All Forum Posts by: Ray Choi

@Ray Choi

Glad you found it helpful Ray.

Yes correct, I run a team of investor friendly agents, invest and manage my real estate, and also have a handyman company that supports the other two.

I'm pretty biased towards Metro Detroit for obvious reasons lol.

HOWEVER, I do personally make over $100k/yr cash flow from 16 properties here. All of which, I’ve purchased only within the last 4 years.

So I do practice what we preach, and it really freaking works.

Metro Detroit has what 99% of Real Estate Investors want. Couple hundred bucks a door monthly cash flow, double digit ROI, and yes the prices appreciate and you build equity.

There are 2 types of people who dog on Detroit..

1. People who don't actually own property in Detroit

2. People who did it wrong and weren't able to execute.

If you do it right, it’s statistically the best market in the country for cash flow.

I cash flow $100k a year off 23 doors and have built a ton of equity in a short amount of time.

Purchase: $80k-$130k

Rent: $1100-$1500 (no rent control in MI)

1% rule: 1%-1.4% rule deals

ROI: 10-14%

Cash flow: $150-$300/door (after all expenses and budgeting for maint, capex, vacancy)

Appreciation: 3-10%+ (has been double digit for a decade)

Location: C+, B-

These numbers are based on the "sweet spot" in Metro Detroit. These are largely in the suburbs and some markets within the city. You can find higher ROI (on paper) here and probably in other cities…but the probability of actually collecting rent significantly decreases. Where these numbers are found, there is a very high rate of rent actually being paid.

We have over a dozen Fortune 500 companies just in Metro Detroit with huge Healthcare, Auto, and mortgage industry National footprints. Ford, Rocket mortgage, Beaumont hospitals and more. All complimented with Amazon fulfillment centers, google, and more tech manufacturing jobs.

The bad reputation of “Detroit” comes from OOS investors wanting sub $40,000, D class properties in poor condition, because they pencil out to 2-3% deals on paper. We don’t buy those.

We have found what works and repeat it as much as funds allow.

Detroit has the the highest rent to price ratio in the country…and we focus on the best balance of price/location within the area.

Here is a picture of my portfolio...

@Bradley Dosch thanks for the BRRRR mention! Yes, BRRRR & variations of BRRRR are have been our primary investment strategy in Seattle over the last few years, and I'm happy to coach people on the strategy.

A couple things to look out for when BRRRR-ing in 2022:

1. BRRRR is a much riskier strategy in an increasing rate environment (which we are in now) than in a decreasing rate, or equilibrium rate market. Delayed Financing BRRRR (a variation on traditional BRRRR) allows you to refinance in less than 6 months, but for most traditional BRRRR investors they'll be looking to refinance at least 6 months after purchasing the property... and on a big project it might be 12 -18 months before you refinance. In an environment where interest rates are going up this can be risky, because you don't know what the market will look like when you complete the project. Rates are 6-7% right now, but if they rise to 10% after you complete your BRRRR will the deal still work for you?

2. Agent, Lender & Property manager relationships are key. The best & cheapest contractors don't need new business, so they may not respond or answer your calls if you haven't worked with them before. BUT, if you work through a agent or property manager that has spent between $100,000 and $1,000,000 on various projects with that contractor they'll be much more responsive! Everyone wants to work with clients and vendors that have been vouched for, and working with a experienced team gives you that credibility.

3. (usually) to BRRRR successfully you need to pay below retail price for the property, the renovation work, or both. That means that you can't use the first contractor that comes up on a google search, and that you can't buy the properties that everyone else is looking at and paying market value for. Diamond in the rough contractors & properties are a key component of the strategy.

4. Capital - aim to have 20% of the ARV in cash available for a BRRRR. That means if you're targeting a $1M exit, try to have $200,000 in cash available. Some hard money lenders will loan to you with less, but as a beginner you want to make sure you have lots of reserves in case your first project doesn't go according to plan. If that sounds like more money than you can afford no worries, there are lots of A+ investing strategies that require less capital, pivot to those and do BRRRR's later when you have more cash.

DM me anytime, good luck and don't wait to long to jump in- experience is the best teacher :).