wholesalers?

 Local meetups.  There is one at the Arbor Brewing Company in Ypsilanti which is pretty well attended.  I believe it’s every month on a Tuesday.  The next one is August 8th. Starts at 6 and everyone is very welcome. 720 Norris Street. 

Quote from @Kim Frantum:

I'm looking for some advice on purchasing properties at tax auction in Michigan. What issues should I be aware of? I've never participated in an on line property auction and I'm very curious. Any advice is appreciated!

 Don’t use intermediaries in Detroit for this.  Always buy online directly.  There are many scams where people claim they can get access prior to the auction date.  That’s not true.  

Second, make certain you have a realistic plan for what to do with the property post closing.  

Quote from @Nikhil Agarwal:

I've invested in MA and I'm realizing that I might have been incredibly lucky. I've got 10 loans from 2 local credit unions. All the loans are made to my LLC (they don't appear on my personal credit report) and the rates were amazing. I checked for a quote today (June 1) and got 6.25% with a 1% origination fee. Of course, these lenders in MA don't lend on properties in Michigan.

On the flip side, I'm trying to buy properties in Michigan now and any lender I ask in Michigan is only doing conventional loans. The best option I have is a 7.5% interest rate after a 2% origination fee. Do portfolio loans for investment properties not exist in Michigan? I'm trying to understand why I'm not able to find an attractive option or have I just been getting lucky in MA.

Appreciate everyone's help!

Incase it matters, I have a 6 figure w2 income, not much debt other than a car loan and mortgages on investment properties, 760+ credit score. These properties often have a 1.6 DSCR ratio. Generally speaking, should be able to qualify for the best rates on most mortgages out there.

In Michigan you’re going to want to make certain you’ve reached out to the known portfolio lenders:  Old National Bank, First Merchants Bank, Bank of Ann Arbor, Huron Valley State Bank.  There’s no sense is calling a mortgage broker who’s simply going to repackage your deal and get financing from these guys.  I’m not implying brokers aren’t valuable but with your background and credentials you may just need to find the right direct lenders. 

Quote from @Michael Davis:

Hey everyone! I’m new to bigger pockets and was hopping some one could give me some insights into my situation. 

Just a little back ground. I have a couple rental properties local where I live and have managed them my self for years. 
I wanted to try an out of state deal and found a brrr in Michigan. Everything up to this point has gone pretty badly haha 

So my question is if it’s normal to be getting All shorts of fees every month from your management company? Over this last year it’s added up close to 10k!? Seems very odd. I am normally not one to question every little thing and assume most people are honest. But again it’s adding up to a lot and it seems excessive. 

Hope to hear from some one thanks

That’s insane.  $10k in fees, not repairs, is highway robbery.  I’m a PM in the metro Detroit area and I can tell you with one exception that no reputable company charges that much. 

We manage a 20 unit building and the fees are about that!