All Forum Posts by: Mark Ormerod

 good point. Also double check taxes have been paid and especially water bills are not overhanging the property. Some properties can have a water bill thats bigger than the purchase price! 

 sorry, thats just ********. the biggest risk is poor property management and a bad area leaves you a gutted shell after someone has removed your hvac and copper. Most violent crime in Detroit (70% according to cheif of police) is related to narcotics and is out in the wild areas. Detroit is a HUGE city, over 140 sq miles - you could fit Boston, San Francisco and Manhatten into that area and still have some room left over. So there are great areas moderate areas, and war zones.   Downtown CBD has lower crime than most major cities. Many of the murders in the stats are bodies of people killed in the suburbs and dumped in the city. 

Many of the comments about Detroit seem to be from SoCal people who are basing their opinions on 10 -15 year old reports, tinged with an undercurrent of rascism. I'm sure there are parts of even San Diego where you'd be foolish to go at night. 

can only agree that if the BiL stands by the numbers, could be great. As per the ' immigrant' status of hamtramck, you get a lot of hard working people who have good incomes (in terms of cash, if you know what I mean) , but can't get a mortgage or have the together for a deposit to buy. I wouldn't expect huge equity gains, but if your contacts can manage, sounds great. 

it takes local, boots on the ground. The haters can keep there money elsewhere, fine with me. Prices are already skyrocketing with lots of east coast money pouring into the city now the bankruptcy is behind us. They have seen this movie before -  in ny,  philly, NJ - and they figure they know the ending. Lots of money for those who get in early. 

the biggest problem in some areas is a lack of inventory.  so, to address the original point, yes. There is huge money to be made. But as an out of state passive investor,  go elsewhere. Or stick to the burbs,  otherwise known as detroit metro. 

I love Detroit.  It is an incredible city. Don't believe the standard media memes. The place is booming, but it varies almost block to block. Yes, there are $5 sfh worth negative amounts by the thousands. But also areas where you can get 18% yield with a likely 200% equity increase on top. 

some of the comments here are just plain ignorant and offensive.  

And yes, unlike many, I live here. 

I'm looking at 35k places that rent 800. B/C neighborhood.  Banks won't lend below 50k, and the people who live there don't have savings anyhow. jobs, yes, but totally month to month, so they can never buy.

As Christian Carson said, these sort of deals are around. 

as defined here, your cap rate and ConC  are the same with no financing.

but I would note ConC and even 'roi' are very simplistic metrics. The problem I have with both is they don't take account of your WACC - weighted cost of capital. 

For example. In my case I have a portfolio of passive investments that generate returns, so any RE deal needs to more than beat my planned portfolio return, after tax. if it doesn't,  I'm better offkeeping the moneyin the portfolio. 

This is my I prefer different metrics in addition to ROI. I especially like NPV(@ wacc) / PV Capital investment, called the Value Investment Ratio.

welcome allison!

And don't listen to Brandon about Detroit. It's a fantastic city. I actually did have a vacation property here for several years! Come and visit before dissing the place.

Minh L.

ok, for example,  take 250k and borrow 750, use the 1 mill to buy 20 x 50k houses, each net say 6k a year, less the mortgage payment at 60k a year, nets 60k. 

Keep the 50k remaining as a capital buffer!

YMMV

wow. SoCal is a different world.

Meh, a measly 300k....

Where you live is not really considered an investment, it's an expense. living in a small house will reduce expenses and increase cashflow. But you have to live somewhere. Once youve decided,  look at rent vs own calculations, but be wary of buying tulips. 

Now, with a portfolio of rentals in the real world, assuming a 25% equity and a nice performing portfolio,  that should get you... say, .... 60k a year net? maybe more. You could use that to rent in socal...