All Forum Posts by: Ujwal Velagapudi

I've found that financing within each country is unique, and can be difficult, which is why it just has to be cash only. For example, Japan, tends to be this way. 

Other countries you do have to deal with their local governments, regulations, corruption(!), etc. which will be so foreign to non-locals, going well beyond just trying to gauge if the property itself is worthwhile. It's comforting knowing all the laws we have here, being able to use English, have legitimate contracts, etc. but it's not the same in all countries. A contract can be useless (sometimes it is in the US too :) ).

Currency exchanges, inflation concerns, especially in emerging/developing nations. 

I've considered it, and have seen it from others, out of country can be OK, but I see the risk higher than the reward. If you're going to get X% returns in another country, can you not get X% return within your own country, or even within a 2 hour radius of where you live?

For me, it was more the allure of traveling so much and I just thought it would be amazing to have a property in all the cool places I've been able to visit. So it came more from a personal desire, since financially they were very comparable (at best) investments to what I could find local to me. I realized I'd rather just make a safer investment locally, something that I could work on scaling easier here, and then just slowly have one or two small properties out of country more as a personal residence/timeshare sort of asset than a true investment. 

I think it is larger cities, and within those cities, the lower income neighborhoods who will be hurt the most. 

Also, I don't think people losing rent, unpaid tenants, etc. will be posting about it all too much on BP. 

It will be interesting to see how it unfolds, and also how Nov. 3 impacts the moratoriums, among many other short term impacts. 

Is this an increase, a significant increase to the current rate? 1.2M seems like a lot. Is this total, 1.2M citizens, or just people on all visas, like student, work, etc.?

Seems like Canada is trying to take advantage of the US' strict immigration of the past few years and get some of the redirected immigrants. 

That seems really interesting. I have seen a few of these government entities, single tenant NNN lease types, and it's intrigued me.

But with this in specific, the 90 day cancellation clause is a deal breaker. All the others I've seen were usually 5, 10, 15 yr fixed terms. If they pull out, then it's a significantly lower valued asset. Population of 500 town is scary to consider as well since that is way too small where anything could impact your cash flow, and the asset. 

If there is any way to firm that lease up, that would be a solid buy as it is stable, government backed, and fixed (albeit at a lower CAP).

@Molefi Branson don't be sorry, that's what BP is for!

1) No rehab. Just buying it right, below market value from off market sellers, getting to 100% occupancy, and increasing rents over time. No financing, or refinancing, cash only. It was on avg. 4-5x on just the appreciation of the property, excluding the great cashflow. I did have a mixed-use that falls into that category. But otherwise, on my residential, I did not see that level of return, but I also didn't care much for residential & as a result didn't put in as much time into seeking them out.

2) It is very tough to get comps sometimes. I think craigslist and other marketplaces are the best bet to gauge rental prices. See who's listing nearby and go +/- 10% of that range and test it out. Comps also make it tougher because like I was saying, it could be a night or day difference from just 1 block over. Literally $200k properties a few hundred feet away from <$50k homes, or even blight. As the city grows and improves, comps should get slightly more accurate.

3) I've never gotten financing in Detroit, it was always very tough, but I do know that it's been improving. Especially for SFH, it should be much easier and there are plenty that will do it nowadays. I think you should speak to a few local lenders, but focus more on getting the proper property to purchase.

4) Lower credit score threshold, lower income requirements, being more lenient on background check issues, etc. Yes, lower criteria opens you up to potentially worse tenants, which could lead to many issues (non-payment, evictions, property damage, poor maintenance, neighbor issues, etc.). 

5) You could really get into the zip codes, but just as a very high level tip, you could focus more on the West side, or North West. West of Woodward Ave. that cuts through the middle of the city. So many pockets though, and I've actually had some great deals on the East side. Just a few on the West side 48219, 48238, 48206 , 48221 , 48223, or 48224 on the East. 

6) It's tough to say, I am not you and don't know anything about all of the considerations you're taking in. Your $$ is definitely enough for REI to take you seriously, but if you're wanting to learn, I'd push that you not only have $$ to invest, but are willing to put in the time to learn & assist them as well. Partnering isn't a bad idea, but I would build relationships with some people first and get to know them than just jumping into a deal together. I'd say best bet is to join some local meetups. Detroit Renegades is a good one I attended, and they do have more city of Detroit focused folks, MREI is another large one but also focuses on suburbs too.

7) I have some, negligible right now since mostly on land contracts, but not like what I had before.

You will find it very difficult to find financing due to location/low cost for lenders (commercial especially), finding good tenants is much harder and you will have to lower your criteria, safety concerns if you self manage, and difficulty trying to get anything done with the city. Dealing with low barrier to entry means you're dealing with everybody and anybody, which is not good if you're trying to run a professional business. 

There are many horror stories you can find on scams. People investing from out of state, meanwhile local PM's/contractors eating up their $$, and in a lot of cases outright scamming people into deals. Fake P&L's, squatters as "tenants", etc. 

Detroit can also be night and day from one block to the next. It is something I urge people to see for themselves. Dirt cheap homes are available still, but do you want one in the midst of a street with 50% blight that has no removal date in sight?

Jobs - or lack of them. The city is gentrifying, that will cause appreciation and rent increases, but for most other residents there still lacks job growth. 

City governing: It has improved as of late, which is nice, but tough to undo decades of degradation in just years. The city offices are difficult to work with & cumbersome. the policing of permits, licenses, violations, etc. is a headache even when you're doing everything right. The courts for evictions and all are also always backed up and dreadfully slow. I automated my business nearly 100% as I traveled out of country a lot, but because of some minor things I did need to physically be present for some city documents, which is just an archaic way of doing business. Not discussing why these issues are there, but just simply sharing the issues I've come across with the city. The city is severely understaffed & under-funded. We even had 911 calls go unanswered. 

PM's - It is tough to find a good PM the worse the neighborhood is. Very tough. Ones who will manage in the worst of areas I've found have a direct correlation with poor performance, poor tenant treatment, greed/borderline steal, etc. especially as a small PM company scales. It's the territory, it is tough to do an excellent job at scale with small buildings. 

Self manage - Can be tough managing different tenants and backgrounds if you're not local. Also, it is violent and can be dangerous. I've been told by numerous tenants basic things of what to do and not to do when going there, like carrying, blend in with a simple car, dress casual, racial things, etc. I've learned a lot from self managing my Detroit buildings. 

Contractors - It is tough to find good contractors. Many of them will not go into Detroit, or only will at certain times (not late night emergencies). You'll have slimmer pickings to choose from, or unlicensed contractors. 

I've rambled on a bit, but just some that came to mind. I'm sure there are many other factors, which I'm sure are similar to other cities as well, but Detroit is its own unique beast. Tame it and it can be great $$$ for you, otherwise you could easily be out $$$. 

If you're asking me, I'd sit tight and not touch it for a few months. Election is one thing, but what happens as a result starting Q1 2021. What happens with the virus, vaccine, etc. So many things going on that I wouldn't do much with it right now. 

I'd keep saving, and stashing away as much $$ as you can throughout 2021. If you do see a great opportunity, I'd jump. Not a good one, a great one. Otherwise, being a bit patient during this time can't hurt.  

Yes, they tend to fare better in cash flow over appreciation. But Detroit was doing so bad (2013 bankruptcy) that it's had some tremendous appreciation. I've averaged at least 3-4x on investments there. 

Cheap is not always good. It is cheap because of so many factors. Unemployment, poverty, poor governing, lack of new jobs, slow external investment, violence, and so many other factors that result in a place being relatively cheap. 

Both of those markets favor SFH & MF I think.

I wouldn't say there is no appreciation in those markets, just relatively lower than maybe other markets. But at the price points you could get in at, there is still room for BRRRR's & flips. It will just be more intensive with your time and proper oversight.

Now I personally don't see any reason to invest in Toledo. Detroit is already so small, and struggles with so many issues. But it is a larger city, it potentially could hold its own and develop growth on its own with external investment, government leaders, new companies moving in, etc. Toledo just doesn't have that scale and ability, I think, and feeds off of Detroit. So maybe it could be a great move, but it just seems riskier than a Detroit (which already is risky in many ways) when you consider all those factors. 

Detroit has been great for me, not just RE but other businesses too, but I always warn people (especially out of state investors) about all the various factors since it can seem attractive at such a low price point without considering the risks. 

Yes, I have for commercial, but never for anything residential. Was it your primary residence? Maybe they wouldn't have directly to the LLC, which is common. I would ask if they can put it under the LLC, but still have it personally guaranteed by you, which satisfies both of your needs.

1) Form the LLC, it takes 5 minutes. You can transfer title to the LLC. It doesn't have to happen overnight, so maybe get another property first and get momentum if you want to save $$. However, I would always have an investment under an LLC + insurance.

2) It doesn't really matter. They will just have you personally guarantee everything even if it is under an LLC, which you probably were doing anyways.

3) Same as you would any other flip. Buy via LLC, take loan via LLC (personally guarantee as well), renovate w/expenses all under LLC (keep receipts of course), and then sell under your LLC.

They are broad questions, but hopefully that helps a bit!