All Forum Posts by: Matt Souza

Hey BP!

A friend of mine is closing this month on a condo (as a primary residence) in Ann Arbor, Michigan. He is looking to do some renovation work before moving in, nothing major:

• Replace carpet/flooring
• Demo a small wall/closet
• Redo one full and one half bathroom
• Possibly replace a water heater
• Some minor miscellaneous work

Does any in the area have recommendations for reliable contractors that could do this work? Any information would be greatly appreciated.

Thanks!

Hi Jason, First off, any particular reason you need an LLC? Liability coverage should be more than enough for just one property. Plus, the bank can technically call the loan due if you Quit Claim the property and put it in an LLC. If you decided to go the LLC route, it's really easy to create one in Michigan. Follow this tutorial below and you should be done in less than an hour: http://www.nolo.com/legal-encyclopedia/michigan-form-llc-31760.html Best of luck!

There could be a price drop coming, but that is beside the point. I would have to agree with Joe, your numbers seem off, and you are missing some very important costs (bold).

Rent: $1300 / mo

Mortgage: $630 / mo (4.8% over 30 years)

Taxes: $260 / mo

HOA: $200 / mo

PM: $130 / mo (average)

Insurance: $80 / mo

Maintenance: $65 / mo (5% gross rents, very liberal)

Vacancy: 5%

You will actually lose money every month, even if you were to self manage. Just my two-cents.

Hi Robert,

I agree with both of the posts above, having a solid state specific Purchase Agreement is crucial. But first, you need to define why you are buying. Are you looking to wholesale? Buy and hold? Flip? All of these contracts and processes for buying will be slightly different.

Let me know if you need help defining your goals. Best of luck!

Hi Jacob, Welcome to BP! I am a real estate investor in Metro Detroit myself, still relatively new to all of this. I recently closed on my first deal in Warren actually, I feel like it's a pretty good "farming" area to do some rehabbing. I'm actually taking a different approach: doing a few buy-and-holds first to learn the ropes, then start flipping next year. Feel free to reach out if you are looking to share some ideas or just to network. Best of luck!

Hey David, Sounds like you found a hidden gem. Small multifamily properties are hard to come by in Metro Detroit, especially the Ferndale area. The ones that get listed are bought up very quickly, since there are so few. I think your best bet is driving for dollars on this one. Even at that, the inventory around Ferndale is so low that you may not see many. Wholesalers might have some, but not the mailing lists I'm on. Good luck!

Hey Jackson, Welcome to BP, you are taking the right steps. The question of "is Detroit worth it" comes up a lot, and my answer is yes. There are a lot of cheap, safe, and high return houses in the Metro Detroit area. When you get in the city, you just have to be very careful as you move block to block, but returns can be found there too. I personally invest in Metro Detroit. Detroit has big plans to grow the city tech center and bring all sports team downtown, meaning the whole Metro area will feel the growth. If I were you, just start by picking a specific area, driving around, and getting a feel for home and rent prices. That way you will know a good deal when you see one. Make sure you have a team in place (realtor, lender, lawyer, etc) to pull the trigger on a property quickly. Let me know if you have any questions, I'm happy to help. Good luck!

Hey Joe,

I like the concept of land contracts, and they are very popular in Michigan. Typically they are structure as follows: $X money down, $Y monthly payments, and $Z for a balloon payment after a certain number of years (typically 4-7 from what I've seen).

The main risk to the buyer is the balloon payment. If the buyer cannot get financing during that period or does not have enough cash, then they will forfeit their initial deposit and be out that money. Other than that, I think it's a good tool to use if your credit score needs some work or you just don't want to finance immediately. Good luck!

Hey Nick, Glad you are moving North, I think you'll like it much better than Florida (at least most of the time). I do investing in the Metro Detroit area. As many people have mentioned, you need to be careful where you buy (same goes for any city). That said, there are a lot of safe, blue collar areas on the outskirts of Detroit where you can find great returns. I have my personal list of favorites, feel free to PM me for more info. Good luck!

Hey Nathan W. , welcome to BP. I'm a relatively new REI in Metro Detroit as well, working on closing my 1st and 2nd deal here soon. Feel free to reach out with any questions, always looking to expand the network (and grab coffee or beer). Best of luck!