All Forum Posts by: Leo Furest

Hi! Nice topic. I would do what I am doing right now. After purchasing and stabilising a 100 SFH rental portfolio in Detroit I would definitely keep flipping homes. Why? No tenants, no evictions, no property management. Every cycle lasts 3-4 months and I can make 15%-20% NET per cycle. If I had your $500k that's what I would be doing, at least 40% year, that's $200,000 pre tax income. I have the crew & the property dealflow. Money is the oil to keep the machine moving. Good luck with your investment criteria!

Roni good point! Is actually more than just the one month vacant. Also consider cosmetic repairs to place a new tenant  

Mart go for it! no pain no gain. I can foresee that doing it locally will be way easier than my case! Go ahead and let me know if there is any thing I can help you with 

Roni thanks for your suggestion, I totally agree with you. Since the very beginning I knew that there was not a lot of room to increased rents, my target has been stabilising the portfolio at $800/property/month (I have some $1,000's and some $700's). I am pretty satisfied with the NET ROI from the rentals, now my speculation is on the capital gain side. Take care, Leo

Thank you so much for your support!

John thanks for your message, I don't know if I am understanding your question. Initial capital was around $600,000.

From 0 to 100 properties in 14 months…My personal experience

It may sound strange, or fake. But is not. My main objective here is sharing my personal experience with RE in the city of Detroit MI (and my first experience in Real Estate at all), basically to encourage those that are starting and just get surrounded with NOers and also to remember the big investors that the bullish spirit can never die.

Everything started January 2017 when reading a book that changed my life “Rich Dad, Poor Dad” (Robert’s Kiyosaki best seller that doesn’t need introduction), not essentially for the content that is pretty repetitive but for the hidden message of building wealth for passive income purposes. Later in August I decided to buy “The Book on Rental Property Investing” from Brandon Turner. I decide to start in RE in a distressed market. Why? Because I come from investment banking industry and I have done pretty well always with distressed assets (oil and gas in Texas, agribusiness in Latin America), so why not distressed Real Estate? Why not rentals? And even more challenging…why not Detroit MI (yes…I know…you are shaking your head Lol…keep reading, this one is a happy ending story).

January 2018 decided to book flight tickets to Detroit, one hotel night and a rented car. 500 miles in two days, more than 20 neighborhoods visited and one clear impression: “if I want to succeed here I will have to invest in”:

• Travelling often to the City (I live out of country with a connecting flight and almost 18 hs. To make it to Detroit)
• Developing a local Team (MOST IMPORTANT) to be my boots on the ground
• Hire inspection companies and try to be in every property I want to buy
• Have a GREAT real estate attorney (in charge of double checking all property related paperwork, Deeds, etc). Title houses don’t work for you, they want to execute transactions to get paid.
• Deal flow (MLS, off market, direct owner, Facebook, Instagram)
• CASH. I have done all my transactions cash, this has helped a lot. I know is not the common rule but is one of the factors that allowed to grow the rental portfolio that fast.

July 2018: closed my first property, those feelings that you will never forget. A nice 3/1 bungalow in a C class neighborhood in Detroit. Last week closed property #100.

My strategy: focus on 3/1 SFH with cosmetic repairs needed in up and coming neighborhoods, avoid structural damaged properties, NO fire damaged properties, No blights in the block, not vandalized houses in the block, screen tenants.

What I learnt from a challenging market like Detroit? (remember I have invested in class C and D neighborhoods).

• Cash is king (applies for every market LOL)
• Develop a local team you can trust on
• Always put “final water reading” as a condition to close in the Purchase Agreement (I have avoided $10,000 past water bills “surprises” doing this)
• Hire a good real estate attorney. Yes I know that title houses are responsible for doing it properly and you have the title insurance. If you are out of country its worth every penny when a real estate attorney puts on an email “I have checked all paperwork, you are good to sign the P.A. and wire funds”
• Always put the inspection contingency in your PA (feel comfortable with the period, I put 7 days).
• Send a certified inspector to the property
• Try to walkthrough every property you put an offer on. Make your videos, make your notes, write down your numbers to an Excel and try to understand if it makes sense to put an offer.
• Be picky with the level of tenants you want (you have invested a lot of money in the property and they have to take care).
• Tenants pay utilities (including water)
• Have your internal Maintenance Guy (when you reach volume like this is worth having this instead of calling maintenance every time something happens).

My results so far:

• Occupancy rate: 98% (two properties have been recently vacated)
• Evictions: 1
• Avg. Rent: stabilized portfolio at $825/month/property
• NET ROI / year: 12.6%
• Portfolio Capital Gain: 14% in one year.

The part that nobody says is that in this last year I have invested more than $18,000 in flight tickets, $13,540 in accommodation, $12,800 in car rentals, over $50,000 in legal fees, $1,500,000 in rehabs and hundreds of hours far away from family, nights sleeping on a plane, jet lag, airports rescheduling. Is it worth? Every single penny. So you better close your laptop or lock your phone and start making decisions that will change your life.

This is a great thread for those like us that are involved in Long term rental investors! I developed a 100+ SFR portfolio in Detroit living abroad, that was very time consuming for me in terms of travels etc, but let's keep that part aside. My tips to "keep under relative control" all things:

1) Have a LOCAL team (don't try to reinvent the fire). Even more if you are a remote investor.

2) Give tenants a decent property in livable conditions. Don't expect sustainable long term tenants if you are a slumlord with leaking roofs that doesn't pick up their calls.

3) Develop your "in house" property management team. Yes! This makes sense when you achieve a 30+ property portfolio. All the Property Management companies I hired robbed from me (and I am into details. I stopped it on time and avoided them ruining my business). With my incompany team everything goes perfect.

4) Give tenants as many payment options as possible. Cash, checks, Money Orders, Debit Cards, Credit Cards, CashApp and centralize all this in a unique software (I don't know if I can post the name of the software without breaking BP rules so I will not do it).

5) Your tenants are your tenants, not your friends. We all have problems and relatives that get sick bla bla bla.

6) Keep properties updated. some general repairs will keep them happy.

7) Be strict and clear with your rental rules in your lease agreement. If you have a pet fee enforce it, if there is a late payment fee enforce it. 

8) Don't ever accept partial payments when a tenants is late. Initiate eviction process asap.

9) Try to keep evictions as low as possible (I know is redundant with previous point but rehabbing a house post eviction can cost the rent of a whole year...or more1).

10) Be always aware that you owe a portfolio in a C/D class neighborhood. If you were owner of properties at The Hamptons or Manhattan you would have different issues.

ps: Never get discouraged by NOers, they are still on their couch running excels in their heads.

Sure you can my friend, fell free to connect :)