All Forum Posts by: Nadine O.

@Nadine O.

I recently moved from Grand Rapids MI and I can tell you from a macroeconomic perspective, it's an excellent market to invest in. All 10 of the largest employers are in different industries, population growth of over 1% annually for the past few years and expected to continue, lots of small multifamily inventory, and really good submarkets. If you really want to invest in a cheap city, Muskegon is 40 minutes west of Grand Rapids on Lake Michigan and you can scoop up cash-flowing deals for $50k.

I previously helped manage an Open Door Capital mobile home park in Muskegon, if Brandon Turner is willing to invest there, it's probably worth looking into.

My problem with other midwest states, such as Ohio and Indiana, is that I don't see meaningful long-term appreciation. People are moving where there is a good lifestyle. In Michigan, you have the Great Lakes and a lot of beautiful natural areas and opportunities for outdoor recreation. (Keep in mind my Michigan bias... no one from Michigan likes Ohio haha).

I think the other considerations such as taxes, tenant friendliness, cost of living, etc are priced into real estate by other investors. I really don't find this info all that relevant - not enough to keep you in analysis paralysis.

New York City! Best place to do an FHA house hack. If you can get a 4 unit and a basement, that would be ideal and create major cash flow and equity creation, plus you can not worry about a property manager and boost your yield.

I see how institutionalized product in Class B/C markets are trading at 5%-6% cap rates. Might as well deploy into something smaller (units wise) and get a +6% cap rate with attractive growth prospects in areas of the Bronx and Brooklyn. 

NYC may not be the best market from a cash flow perspective, but if you are seeking out asset accumulation and equity appreciation over the long term then there are certainly fortunes to be made. And there are still plenty of cash flow opportunities in the outer boroughs if you buy right!

Metro Detroit! 

 It is near impossible to do what you are talking about. Those midwest properties will barely throw off any cash flow when leveraged and only a few hundred dollars a month each when paid off.And you will be hit with constant issues of maintenance, cap ex, eviction, vacancy etc. The housing stock there is all from the 60s and 70s and aging rapidly. The tenant pool is not great either. Before you embark on this path talk to people who have owned this asset class over a period of time exceeding 5 or 10 years. People have made fortunes in California on just one or two properties over time. Midwest prices are the same as 30 years ago especially adjusted for inflation. I speak from experience of owning several such properties and while I made a good profit it was pure luck of timing picking the up after the crash. That still doesn't make it a great asset class, especially at todays prices.

I bought a house hack on a small multifamily (an over under duplex sort of) in Charlottesville VA. I do Coliving in the upstairs unit which is bigger and make killer cash flow! I'd recommend a low money down (5%) over an FHA if you can swing it though because the have to pay the mortgage insurance for longer on an fha and the mortgage insurance tends to be higher. I think there is a lot of potential for house havkinghacking in Charlottesville, richmond, and some of the dc suburbs.

Nadine, five years ago my wife, oldest son (not quite 1 at the time), pup, and I sold our Walnut Creek townhome and intended to move to Ann Arbor, MI. We wanted to get into real estate, eventually, but that's not why we moved. We wanted a lower cost of living so my wife could stay home full-time and focus on being a mom.

The housing market in Ann Arbor was too crazy for us and we started getting that Bay Area vibe with things going $60k-$80k over ask. We figured we'd just up our budget, which we could afford to do, but then realized we were falling right back into what we were trying to escape. So we began looking elsewhere.

We decided on Metro Detroit, specifically Troy, MI. The schools were a big draw for my wife. We liked being near a large airport, big city for culture, etc. And the housing wasn't like it was in Ann Arbor. We bought our 3,100 sq ft home for $460k, did a bunch of renovations on it and then decided we'd get into real estate investing.

Everyone told us not to buy in Detroit proper. 

"STAY IN THE SUBURBS", they said.

The thing is, the masses are almost always wrong. I started investigating Detroit. In 2018 we drove some nearby neighborhoods not quite in Detroit proper. I specifically remember our son in the back seat as we headed down to Allen Park and Redford. Ultimately, in 2018 we decided we needed more capital before pulling the trigger. We really didn't but we didn't know any better. I wish we'd gotten started then.

But about a year later in 2019 we got a HELOC on our primary (appraised for $550k) and took out a loan against my 401(k). We bought our first rental property in Detroit in April 2019 for $40k. The tenant was paying $750/mo but not REALLY paying. We got two months out of them before we had to evict. Then we put $15k into cosmetics and rented it for $950. Today the home is worth $120k and rented for $1,200/mo. PITA is about $250/mo :-)

We now have 10 doors in Detroit proper (NOT the suburbs) and they have been extremely good to us. Most of these houses we were able to BRRRR. The ones that didn't quite make it have already paid out their capital. We could refinance everything today and pull out about $200k in equity. And I intend to soon but we can't do that quite yet...

This week we are putting our primary residence on the market and heading back to California. SLO to be exact.

My wife never thought we'd be able to afford to move back. I had friends tell us we'd never be able to afford to move back. But we are.

It's been a journey and it hasn't been easy. But know it can be done and the place you move doesn't have to be your forever home. You can leave with a mission to build some serious wealth and then move back. Don't let people tell you any different.

Let me know if I can be helpful and good luck!

This can give idea where people moving and always great to build RE Empire on path of progress....

@Nadine O. Dayton, OH Land and homes are actually still affordable. Also, anywhere with a land bank strictly for flipping.

 How about Seattle?  Get the benefits of being in the west coast and no state income tax.

 My wife and I are doing the same. We rented for years and saved as much as we could. We now own our home in Alameda (got it off market from a client) and own four investment properties (two in Cleveland Oh and two in Tacoma, WA). 

Regardless of where you look, you might consider trying to buy property and rent by the room. With prices the way they are, I am seeing that as an opportunity to make solid cash flow in better zip codes. Obviously it takes more work as you have to manage it more actively but the numbers may make the extra effort worth it. Good affordable rental options are few and far between so you may be able to make this work well. 

One final thought is whatever you end up doing, allow pets. You have to screen this carefully but that goes without saying. Very few rentals allow them and you can charge a premium. In my experience, tenants tend stay longer and are grateful to have their pets with hem and end up taking care of the place.