All Forum Posts by: Timothy Moore

Obviously I am biased given I invest and manage in Detroit but Grand Rapids is definitely going to be a tough market to get great returns on. In my opinion, it's already experienced most of it's growth but will remain a stable market for someone looking for low but secure returns. 

Detroit is going to be a little higher risk (granted you can always invest in the suburbs for minimal risk), but there are much higher cashflow and returns. You'll want to do your due diligence, as with any other investment, and team up with the right broker, mgmt company, lender, etc. but there's much more opportunity in Detroit. 

I'm always open to chat with anyone interested in investing here.

Just comparing options here but it sounds like if you sold the home you'd get almost nothing, just offloading the asset. With the PMI falling off the loan you should be able to net 100-200 per month and be building equity at the same time.

Only reason I would sell is if you're able to get a reasonable cash gain from sale (after selling costs) or you foresee this being a poor market to stay in long-term. Obviously the market is up right now but overall long-term expectation in your market will be a big role.

Even if you were only breaking even (after all expenses and maintenance factored in), you're still building equity. Ideally, turning this into a cash flowing investment of 100-200 a month is best option in my opinion. 

I'm not a lender, but you may not need to refinance to remove the PMI. Check with your lender on that but you may be able to simply get it removed. It's worth digging into this more because refinancing may use new home values instead of the 206K, which would mean you're still not at 20% equity yet.

I'd use Jimmy Roberts with Renaissance Appraisal. He's done a good job for me

I've got two that we manage in Warrendale now and honestly I've found it to be reasonable to manage in for such a low cost area. Crime doesn't seem too bad and tenant options are decent.

Nice job with the BRRR!

As Travis said, the main way to avoid this is the due diligence phase of any deal. Think like an appraiser when you're running comps prior to close. There are many parts of Detroit where there are zero flips, at best it's a 'flip to rent' situation. Other areas have many flips and comps that make it easy for an appraiser. 

Especially if there aren't many comps, provide the appraiser with information on recent renovations to the property. This can help show the increase in value that is difficult to see in the market comps.

Some areas or property types are more hit or miss. Not only can property values more than double across one street (such as Mack on the East side), but also 2-4 units can be especially hard for an appraiser to comp since most of these are residential and based on sales comps and not income comps. There's often few of these for them to compare in any individual area.

At this point, I'd recommend digging into the comps for your house and get another appraisal. 

There's a lot of factors at play here but the biggest two in my opinion are: 

What are your short & long term investment goals and what is your risk tolerance?

What are your plans for your next primary residence?

You can pull out more funds by selling (ARV less roughly 8% sales fees) compared to doing a cash out refi (typically pull out up to 75%). However, between the two of you, you could potentially use both homes as primary residences and some banks like Huntington I've seen do cash out refis at 80-90%. HELOCs are an option too.

I don't know the exact location but if you're within a mile of downtown and 70k margin, it sounds like your home is in a very steady area right now. There may be more potential for appreciation but it's likely also a lower ROI as a rental as compared to investing in riskier areas or in multi-family. Not necessarily a bad thing, i started investing only in class A and B areas in the suburbs before investing in Detroit but it is a factor.

Your primary residence plan is a factor as well. Do you love your current home? If so, stay there and focus on building out your rental portfolio using that equity and other funds. 

Do you want to move? There's the possibility of doing a 2-4 unit with 3-5% down and living in it while renting the other units. You could sell and buy two properties, one to live in and one to rent. 

That's honestly pretty reasonable. I've seen anywhere from 2-6pts and 8-20% interest rates on hard money loans here. If you have rapport or the ability to build a relationship with them, generally your terms will improve over time. 

Just make sure to be calculated on your flip repairs and time frame whenever using hard money since unexpected rehab issues and delays are more costly.

Hi Lizz, I own PM company that manages SFH and small 2-20 unit MFH properties in Detroit. I'll message you but I'd also be interested to know which areas of service are lacking.

Congrats Rodney, that looks like a pretty strong acquisition! 

Which zip / neighborhood did you invest in?

What was your cash out ARV?

Thanks for the referral. My company manages SFH and small to mid-size MFH rentals in Detroit. Feel free to reach out to me if needed.

Detroit can be a risky market, especially in the 50K or less purchase range, but there's been incredible growth and improvement in recent years. If you do the right due diligence and mitigate risks, there's still plenty of returns to be made in Detroit.