All Forum Posts by: Leroy K. Williams

When it comes to dealing with a bad tenant there is practically no difference between an annual lease and month to month. The month-to-month aspect does not expedite eviction.  Month to month is really more of a strategy to use if you have a unit in an area where rent rates are increasing rapidly, and you don't want to lock yourself into a lease where you are affectively losing money. 

A one year can be rescinded where the tenant fails to adhere to the terms of the lease so it doesn't matter if its a year or not. Most leases will include a provision for early termination.  

Quote from @Nader Shariff:

I would look into the midwest - and more specifically Detroit, MI . 

Low Entry Price Points (65-90k for a SFR) , and Strong returns - if you have the right team on the ground, Detroit could be a great place to build a portfolio.

Yes Detroit is actually a No brainer when it comes to "Finding the Next Boom City".  Detroit has several major projects underway including the construction of the Gordie Howe international crossing to Canada, the Joe Louis Greenway, the Riverwalk expansion and the several skyscrapers and Hotels downtown. Detroit sits on an international border and two countries are collaborating on Detroit's growth and emergence as an international destination.

AS it relates to having the right team on the ground, that is true, which is where companies like ours come into play. Feel free to reach out by inbox.  

If anyone is telling you not to invest in Detroit, it's because they are trying to keep it all to themselves.  

Ok, here is how you fix it.  Call the local Building Authority let them know you are in receipt of the code issues. Asl of there is someone they can recommend who is familiar with the local codes. Hire him or someone else local and experienced with this building authority. Let the department know you have hired this local guy. 

With all of the technology at our fingertips why would anyone have to physically walk through a property?  As an investor the number one thing you need is a competent person in the area who wants to help you succeed.  You find the person who understands what your goals are and then allow their eyes to become your own. Astronomers and Astrophysicists don't have to fly into outer space to understand the planets and stars billions of light years away, surely you can get a good picture of what is happening a few hundred miles away.  

Go visit the local Lumber yard ask for referrals for guys who will work there. If you don't have running water place a porta potty on site.

Pay laborers 1/2 of what you owe them and promise to give the remainder at the end of each week, this way they are motivated enough to show up and even more motivated to keep showing up. 

As it relates to the quotes, ask guys to bid based on videos and photos, if they are good they can do this with no problem. 

Hi Anh,

Detroit is in a state of development flux, things are changing fast and very intentionally.  Many of the neighborhoods you mentioned are right in the path of development progress which means there is a lot of new investment aimed there.  I would say the top 5 of those you mentioned are 1. University District (6 mile/ Livernois corridor), 2. Jefferson/ Chalmers 3. East English Village (I would include West Village in this) 4. Aviation Sub (not too many duplexes in this neighborhood however on the border there are but those border areas don't have the same charm or appeal 5. Island view

Because the entry cost in Detroit is so low I would say that it will feel very little effect in a housing recession when it comes to values. I believe that the development drive will keep pressing values up. 

Quote from @Michael FungHi Leroy, where would one start looking for a PM?

I would start with the local REIA and ask other investors who they use to manage their rehabs. I would also use sites like Thumbtack and search for Property Managers who coordinate renovations for clients.

If your only issue is finding a contractor I would suggest changing your approach from looking for a General Contractor to looking for an experienced Project Manager or Construction Manager.  In truth GCs are not built for rehabbing.  Typically rehabbing requires tight budgets and if a GC is good he/she is already making money working for the general public that is willing to pay higher prices since Mr. and Mrs. Public typically renovate for comfort, enjoyability, convenience, or emergency.  They aren't thinking in terms of real estate investing strategies.  

If you find a PM you are replacing yourself and hiring your partner in the deal.  A good PM understands that the project has to stay within budget, they have to make their own money by bringing the project in ore below budget. Typically they will have established relationships with tradespeople outside of their own guys (unlike a big GC).  

You can have your cake in Detroit and eat it too.  You can purchase single family or duplex homes in the "hood" for $35-40k per door, Spend $25-35K rehabbing and collect a healthy rent of $1,100-$1,300 per month consistently.  As a person who owns property and services other OOS investors, I know because we are right here in the thick of it with boots on the ground watching this happen.  What about the head ache part?  That's called the effect of "Greed".  Most investors who invest in the hood decide to penny pinch, the idea always seems to be "buy  low, re-invest as little as possible, and hope to place the best of the bad apple tenants".  I look at it like a person investing while pinning their nose due to the stench of the inner city.  This approach doesn't work.

What works is deciding if you truly want long term ROI or not. If you want healthy cash flow (from inner city properties) invest into the properties with the idea of improving the community. Once you purchase and renovate a home introduce yourself to the block club and advise them of your intent to make an impact. Find a management team who understands that being a "PM" in the inner city is just as much about being a "Property" manager as being a "People" manager. The tenants want to pay but sometimes money is short and there is nothing wrong with the PM directing tenants to government resources for just such occasions. Overpay-(Yes I said it) OVERPAY your contractors by 10-15%. Let them know that you are willing to do this to ensure great service and a quality product. This will create loyalty on an epic scale.

Last thing, forget the classical causation for appreciation and think about this, if you can buy several properties in one community/neighborhood and restore them and place families in them, by creating the right kind of density in the neighborhood, the value right around your homes will rise.