All Forum Posts by: Tommy Desmond

Hello Cornelia! I'm in Michigan as well. Welcome to BP. I'm a newer member myself, and I've already started meeting some great people.

It sounds like you've already been investing for a while. You should check out www.biggerpockets.com/biz to learn more about how BP can work for your business.

The unfortunate end result of Detroit's restructuring is that the working stiff and the retiree will probably take the brunt of it. It's brutal and unfortunate, but all the criminals who caused the problem don't have any paper trails to reclaim any assets. It's been a feeding frenzy for nepotism and shady dealers for so long, all the capital that went into them is just a ghost now. There's only one place the city has legitimate money, and that's in its law abiding working class. It's a sad story, but it has to end so a new chapter can start.

With the emergency management, the unions can stamp around all they want, the well has run dry, and yelling at it won't make it wet again.

@Patricia Franciulli In the suburban areas I deal with, my average DOM is from 15-30 days right now. We're at a relatively low inventory point, but it's starting to build up a little.

@Aaron Yates Those $500 houses definitely do exist in the city, just probably not in places you want to get stuck dealing with. I get calls weekly from hotshot "investors" in NY and CA that think they're the first person to discover the $500 house in Detroit, and that I should be honored to drive over to the 200 properties on their lists and give them detailed reports about the properties. I don't do that.

Honestly, I would be very wary of using agents to find investment properties in the first place. I'll be the first to tell you that 90% of the training agents get is incentivized towards retail buyers and sellers. The truth is, most of them don't really learn the specialty skills that go along with investment properties. $5k under asking is a deal to many of them.

I mentioned the other day in my office that I was thinking of wholesaling one of the properties I picked up, and not a single person in the office had heard of it, including a broker. It's just not their business.

From their perspective, and perhaps rightfully, why would they do the extra leg work when it just results in a lower commission for them? Investors don't sign exclusive agreements with agents, where retail buyers and sellers do. There is more than enough business in the retail market that most agents stay there, and the ones that don't, pick up the deals themselves. I personally still have a thriving retail listing business that exists symbiotically with and parallel to my investment business. Investors I do work with have a track record, so their quantity of business makes the added effort worth it.

Agents also have reputations to maintain amongst each other in the retail circuit. If they get pegged as an agent who lowballs offers all the time, other agents will just stop responding to their offers. Lowballing an offer on property that has no distressing, nor a very motivated seller, is a waste of everyone's time. Most agents won't want to damage their reputations in the hopes one of their investors will pick up a bargain.

As far as Detroit proper goes, I totally agree with @Account Closed , the city is cleaning up somewhat, but that's not CLEANED up. So many of Detroit's moving parts are so defunct and inoperable that things you'd think are simple to accomplish aren't. Even easy things like pulling information from the public record... in Oakland or Macomb county, it's not a problem, in Detroit, there's so much missing or incorrect information, it's almost pointless to waste your time looking it up.

There are definitely people making money in Detroit, without a doubt, but these are seasoned people, who typically have connections and money behind them. Don't expect to show up to the party with $10k and own a shiny new subdivision, because that's not what's happening here.

@Jerry W. I hear you about the Learn section. It's pretty mindblowing the amount of information they've got there. I got the Flip and Estimating Repairs book that I'm going through now. I also read the Beginner's Guide to REI. I've got a ton of other non-BP stuff I've read or audiobooked as well. I feel like I've only touched the tip of the iceberg. There's so much to know. I'm going to have to just focus on one chunk and get good at it, because there's no way to know it all.

@Rob Yeichner No need to feel like that, compared to the seasoned pros on here and at my REIA, I'm 1000% green with a ton to learn. That's fine by me, I love learning new things, and I really love learning new PROFITABLE things ;)

@Patricia Franciulli Things are definitely picking up in many areas of the metro-Detroit market. In my primary area, Oakland County, prices are up 28% year-over-year. Even in the city there's a lot of activity brewing. The inner city neighborhoods like Corktown and Midtown are booming, but the outer ring city areas are still very very rough (There's your mythical $500 houses). In the areas I work, there are some great deals, though it is a seller's market with very low inventories. In general, there's a feeling of progress most everywhere.

Hey Tereal,

I'm a licensed Agent in MI. I'm with the Keller Williams in Royal Oak. I can help you out with a license.

Basically, you take a 40 hour course, and then take a test with the state. There are online courses, but I'm telling you, take it in a real classroom. There's so much material that you don't need to learn, because its not on the test. In a classroom, the instructor will tell you only the parts that matter. If you try to learn all the BS they want to you in the online classes, it will take way longer.

I took an online course first and got overwhelmed with all the occupational code BS. I'm pretty academically astute, but after about three days struggling with the online course, I ended up taking a second course in an actual classroom, and a week later I was done. I passed the test the first time pretty easily. It's mostly bureaucratic and technical stuff.

You don't use anything from the test anyway in real life. Once you join a brokerage, you'll have to get actual training in the real business of real estate.

After you pass the course and the test, you get your license. You have to hang it with a broker. My broker is Keller Williams. You also have to join the boards - National Associate of Realtors, Michigan Association of Realtors, and a local board. For me it's Metropolitan Consolidated Area Realtors. There are several in metro-Detroit. It depends where you plan to work.

There are costs for each of these steps, obviously. Getting into real estate isn't cheap, I won't lie to you. Expect to spent about $500 to get licensed, and another $500 to join the boards. Then expect to pay MLS fees for access to one of the MLS ($100 - $200 a quarter) and office fees ($50-200/month at KW, I've heard there are considerably higher, and lower fees at other brokers). Also expect to pay into your business to get it off the ground. There will be marketing costs.

Also expect that you won't actually see a check for several months when you start out. On average, I expect that, from the day I meet a new client, to the day I get some kind of check from a deal we do will be about 90 days out.

You will also split your commission checks with your broker until you "cap" (hit a specific $$$ in sales). For me, I get a 70/30 split with my broker until I hit $2 million in sales each year. My fiscal year is August-August. I typically cap in two months, then I get to keep 100% of the commission.

Be under no illusion, when you get into real estate - whether as an investor or an agent - you're starting a business, not getting a job. Expect to need a warchest of capital to get anywhere with it.

If you'd like to get the name of a team leader at a KW near you, drop me a message, I can hook you up with someone.

I'm also an investor in the southeast Michigan area. I'm also an agent, and I have to say, at the moment, our market is pretty hot. In my area (southeast Oakland County, primarily) we're seeing average DOM from 12-30 days. For nicely rehabbed properties, multiple offers over asking price is pretty common.

While I'm not intimately familiar with TX, I am familiar with what's happening there on a macro-level. It definitely looks like a sexy place to invest, and I've heard many opinions from seasoned investors singing it's praises.

That being said, I've seen quite of few of those same investors quietly pick up properties in Detroit on the cheap. We're seeing a massive influx of investors from NYC and overseas coming into the SE MI area and picking up property left and right. The reality of this bankruptcy is that it's a fire sale. From the inside, I can see the state government has finally had enough and it's purging the city. After they gut the corruption there, the investors who picked things up for pennies on the dollar will turn the spigot back on and collectively grow their investments.

People from outside the area don't necessarily realize the nature and geography of the region, how massive it is, and how distinctly separated the different cities are economically, even though they can border each other. Some of the cities I work in, for example, are not what people would expect from "metro-Detroit". Bloomfield Hills, for example, only a few miles outside of the city, has an average sales price of $850k. Birmingham, right next to it, has an average sales price of $495k. A far cry from the $400 houses the national media likes to talk about.

This region is definitely going to experience a resurgence. Wealthy land developers from Manhattan rarely put their money down on loosing horses.

FYI - I'm an import from New Jersey, not a native, so I'm no auto industry apologist or otherwise emotionally blinded to economic realities. I'm seeing this activity every day, and personally profiting from it.

@Jon I've found and helped coordinate over a dozen flips for clients, and I've just recently sold my first 100% independent rehab last month (Aug 2013). I'm no where near as experienced as some of the people on here, but I've got a handful under my belt.

I've written a blog post about my first independent flip, over here (it's on BP).

Realtors have limited motivation trying to find you majorly discounted deals. The lower the purchase price, the lower their commission. Unless you have a track record and they can count on quantity of purchases from you, they probably won't play ball.

Also, the agents have reputations amongst each other. If an agent gets a reputation as someone who lowballs offers, other agents may just start ignoring their offers.

If the market is a solid sellers market with low inventory, there's even less incentive for the agent to submit lowball offers they know won't get taken. If an agent is also an investor, and they understand a real deal when they see one, they're not just going to hand it away for a commission, they're probably going to try wholesaling it. Why make $1200 off a $50k house when you can wholesale it for a $10k finders fee?

For the most part, no, don't expect to get agents to find you real deals unless you're planning on doing a volume of business with them.

If you're driving around your area and you see bandit signs on the side of the road ("We buy houses cash!"), try calling the numbers. Many times, those people are wholesalers and if you tell them what you want, they will do the legwork for you.

Wholesalers also show up at REIA meetings. Be careful though, from what I've seen, many wholesalers are new to the game and they might not necessarily know what a real deal is themselves.