All Forum Posts by: Nathan Frost

The federal savings bank does 5% down on vacation homes, talk to Jason Wray over there.

Quote from @Nathan Frost:

Hi all, curious on any advice or tips here.  Inspection was schedule for today but when the inspector / my realtor arrive the power is off.  They also noticed the furnace and hot water tank is missing / stolen.  Seller agreed to install a new hvac, hot water tank, and furnace before I can do the do the inspection now.  So the inspection is pushed back 10-25 days until those items get installed.  Sounds good since everything will be brand new but is there any other leverage I have.  This could take 2-3 weeks to get done since the seller is out of the country.  Can I get them to come down in price or get them to install motion lights / fake cameras?  What should I do?  Be nice to get them come down in price or give me seller credits.  Bonus is I am getting new HVAC, Furnace and hot water tank.  Just trying to see if I can use this to leverage my deal in any way.  Thanks.

 Hey Nate, if you have any questions moving forward in the Metro Detroit market or need to connect for any resources regarding the deals or finding any, feel free to reach out

Quote from @Nathan Frost:

Quote from @Greg Scott:

Quote from @Nathan Frost:

Quote from @Stuart Udis:

@Nathan Frost....  5% down can make STR especially since 5 bedrooms. Good cash flow.....Yeah just cant beat the deal.  How can you possibly believe this based on your own experiences thus far in the transaction and what others, particularly what Drew who has experience in this market has told you?  For goodness sake, having to remove mechanicals in between tenants means you are buying the worst of the worst assets properties imaginable. 

You appear to be an investor who only cares about their spreadsheet's best possible outcome without any regard for risk. You say its good cash flow. How will you collect rent when the building's mechanicals are stolen again? STR....I can only imagine the groups of individuals who will rent this house on a short term basis. Are you going to send over a PM to remove your mechanicals in between each STR occupant if there's down periods with no occupancy? A price reduction doesn't solve the issues this property presents. It sounds to me like you're acquiring a liability.

Cameras, security system, motion lights, cage lock on hvac, etc.

They were stolen cause it was vacant and had a for sale sign.  

FWIW, where you are buying is NOT a place that tourists come to visit. If I had to pick a place to put a STR, it would be far from there. You should come to visit before buying. It will be money well spent.

Also, criminals know how to check which properties in the area are STRs and might be vacant during most of the winter.  You might as well put a vacant sign out front.

Let's say your record video of someone stealing your furnace and hot water, what are you going to do?  That is a fairly low priority issue for the Detroit police.  I can share video of things being stolen from our apartment complexes.  We've never recovered a thing, although I hear one guy got arrested.

STR could be a disaster for you.  LTR makes a lot more sense.  Even then, not for the faint of heart.  Think twice.

Get it, but a tourist place usually means high purchase price.  

A low price is no guarantee of profits. 

There are at least three Detroiters on this thread that have urged caution or noted this is not a great place for STR.  You seem determined to move forward anyway.  Do not be surprised if you lose your entire investment and maybe more, if you have a recourse loan.

On the other hand, real estate is a forgiving asset class.  You might do well.  I hope you do.

Good luck.

Quote from @Nathan Frost:

Quote from @Stuart Udis:

@Nathan Frost....  5% down can make STR especially since 5 bedrooms. Good cash flow.....Yeah just cant beat the deal.  How can you possibly believe this based on your own experiences thus far in the transaction and what others, particularly what Drew who has experience in this market has told you?  For goodness sake, having to remove mechanicals in between tenants means you are buying the worst of the worst assets properties imaginable. 

You appear to be an investor who only cares about their spreadsheet's best possible outcome without any regard for risk. You say its good cash flow. How will you collect rent when the building's mechanicals are stolen again? STR....I can only imagine the groups of individuals who will rent this house on a short term basis. Are you going to send over a PM to remove your mechanicals in between each STR occupant if there's down periods with no occupancy? A price reduction doesn't solve the issues this property presents. It sounds to me like you're acquiring a liability.

Cameras, security system, motion lights, cage lock on hvac, etc.

They were stolen cause it was vacant and had a for sale sign.  

FWIW, where you are buying is NOT a place that tourists come to visit. If I had to pick a place to put a STR, it would be far from there. You should come to visit before buying. It will be money well spent.

Also, criminals know how to check which properties in the area are STRs and might be vacant during most of the winter.  You might as well put a vacant sign out front.

Let's say your record video of someone stealing your furnace and hot water, what are you going to do?  That is a fairly low priority issue for the Detroit police.  I can share video of things being stolen from our apartment complexes.  We've never recovered a thing, although I hear one guy got arrested.

STR could be a disaster for you.  LTR makes a lot more sense.  Even then, not for the faint of heart.  Think twice.

@Nathan Frost....  5% down can make STR especially since 5 bedrooms. Good cash flow.....Yeah just cant beat the deal.  How can you possibly believe this based on your own experiences thus far in the transaction and what others, particularly what Drew who has experience in this market has told you?  For goodness sake, having to remove mechanicals in between tenants means you are buying the worst of the worst assets properties imaginable. 

You appear to be an investor who only cares about their spreadsheet's best possible outcome without any regard for risk. You say its good cash flow. How will you collect rent when the building's mechanicals are stolen again? STR....I can only imagine the groups of individuals who will rent this house on a short term basis. Are you going to send over a PM to remove your mechanicals in between each STR occupant if there's down periods with no occupancy? A price reduction doesn't solve the issues this property presents. It sounds to me like you're acquiring a liability.

Quote from @Nathan Frost:

Quote from @Nicholas L.:

@Nathan Frost

hello.  i remembered your other post from a while back, and i know you're experienced. but were also feeling overleveraged.  so - i don't understand how a deal like this is going to help you advance your goals.  what are you hoping to accomplish by buying out of state in an area where the mechanicals would get stolen??  let me know if i am missing something but i'm confused.

5% down can make STR especially since 5 bedrooms.  Good cash flow.

wonder is STR actually rent in areas that are that prome to crime ?.. geesh.. I understand this is a big problem in all inner cities in America.. had it happen to us to many times to count.  if it was me I would get a credit for those items do your inspection then install them yourself .. just pay cash then refi I guess or use a bridge loan.. or risk having them stolen again.. I started my OOS HML  career in Detroit and that was 2002 and WOW coming from our area what an education I got.. my clients that were doing turnkey at the time and all the buyers were out of state ( basically LA based) the local on the ground operator was very good he had all sorts of tricks to try to keep the houses safe.. the one i really liked was painting the copper pipes grey so thieves would not steal them.. But he had security on site during rehab taking ID's etc.. he determined a lot of the theft was from the workers who knew exactly what was installed during the day and stolen at night..  To me knowing Detroit area like I do these days I would simply pass on any neighborhood that has bars and caged condenser units and this kind of theft I dont think there is much long term upside and just a ton of risk.. BUY in a better area if you want Detroit all these cities have better areas and outcomes will no doubt be superior over time as opposed to taking on these risks.

Quote from @Nathan Frost:

Quote from @Todd Douglas:

Its been a month now, how what was the solution? How did the deal turn out?

 Still in inspection phase.  Getting seller to do repairs.

 Got it, yeah Fitzgerald/marygrove neighborhoods have some solid pockets for holding as they neighbor the Bagley community

Its been a month now, how what was the solution? How did the deal turn out?

@Nathan Frost

hello.  i remembered your other post from a while back, and i know you're experienced. but were also feeling overleveraged.  so - i don't understand how a deal like this is going to help you advance your goals.  what are you hoping to accomplish by buying out of state in an area where the mechanicals would get stolen??  let me know if i am missing something but i'm confused.

I would personally ask for a price decrease based on whatever estimate they got for the installation of that equipment (assuming you can get a loan without those things - depends big time on the bank - my local banks would do it for me). 

If not - yea, let them get installed, do the inspection and go about it. 

I had a house in an area like this (previous HVAC was stolen while the house was vacant) although it doesn't seem nearly as bad as your area. I put up a mix a fake and real cameras. Had a couple of cars towed when they parked in the driveway. 

Nothing you can do about people knowing it's vacant though. And most of the time police won't even pursue something like this with any sort of effort. It definitely causes some anxiety anytime the place is vacant. 

I'm actually selling that house right now - I stay away from that type of area now. B class and up for SFH and C class and up for MFH. MFH I haven't had as much of an issue. I'm guessing because the population density is higher with more neighbors and all that.

And I see you're located in Texas. I'd look closely at the Texas market as opposed to Detroit. You're having issues and you haven't even closed yet. The issues are just starting and the area is literally telling you what it's going to be like before you close. I'd seriously think about whether or not is makes sense to pursue that market in that location.