All Forum Posts by: Saul L.

So far a landslide victory for Option 1- get a judgement.

Anybody think otherwise ?

Thanks all for the input.

Thought I would throw this one out to the wisdom of the masses of the good people here on BP, and see if it can help me come to a decision.

I won't bore you with all the details of a mismanaged property and non paying tenant that eventually had to be evicted, as I am sure most of you have heard it all before - especially with the properties in Detroit.

I now know that the tenant was living solely off social security with a total income of $2360 per month, and probably couldn't afford the property from day one anyway - (rental was 800 pm). The original PM (now fired) didn't take a security deposit from them and with all expenses, water and electrical bills etc. they have left me with an outstanding debt of around 2200$. I am at significant loss on this investment , and haven't been able to get it properly cash flowing since I bought it in Dec 2014.

I have approached them and attempted to negotiate a payment plan, but got the royal FU.

They are a family of 5, she claims to have major health problems, surgery etc, claims to be homeless as a result of the eviction etc.- difficult for me to assess the accuracy of these claims.

My dilemma is obvious and I am sure many of you have faced similar:

1. Do I pursue this debt to the fullest extent I can, possibly recouping some of my losses - Small Claims Court or Collection agencies.

OR

2. Do I write this off as the cost of doing business, and move on ?

The things I am considering:

In favor of Option 1:

The principle - I hate the mind set of people who don't take responsibility , believe they deserve to get everything for free, live in your property for months without paying rent or bills, and won't even discuss settling a debt. If you can't afford a commitment don't take it on - and if you did, bear the consequence.

In favor of Option 2:

I may not ever see 1 cent as I am not certain that they are collectible even if I do get a ruling in small claims - as a result if I sue I will just have incurred further costs with no result.

In the process I may be creating a lot of additional hardship for an already destitute family ( I don't want to say taking food from the children's mouth ). In another context if this family had approached me for charity, I would probably have considered helping them out.

What would you do -Option 1 or 2 (or something else) ?

All opinions or suggestions welcome.

Welcome Nathan,

Definitely reach out to local REI groups. I went to two for the first time on my last trip to Detroit, and the leads, connections and networking have already helped me tremendously.

@Tom A. hosts a local group. 

You should also maybe talk to @Jeff Rabinowitz - looks like you two share a profession as well as an interest in RE. There are some really great guys involved in your area.

Good Luck.

I use Chris Moshier at Simplified Insurance, (248) 996-8904 - believe he could give you a good quote.

Hi Wilmar,

I can recommend Castle: You can also contact @Tim Dingman on BP.

They manage 4 of my properties and have a slightly different business model to other companies.

Best of luck,

Saul

Great Post Jon,

I can only agree fully.

Welcome to BP- It is an awesome tool- I am also relatively new and its changed the way I invest allready.

I would say walk away.

I wouldn't buy a used car without seeing it, or having someone on my team see it, never mind a property.

To get back to @Jeff Rabinowitz original post, after initially investing in properties within the city (Zips 48223,48235) for long term buy and hold, and experiencing firsthand all the unforeseen complexities that go with that strategy in Detroit, I am taking a step back and reconsidering - looking for cleverer routes with the right partners on the ground.

I think that both the suburbs and the city proper have great opportunities (and am considering further opportunities in both)  but not necessarily the same strategy. They are different markets. What works in the city wont necessarily work in the burbs and vice versa. (Not sure how the @Joe Villeneuve BRRR strategy would work in the city without the stability of the burbs or if @Richard Dunlop 's strategies for the city would work with the higher priced properties in the burbs)

In my opinion, the burbs or city debate all comes down to the area you are familiar with, your strategy, and for an out of state investor - who you are working with on the ground.

@Janann Chan; @Richard Dunlop; @Jennifer Streamer

Richard- you are so right about better ways to invest in Detroit.

Jaanan, believe me, as a foreign investor like yourself, I've been there and nearly made those  mistakes. ( In fact from your questions, I wouldn't be surprised if its the same turn key company  trying to sell you this property,  that I used for my first 2 properties. I wont be going back to them.) 

Be very careful, Detroit is a not for every investor and definitely not for every foreign investor. Richard defenitly saved you a whole lot of money and heartache.