All Forum Posts by: Tom A.

Welcome @Tom Shilakes! BO is a great site packed with RE investing knowledge. We also have a pretty active local group that meets up on a monthly basis. The next meeting hasn't been announced yet but you can get on the email list if you send me a message with your email address. I also post them on my FB page below.

@Ben Wakefield, Chelsea is a nice town. It depends on what type of rentals you're looking for. Chelsea is mainly an owner-occupied town, so you'll pay higher prices than in a predominately rental area . You're probably looking at $90K - $110K for a 2 bedroom that will rent for $900 - $1300, the higher end being a condo with monthly association fees. A 3 bedroom would be more like $100K - $140K for slightly higher rents.

The area around AA ("suburban" AA) is higher priced due to spillover effects from the college town. Better deals are in the metro Detroit area, or parts of Ypsi.

Welcome to BP, @Lisa K.! It's great that you're starting out in RE now, and looking at Detroit as a possiblity. I used to live downtown in Lafayette Park and loved it. Downtown is much better now than it was then too, so I'm sure you enjoy it.

For your first investment I wouldn't advise doing something too "outside the box". Detroit areas like Corktown, Woodbridge or Midtown might be worth a look to see if you could find something that needed work but was significantly below market.

If you want to be a little further out, but in the city, consider along the river/Jefferson Ave, EEV, Rosedale, parts of Hamtramck or West Village.

For suburban entry points there are a lot of options but if it were me I'd look for something in less expensive parts of Ferndale, Madison Heights, or parts of Hazel Park, assuming you're going to be living there. These areas are close to the action in Ferndale and Royal Oak but more affordable.

BTW, we just had our 5th monthly Metro Detroit Real Estate Investors meetup. You might want to check it out. We announce it in the

http://www.biggerpockets.com/forums/521-events-and-happenings forum here but it can get lost in the traffic. I also post it on my FB page (see below) and do a monthly email announcement. Anyone interested in getting on the email invite list just drop me a note at the email below.

We usually have about 25 - 30 people, from college-aged to seasoned citizens, from newbies to those with decades of experience. We meet a local restaurant just to meet and talk, no charge except for food/drinks. Everyone's friendly and helpful. Fyi, here's a link to the last one

https://www.facebook.com/events/495764480534567/

Best of luck in your real estate endeavors.

@Ben Wakefield, are you looking to invest in the Ann Arbor market, or elsewhere? Ann Arbor is kind of in its own little bubble, in a lot of ways (I grew up there). That market never crashed as hard as metro Detroit, and it's still really hot. You'd have no problem renting out a place there whether it's to students or families, but you'll find the returns aren't as good as other nearby areas.

Finding good property management can be tough because in many ways, your interests and the interests of the property manager aren't aligned. When you look at how they're compensated for lease-up and repairs you'll see that what you see as expenses, they see as income.

Not to say a PM will do bad things on purpose, but the inherent structure of the relationship isn't always favorable to your bottom line.

Some people partner with their local family members. The plusses are trust and aligned interests (profit) but there can be a whole other thread on how family partnerships can go sideways.

Welcome @Bill Berklich! For you and any other locals, we're having the monthly meetup tonight at Shields in Southfield from 6:30 on. Can come later depending on one's schedule. More info at

https://www.facebook.com/events/495764480534567/

Beautiful kitchen and bath Bryan.

I'm sure BPers on the East and West coasts are staring at the "1500sf, 3 bed, 2 bath (of yeah, did granite on old cabinets in the baths too) $100,000" part of your comment with some level of disbelief, but that's no lie, this is an affordable area for housing.

At an ARV of around $175K in the area you mentioned (Ferndale?) I'd 100% do granite. Minimal incremental cost in your smaller kitchen, but big bang for the buck.

@Pete Tam, you mentioned your objective is cash flow. You can do much better in Michigan than the property you mentioned, without buying in a war zone or high-crime area. A $120K house around here is an owner-occupied house, typically. House affordability in Michigan is the opposite of California.

I saw a stat the other day that in suburban Detroit (excludes the city), a family earning the median income for our area can afford (using lending guideline of PITI < 28% of income) to buy 80% of the homes that were sold last quarter. In LA and Orange County, only 20% of the homes are affordable for a median income family.

If your brother is in the Detroit area, the most compelling rental homes are IMO in the first ring of suburbs around the city of Detroit. Your $120K will buy two $60K rentals that rent for $1000 - $1200 each. Or it could buy three $40K rentals, each of which would rent for $800 - $900. There are also suburban neighborhoods where you could get four $30K rentals but you start to get into a little higher hassle factor so I wouldn't point a first-time long-distance investor that way.

BTW, these inner-ting suburbs typically don't have HOA fees . HOA fees are not very common in rental neighborhoods around here.

I know some landlords that do, and some that don't. Some that do offer appliances (bought used, or that came with the house) put in the lease that they're provided for the tenant's convenience and the landlord isn't responsible for fixing or replacing them if they break. If they break the tenant can have them fixed at their expense or they can replace them. The landlord will remove the old appliance upon request.

It seems that the more experienced, high-volume single-family house landlords try to avoid being in the appliance repair business. You could, however, make appliance rental another line of business for yourself. Tenants without appliances sometimes go to the local rental place to get their appliances. You could provide used (or new) appliances for a monthly fee. I've known landlords that do that and make out OK financially.

Another wrinkle in foreign investing is that you're exposed to currency risk. That can help or hurt your investment performance, but it's not under one's control. Changes in currency valuations can overwhelm your real estate investing returns.

Combined with long-distance property management risk, there's much more uncertainty compared to investing locally. In the financial markets, uncertainty should be compensated for with higher returns. I would advise the same for international real estate investing.