All Forum Posts by: Matthew John

@Christian Hutchinson I feel it's probably similar tenant pool to Centerline/Warren. 

My CenterLine Duplex had hundreds of messages, but most people were just window shoppers. I did about 30 showings and 10 applications before I settled with someone and they still aren't perfect (good job, decent credit, felony). 

A lot of people don't like the fact that there's someone else living upstairs, most people want their own house to rent. I also had a lot of people from Royal Oak area saying they couldn't afford it anymore, so they wanted to move 10 min over to Center Line because they knew it was also a quiet, drama free area. I ended up renting the Duplex bottom unit for $1000/month & top unit for $600. This was the definition of a turnkey, it's just harder to rent out multi families. 

Thanks again for all the info! I'm going to keep buying as long as they cash flow and make sense. 

@Danielle Z. Nope! If I wanted to take a passive approach and/or didn't live in an area where houses are good for investing, then I definitely see the benefits. 

Right now it makes sense to me with most other investment classes showing signs of uncertainty & weakness. Being a private lender is a relatively risk free way to generate truly passive income.  

@Danielle Z. The good thing about Private Lending is you get to structure it however you want! 

Typically private lenders charge interest only at 10-12%. How much depends on the market that the investor is in. Here in the suburbs of Detroit, I can be all in Purchase + Rehab for 75k with ARV between 100k - 120k. However, this is my personal buying criteria because my strategy is to build a rental portfolio.

Some people you could lend to might be flippers and work in higher priced markets because the profit margins are greater. It totally depends on the market you're working in! 

As far as finding a private lender, you have to do your own research on the market/deal and see some of the previous results of the investor. I have a "pitch deck" I send to private lenders that I'm networking with that highlights typical deal structure, shows the numbers on previous deals I've done, and shows you exactly what type of returns you will be expecting. 

Any legit investor is going to make sure you're paid because they want you to keep coming back and reinvesting with them. Working directly with private lenders is possibly the quickest way to scale a real estate business! 

@Christian Hutchinson Sounds like you got a steal! I'm going to go after this guy with an offer and see if he'll bite. 

How do you like the area in Roseville compared to others in Metro Detroit?

@Christian Hutchinson Wow! Tons of value. Interesting that you don't deal with siding, all my other deals in this area have been siding & not brick. 

The owner is an international investor. They bought it for 95k in 2016 now trying to sell for 150k?? 

I wasn't sure, since it's a triplex, if you need 3 furnaces + hot water tanks or if 1 works for the whole building. That's where I was struggling with estimating a budget. 

130k sounds about right, but he wants a 6 year note. I was going to try and negotiate that for 3 years at 7%. Might be hard to find a bank that'll loan 4.25% on an investment property. I keep hearing rates of 5.75% nowadays which makes 7% on a LC not sound that bad. 

@John Woodrich I appreciate the honesty & advice. I have a better chance of getting my foot in the door if I give an offer closer to market value and go from there. I just don't want to lose a bargaining chip if it needs a ton of work and I already offer closer to market value. 

12 years ago they said they replaced electric, "90% of plumbing", roof, furnace, and other repairs. Maybe I'm underestimating how long those actually last, but I guess I wouldn't know without seeing it and having it professionally inspected. 

@Joel Fine I think this is a great idea, thanks for sharing! 

@John Woodrich You don't think 12 yr old furnace, roof, water heaters, etc is going to to need replacing in the next couple years?

25% drop off the top does sound like a lot, but it's hard to guess without seeing inside. Also, there's only 1 triplex in the area that's sold in the last 3 years, so trying to find comps to come up with an accurate ARV is nearly impossible.

I just figured all those major expenses start going between 10-15 years and should be considered in the price since he won't be dealing with them. 

@Steve Hodgdon The problem out of state investors have in Michigan is they are buying in Detroit. Yes, there are great areas in Detroit, but if you don't know the market you'll lose. 

My focus here is in the suburbs on the cities bordering Detroit. Most people don't want to live IN Detroit, but they want to live close enough to enjoy downtown. My houses are cash flowing, but these multi families here are cash cows & they aren't *that* expensive. A little money in California will go a loooong way in Metro Detroit! 

@Christian Hutchinson Roseville - The numbers aren't bad, but it will definitely need some big items replaced. I do think 6 years on a LC is way too long to wait, so he's going to have to negotiate if he wants to sell. 

Pretty much everything around here was 1920s - 1950s in Warren/Roseville area. 

Are you still looking to buy in this market?

@Steve Hodgdon Wow! Good thing you did your due diligence. Hearing those prices in your market sounds crazy because in Metro Detroit you can get a 30 unit for 1.3 million. 

In my area, all the houses are older, especially the multi families. 

They said they updated electrical and 90% of the plumbing 12 years ago, but also did the rest of the CapEx. I figure in the next few years it will need roof, furnace, water heaters, driveway so I'm going to present them $115k and see if they want to talk. If not, onto the next one. It'll be a tough sell if they won't let anyone inside!