All Forum Posts by: Lucas Schlund

Would you say the Detroit market is oversaturated with STR's right now? And what do you mean by a good backup plan, like having the option to turn it into a LTR?

So with that being said, it doesn't make since to buy STR's within Detroit's city limits. Because, when that ordinance does go into effect you pretty much wont be able to make enough revenue from your STR. Have you heard or know anything regarding when they will start enforcing this?

 Hey Travis, I am posting the link to the Ordinance. https://detroitmi.gov/sites/detroitmi.localhost/files/2019-0...

It says that this ordinance was passed in 2019, however, @Drew Sygit says that it is still just a proposal. On page 2 it says "Limitation on rentals per year. A short term rental unit may not be rented more than 90 days per calendar year (Sec. 9-1-100.8(e))."

If this ordinance is still just a proposal, what happens to all of the STR owners when/if it does get passed?

For those of you who own STR's in Detroit, how do you get around the 90 days per year regulation? When looking at other STR listings in Detroit I see that they are available way more than 90 days per year. I mean the average Occupancy percentage right now in Detroit, according to Airdna, is 50%. How are they doing that though if the city says that you cannot rent it out more than 90 days per year, any help would be great.

Hello all! I have tried finding post regarding this question but couldn't really find what I'm looking for. I'm new to STR's and was wondering, from a big picture view : How do you run the numbers on a potential STR? Any help is appreciated as I'm trying to get a better grasp on evaluating short term rentals including the steps you go about to finding your target markets. Also any book recommendations on STR's are appreciated.

I am new investor to the Detroit area and was just looking to connect with some experienced investors or agents in the area. I am a real estate agent and live about 30 minutes from the city, but I haven't done any deals as an investor or agent within the city limits. I am mainly looking to connect with investors, but if you are an agent that works in the city I would still appreciate the market insight.

If you have done any residential flips, rehabs, BRRRR's, rentals, or any type of deal and wouldn't mind just connecting over the phone/email, please reach out.

Thankyou!

Just trying to get a better idea as to what the financing process was like for you experienced investors, that did not do all cash. 

What kind of loan(s) did you use for the purchase, rehab, and refinance?  


Who did you get the loans through?

How much of the deal did you finance?

What were the lengths of the loan(s)?

@Ty Coutts What method would you say is better for a beginner investor, using max leverage on your first deal, or using more cash upfront to put more equity into it?

I have been having a very hard time getting a straight answer to this question, probably because im having a hard time wording it right, so just bear with me here.

For my first deal, I plan on BRRRR'ing out of it to build my portfolio faster. I will give some example numbers, and please let me know what you all think.

Perfect scenario example :

Buy a property for 80k, put 25k into rehab, and it appraises for 150k. After I would refinance and roll it into the next deal, like all BRRRR's work.

Lets say I find a deal and the numbers run to be exactly like the situation above. How much cash should I plan on pulling out of my own bank account for this?

What I mean by this, is should I use a lender to cover 90% of the purchase and 100% of the rehab for max leverage, or should I put more equity into it. Should I have a lender cover 90% of the purchase price and 0% of the rehab? 

You guys get the point, should I be looking to leverage other peoples money as much as possible, or use more of my own cash in the deal? 

The main reason I'm asking this, is to understand how much cash I need to save up in reserves before pulling the trigger on a deal like this?

Thank you to all that respond and your input.

Quote from @Nate Herndon:

Hi @Lucas Schlund (and @Jerell Edmonds!) - 

That's a great question. Knocking out your first deal with all cash is ideal for saving on financing twice - the rehab loan and the 30-year fixed DSCR refinance. However, it does tie up your cash all at once, and can take some time to save up that cash before getting started. I think the bigger question for you now is whether the time feels right for getting started on your first BRRRR.

If you were ready to get started, but were short of your all-cash goal of $80k, there are loan programs that can finance lower purchase prices in the Detroit area. One program in particular can finance 90% of purchase + 100% of rehab for a first-time investor, but the property needs to be a good fit for their algorithm, and the loan amount must exceed $100k. The rehab budget cannot exceed the purchase price.

For a lower-value Detroit Purchase + a 50% rehab budget, say $50k purchase + $25k rehab, the following type of loan scenario would be a possibility:

 Where do I get this info and who is this program through? Also is there a name for this program or do I just need to get in touch with a mortgage broker?