These costly improvements are pushing rents up.While effective rents (factoring in concessions) may be declining, asking rents remain high as landlords aim to maintain their property value.

Prices have increased significantly in my market in the past 18 months with savvy sellers now expecting top dollar for their terribly maintained properties.

Construction can have unforseen costs, construction loans for rounds of funding can be more expensive over time, rent markets can drop, vacancies in market can increase.Typically entitlement phase of land most risk, followed by development, followed by vacant building turn around, followed by half vacant building, followed by mainly full building with value add component, followed by brand new building with market or below in place rents and everything new with good location.Along that spectrum of course you go from heavy equity upside potential to mainly just the cash flow return and hopefully price appreciation over time.Investors have to decide on the spectrum of their risk assessment to capital over what period of time how they will allocate between all one type of investment or multiple and what percentages.

Because banks know that investors/tenants don’t maintain properties as well, and fight needed reserves and assessments — don’t even think of arguing against the fact).

To thrive in real estate investing, you must maintain a firm grip on your finances.

You need to maintain a reserve to handle unexpected costs in the first year.How much should you maintain in the reserve? 

It was simple and cheap.However, it still takes time and money to set up and maintain the LLCs.

🏦To get to the point where you can avoid personal guarantees, you’ll need to build your business credit over time:Open trade lines in your business’s name (utilities, vendors, etc.).Make sure you’re reporting payments to business credit agencies like D&B.Keep your debt-to-income ratio low and maintain good cash flow.It doesn’t really matter if it’s an LLC or S-Corp—what matters most is establishing the business as a strong, creditworthy entity.But yeah, in the early stages, personal guarantees are almost unavoidable.

Financial independence requires an income that enables you to maintain your standard of living throughout your life.

ThanksHello Imani, my husband and I have been building big beautiful brick properties day in and day out in Detroit for the passed 5 years straight and I’m proud to say we are experts in all aspects of building and maintaining successful rental properties in Detroit City.