All Forum Posts by: Alexander Merritt

Go-Go-Gadget Hammer!

I find your responses surprising and contradictory considering you are actually investing in Detroit "a house here and a house there" as you said.

http://www.biggerpockets.com/forums/67/topics/1687...

Why would you make it seem like Detroit is "un-investable" when you are investing there? Now I am certain that you are completely missing the point of his post. Or, maybe you're just trying to scare off other investors so that you can reap all the profits. I don't know.

@Ndy Onyido I'm really glad you asked this question because I too have been wondering about Detroit. I'm thinking this might be one of those "Carnegie" moments to seize an opportunity. People talk about all the negatives; which are numerous and real. But, what about the positives. As you said foreign investors are investing there and I think now is the time to really keep an eye on Detroit and possibly be ready to invest there soon.

Thanks @Brandon Turner for posting the replay. The biggest thing I learned from this was concerning how to find MF properties by getting a listing of evictions and then searching the property address. That's a great strategy I hadn't even considered.

@Todd C. Yes, comps are a good indicator of ARV. Remember, you want to compare houses sold that are in rehabbed condition. That means they have already been updated and no work is required. It doesn't mean that the property is in "move in" condition but hasn't been updated. So, you'll want to throw out any "comps" you see where the property isn't fully up to date.

If he's mentioning that the house is worth the same as the comps in the area, then either it's already been recently rehabbed and just needs a few things (which i highly doubt considering he told you it was a rental and in which case it probably won't be a good deal), he's pulling comps that are in similar shape to his, or he's just lying.

He told you he's looking to get rid of it sooner rather than later in "as is" condition. Those words are keywords. That means he's either sick and tired of being a landlord and just wants to get rid of it, or he's retiring from being a landord and wants to get rid of it, or something else has popped up where he needs some cash quick.

In any case, I would let him do most of the talking. Ask him why is trying to sell the property and just let him tell his story, you'll probably pick up a lot of information by just listening. Plus, he'll probably thank you for just listening to him. Then, you can tell him that you'd love to help him out and work out a great deal for both of you.

Let us know what happens after the showing.

@Todd C. 

Do not over pay for the property! Do your research and find comps in the area as @Walter Pape 

suggested. See if you can bring a contractor with you to get an estimate. Run your numbers and then stick to them. Even if it's your first "deal" you don't want to sacraifice making a bad deal just because it's your first one and you really want to do it. If the seller is really motiviated to sell, then he should be willing to negotiate with you, especially if you have the research and numbers to back up your offer. You'll obviously want to get the best deal you can, but I think a great deal benefits both parties.

Keep at it and please keep us informed of your progress. Good Luck!

I guess that depends on how you look at it. Let's say you decide to purchase a house and then flip it. If you decide to sell before 1 year, you won't qualify for an FHA loan (low down payment ~5%). So then you'll be looking at conventional financiancing with a larger down payment. Let's say you successfully flip the house and sell it after 6 months. Now you're forced to move and repeat the cycle. While this can definitely work and make you some cash, it does have the draw back that you are living in your flip house. you might not always have runnign water, or a stove, or heat, or a place to eat a meal or even sit on a couch. Living in a flip will most likely extend out the rehab timeline because you need to account for you living it it. Your personal stuff will be in there and the contractors will need to work around it or spend time moving it around the house. Plus, you're making your family move every 6 months or so. Not so ideal.

With House Hacking, not only are you building equity in the property, but you are also able to save the mortgage payment because your tenants rent are paying the mortgage. So now you're able to live mortgage free (and probably utitilty free since the rent income will probably be more than the mortgage) plus probably have some additional income from the rents. So that's a full mortage payment, utility payments, plus extra income you are saving every month for your next purchase. PLUS you don't have to be constatnly living out of your suitcase and  having to move every 6 months.

@Michael Algarin 

I'm not a wholesaler, but I would ask if the comps you looked at are comparable, meaning same sq footage, same number of bedrooms/bathrooms, etc. I would also look at the comps and see when they were last sold and how long they were on the market for and if any of those properites had to lower their price. That may give you an indication of what the area is doing. Also, how do you know it will only take $40K worth of work? Did you get some bids from contractors or are you just guessing? If you have a bid which you can show to a potential buyer, that may sweeten the deal even more because you have hard evidence.

Again, I'm not a wholesaler but I wouldn't think price is an issue with wholesaleing. If I have a $1 million dollar ARV house and I can buy it for $700K with $100K in repairs, is that a good deal? I would think so.

@Brandon Turner 

I won't be able to attend but I am really interested in this topic. Will the webinar be recorded and be available to watch later? That would be really helpful.

@Kelvin Hamilton 

I don't have any experience with Trustee's but it sounds like from what you're saying you won't have contact with them at all for the first "round"; especially since you said they are tabling offers until mid January. That being said IMHO I would include as much info in your offer as you can. You want them to feel like you have a very solid plan and that you've thought about everything and can show details. Do you know if the bids will be made public? If not I wouldn't be worried about "tipping your hand" to them for what your plan is. I don't think they care. I think they just want a solid bid from someone who they know will be successful with the project so I say lay it all out there. The more detailed and exact your plan is with all your supporting information the more they may feel comfortable going with you. That may go along the lines with what others have been saying about building trust and repore with the Trustee.

Think of it this way, if you don't even get through the the next "round" will you be kicking yourself for not providing enough info?