All Forum Posts by: Tom A.

Dredging up this old thread as a tenant has inquired about getting a dog. Steve Might, in Michigan you're limited to 1.5 months rent as refundable deposit. It can be any combination of security deposit, pet deposit or whatever but no more than 1.5 months. Since one month is fairly common for security deposit that leaves 1/2 month for a pet deposit if that's how you want to structure it.

The silver lining is the city now has the opportunity to go forward with a restructured debt load, restructured union contracts, restructured pension and retiree health care liabilities and with one person, the emergency manager in charge along with a bankruptcy judge, the ability to make decisive changes that the former leadership was unable to do. For example, turn management and its associated costs of running the huge river island park, Belle Isle, or the historic fort, Fort Wayne over the the state or regional authority as has been proposed and rejected by the former incompetent "leadership".

Contrary to what I sense is the conventional wisdom outside Michigan, this is not the beginning of a disaster. It's the inflection point where an ongoing disaster finally hits rock bottom and the city is given a chance to rebound financially. City services are already brutal. Bankruptcy doesn't make them worse (we joke they can't get worse when they don't even exist any more), but the reduced debt load and restructured city departments makes more money available to use for city services and makes the services more efficient.

From a real estate investing perspective there have been opportunities to pick up cheap properties for years and years. You can bid at the annual second tax auction where thousands of properties start at $500 (and many don't get any bids). The houses on the demo list are usually too far gone compared to what you can get in good condition for a relatively small price to make it worth buying a wreck of a demo house.

Detroit will continue to have areas where the housing stock is just devastated. It will also have areas where there is strong demand, rising rents and asset prices, and an influx of young professionals. It's really a fascinating city but not for the weak of heart. I'll have to make a thread with some photos and commentary on the good and bad in the city some day. It's a strange, scary, fascinating and fun place, all at the same time.

Michael, I don't know your market but I'm surprised that a Section 8 property with $825 rent goes for $64K. That purchase price seems high for a middle-of-the-country real estate market, although our coastal counterparts are probably used to seeing parking spaces sell for more than that. $64K in my market would get a suburban non-Section 8 home with a rent of $1100 - $1200, but we are spoiled with high rental returns.

If you want to be an active real estate investor it makes sense to buy close to home if you can get a decent return. Your deal sounds OK but not great from my perspective. You might want to talk to some local investors to get their take on it. I'm sure there are some here on BP and at your local REIA that would be happy to share their opinion.

I'd also be looking at vinyl plank flooring like the Allure brand. I haven't used it on a really wavy surface though. Maybe talk to a local installer to get their input?

Pete Tam,

I don't want to put his contact info up here to keep him from getting spammed, but I'll send you the contact info for the inspector I use and recommend.

He's an ASHI member, has a builder's license, heating and cooling license, boiler license and has performed over 5,000 inspections. He can do multi-family apartment building inspections as well. He's also a landlord.

If anyone else wants his contact info, just send me a message. Disclaimer: I have no tie to him other than as a satisfied customer.

You might also want to look into the cost of having it done for you professionally. Unless you're looking at this as a learning opportunity you may find that the time and hassle involved in refinishing the floors yourself isn't worth the savings on an area that small. I don't know costs in your market, but I'd guess you could find a pro to refinish your floors for between $1.50 and $2.00 per square foot.

I'm a pretty handy guy, a woodworker,, and I refinished the floors in a two bedroom flip house once. After looking at the finished product and the time involved, I decided to hire that job out in the future. Keep in mind that when we amateurs do things they can take twice as long as the pros and not come out as good. If this is a rental there is a cost for each additional day it's off the market.

In addition to commissions and closing costs the seller will have holding costs such as taxes, insurance, maintenance and utilities while the home is on the market and while they wait for an accepted offer to get financing and close. You may be able to offer them a quick close if that suits their needs, or a closing on a date of their choosing that better meets their needs, which is something that a retail buyer may not be able to offer.

You can also point out that they don't need to clean their house, de-clutter their house, stage their house, vacate their house for every showing and keep their house in showing condition constantly. And tell them that you're not going to do a post-offer inspection and come up with a list of 30 minor to major issues that you want them personally to pay for or fix before closing.

They may also have some other need or problem that you can help fix. For example, they may have furniture they need to store in a storage unit for a few months and other things that they need to move from a cottage, or an old boat or hot tub or pile of junk that they need to dispose of, and you can make that happen for them. A retail buyer is not going to do that for them.

If your value proposition doesn't meet their needs, as others have stated, refer them to a realistic real estate agent and move on. Then make a note to yourself to check back after a reasonable period of time. If their house hasn't sold they may be more receptive to your offer.

Originally posted by Richard Lee:

I am confused!

NEW updates.

The borrower did not have the deed, he actually have a "lease to own" contract, except the borrower paid $100k up front! (Does he got tricked or something?)

So, if I buy the "note", I will have the deed, and if he decide not to pay the monthly payment, I don't need to "forecloure"; I just don't have the obilgation to sell it to him after he .

Has anyone done this kind of deal before? Does the situation improves because I will have the deed, or is it a even more complex thing and the borrower may take legal action against the "note" holder, Please help?

Richard, I'm confused too. If the borrower paid $100,000 upfront that sounds like a land contract, but the term "lease to own" sounds like a lease option, which is a lease with an option to purchase the home.

Richard, please don't take offense, but the factors noted above by several very astute commenters combined with what I perceived as your lack of real estate investing experience makes this a high risk transaction for you. Unless you can get much more comfortable with this potential deal, you may want to look for more of a plain-vanilla investment.

In Southeast Michigan it's common to include an inspection contingency in your offer. It's also common to include a financing contingency unless you are paying cash. Since you are in California and the house you are considering buying is in Michigan you should certainly have someone look at it carefully.

Some investors (experienced, usually) will waive the inspection contingency in a hot market to give them an advantage versus other potential buyers. I would not recommend that unless you have a trusted person who can assure you that the home is in the condition you think it is in.

Bill B., being introverted really won't hold you back as a real estate investor. It may take you a bit longer to get to a warm fuzzy level with other investors, but it will also help you avoid some slick talking scammer types that sound too good to be true. You'll find that there are other introvert investors who are looking for someone they can relate to, not the glad-handing life-of-the-party types.

Regarding what to say to others at REIA meetings, just say something like "Hi, I'm Bill B., I'm just starting out in RE investing and I'm interested in _____________________. " If they're doing that same thing you can talk about what they're doing and ask them what they think you should do to get where you are going. If they're not doing what you're focusing on and the conversation trails off, ask them if they know anyone at the meeting that you should talk to.

I saw in one of your other threads that you're looking at investing in WI. You could ask if the other person knows any one that's investing out-of-state. In your high-priced market there are surely others who are pursuing that strategy.

Keep going to meetings. Over time you'll note that strangers turn into acquaintances and sometimes, into friends. Don't run home as soon as the meeting ends. Stick around and talk. Arrive early and talk. That's often more valuable than the speaker that evening. Meet a REIA officer and ask them to introduce you to people they know that would make sense for you to talk to. It's one of those things that will feel awkward initially but become much less so in a few months.