US Detroit - turning the bend

Anyone read this, or met up with GC??
Hello from Sydney!

 

Hi @Fox , I shall try and answer this as best and educative as far possible I can - having had inspected 31 homes today, so will be brief,

Do you own all houses that you are selling on your website?
Ans - 95% of them, yes. A few are assignment contracts. Seller sells, and you buy directly. My markup is 3k per property. My mark up is transparent in the deal.

How many clients do you have?
Ans - humbly 700+ subscribed, Active about 40 Buying today. 10,000 in the database.

How many houses have you sold?
Ans - quite modestly again, a considerable few.

How many years in the US market have you got?
Ans - 8 years and counting. I am investor myself. went in at every 6' O clock market. before the upturn. I spend my dollars till the 9'O clock stabilisation.

Can people see reviews from your clients about your services? I couldn't see any on the website!
Ans - Word of mouth business, you may wish to ask investors about my deals. I walk through 70 and shortlist the best 3 value properties for investors. Based on Location & pricepoint. Btw, you are investing on the Product i.e. Detroit rentals and the associated Capital growth. I can ensure I work with investors find the best investment properties there is in today's market. My service is only a small addendum to this dynamics, but makes a difference with my inhouse crew, that is, selecting properties, neighborhoods, negotiating the best price, rehab management with inspections and selecting the best paying tenants. There are other pointers ofcourse, i.e. securing the property with alarms, turning utilities on, facilitating viewings etc...

How can people make sure this (your company or LLC) is a serious respectable business (no scam)? no offences but property investing is a delicate business where people invest their life savings!
Ans - Sorry but No offence also, I wouldn't answer this. Not defending my business model. As some troll or hater can come right after and take me down to their level of IQ. You may wish to check with other investors if I am the one for your acquisitions.
I source off-market and Pre-Foreclosure transaction from Sheriff's auctions to Private sales (which are common in the US).

What is your selection criteria in Detroit?
Ans - Plenty to list, first things first Location. And price combo. Next school districts. Accessibility. Then desirability. Suburbs where people want to move into. Yes, I have a 27 point checklist before I settle on a property. I visit them and the neighborhood to ensure that this is the best transaction available for the buck, before proceeding.

Are all the tenants 8-section-tenants?
Ans - no not all are Section 8 properties. Sec 8 sell for 50K a pop - hedge funds pick them up quickly, if you are interested, let me know, I sold one to an Aussie investor today at 38K on this forum. Only the best deals I find and make. Period.

How easy is to evict a bad tenant under US law?
Ans - Easy enough - but you must follow the procedure - first a 5 day late payment notice then an eviction notice.
Still not compliant? 2 months, flat. You will have the house back.

Are all houses turnkey properties?
Ans- Yes - all houses on my site are turnkey. Earns rent from tenants day 1.
I carefully pick each tenant after verification. 18 point checklist including court records and rental history.

Cheers,

 

Thanks much Marisa,
43+ properties to visit tomorrow to shortlist at least 5 (for serious buyers):

15010 Cruse
13996 Cloverlawn
3230 Richton
10327 Roxbury
19184 Waltham
14871 Sorrento
19581 Barlow
11203 Stockwell
10468 Lakepointe
11300 Rossiter
12117 Laing
20316 Forrer
5735 Buckingham
9221 Manistque
9902 Coyle
15110 Lesure
12763 Cloverlawn
16171 Washburn
14883 Marlowe
16863 Birwood
20535 Joann
14842 Ohio
14249 Cloverlawn
15025 Steel
9533 Coyle
15110 Cruse
16561 Washburn
14682 Greenlawn
12700 Sussex
14004 Roselawn
15400 Sorrento
13924 Roselawn
9340 Hartwell
16185 Manor
9950 Balfour
13970 Sussex
20035 Northlawn
14076 Mark Twain
17135 Ashton
14321 Ardmore
14772 E STATE FAIR
13560 Stoepel
20090 Goulburn
15825 Wisconsin
14914 Monte Vista
9503 Lakepointe
5238 Somerset
19378 Huntington
15749 Hartwell
15746 Coyle
15495 Littlehead
15011 Appoline
13518 Grandmont
11742 Roxbury
11634 Coyle
10982 Beaconsfield
10500 Nottingham
10313 Mckinny
9630 Abington
15452 Cedargrove
12510 Duchess
10323 Greensboro

45 square miles to cover from 7:00 AM at least,

---

 

A quick update after 48 hours since my last post:

Property no #1 @ Stoepl - reserved under contract
Property no #2 @ Kensington - reserved under contract
Property no #3 @ E Outer Dr - reserved under contract
Property no #4 @ Canonbury - reserved under contract
Property no #5 @ Westwood - reserved (awaiting PA)
Property no #6 @ Barlow - reserved under contract
Property no #7 @ Carlisle - reserved under contract
Property no #8 @ Shaftsbury - reserved under consideration
Property no #9 @ Whitcomb - reserved pending HUD approval
Property no #10 @ Rutherford - reserved under consideration
Property no #11 @ Cherrylawn - reserved under consideration (under contract)

These could take anywhere between 1 and 4 months to get performing (after rehab).
But the deal is under the belt and the price locked in.
Confident investors transact to profit.
Most of them under 40K, Investors and wholesalers are buying, knowing that the market has only a 'period of window'.
I thank my kind supporters on this forum - you know who are.
The crew and I will always do what's best for your interests as an investor.

 

Holy hell... you been busy... hope you don't have same traffic issues as Atlanta... what nightmares are made of

It was inevitable this market would eventually take off with US economy flying.

This is currently a cash market??
The flood gates will open when US buyers can source finance in this market, so I guess when these properties hit around $50K we will start to see some serious growth and surely we will see Hedge Funds jumping in, as what happened in Atlanta


Your thoughts??

MTR

 

Absolutely Marisa,

It's a tough market to navigate, especially when the agent showing say 'What, you are only putting offers on those 4-5 properties after you have seen 70 and having worked 3 days with you, you've wasted my time"?!
My comeback - sorry, will improve on those statistics.

Investors are buying bulk, not 1 or 2, no agent pays attention, cos their commision is low.
Few hundreds tops.

US Investors are buying in bulk (like 30 properties one go) and holding - no rehab.
Sell in 12 months time for a 10K+ profit on each door mindset.
Not a bad idea as discussed.

 

Very interesting play, in effect land banking as prices are rising. Either sell off in 12 months time or rehab?? whatever suits.

 

Exactly, only this time, it's house banking (not land banking)

 

Hi GC,

Your office in Baulkham hills is quite close to one of my remote offices that I sometimes work out of. Are you guys holding a workshop/session for potential investors of Detroit shortly?

I wouldnt mind coming along. Also will you personally be there so I can talk to you? I have a big portfolio in Sydney/Brisbane and if I was going to invest in Detroit it would be a all cash deal - but before that I have a tonne of questions and clarifications to discuss.

Can I just call your office and book an appointment? Im on your website now but thought I'd post since I saw your active now.

 

Have to have a laugh about house banking in Detroit, seriously imagine trying to house bank in Australia where major capital city medians are over $800,000.

 

Sure - Available for a chat tomorrow by phone if you wish. Just PM me please.
Happy to meet you in Sydney.
But, I am in Detroit at the moment. Just focussing on acquisitions.

 

Great work @GentleChief . Thanks for saving a few deals for me.
I agree Detroit property is at rock bottom pricing it's bound to go up with all the positive developments going on in the city and the demand from investors all over the world chasing cashflow. I am keen to build a portfolio of these and happy to rehab them 1 at a time as I have funds available. The "window of opportunity" at these prices will close not sure when, but pretty confident the upswing has started.

Good point to let investors know that the first 6 months is the acquisition stage, getting the property rent ready and taking care of any maintenance issues. I found the same in atlanta, don't expect too much cashflow in the first 6 months during the acquisition stage. The property will repay you nicely as time goes by.

I was just talking with @MTR today about one of my first atlanta deals. Tenant moved in 2010, paid 42k for it and they just moved out last week, property is now worth $160k, the tenant was paying between $1000 - $1200 month during their tenancy and my turnover cost was 2k to get the home rent ready again. Looking forward to getting a few properties at these prices in detroit. Atlanta entry prices are now 100k.

 

Thank you for your response!
With respect, I still visualize some significant risks!

 

Yes, sure. There are risks in any Property Investing...
But it can be managed if done correctly - through a process of checklists.
Like Tenant selection - Property selection - Rehab monitoring etc.
We take care of this with the crew diligently.
US property is not for everyone. And so is Sydney (perhaps) to some...
Proportions may vary and so does the returns.
Some would prefer the comfort of a CD (cert. of deposit) on an index linked to CPI increase of 2% annually whilst some others would prefer to take a higher risk for a 200% increase like Bitcoin investments.
Just saying humbly - risk to returns is dependent on what one wants to achieve ultimately. And where they are comfortable in their investing vision.
As a saying:
"Work" the hours, or "Enjoy" the hours,
Life always comes with a choice (to everybody)...
And those investments, that you're comfortable with, are that key!

 

Good luck GC , I for one if I had the money would definetely be buying your houses , forget the trolls and the negativity and keep being positive.

You sound like a smart guy i hope you find them

I hope you do well and Shalom

 

do you need a US bank account, Tax file no and/or company registration to purchase a property in us?

 

Mature as in well established and have the capital to be able to withstand the ups and downs

 

or could be your age.... I am young at heart, does that count

 

Great results to date Marisa, that's awesome

 

Came across this article and a few others below and thought it summed up the opportunities and risks quite well. Tenant selection and property selection is key and I know how stringent @GentleChief is on who he allows to become his tenant. With the right team and strategy this can be a very lucrative market. I like that the city is in the process of knocking down the blighted houses (abandoned homes beyond repair). Population and jobs seem to be moving in the right direction also.

Information on Job Growth
Detroit Area Employment — September 2017 : Midwest Information Office : U.S. Bureau of Labor Statistics

Best cities to buy a rental property (written in 2017)
The 10 best cities to buy a rental property if you want to make extra money on the side


The Verdict on Detroit—Is it a Good or Bad Market for Investing?

Metro Detroit is in a fairly legendary place in terms of its housing market. Tens of thousands of empty houses sit decomposing in some areas, while other areas are blossoming. You can find houses worth $80k that are selling for $150k—and some that are selling for $80. In terms of real estate investment, there has never been a place where the emptor needs more caveat. For an investor who mixes risk tolerance with diligence and patience, however, the potential rewards are above and beyond.

4 Upsides to Investing in Detroit
Upside #1: Rent-to-Value is Through the Roof

According to BiggerPockets’ annual real-estate market review, Detroit has the second highest rent-to-value ratio in the country at just over 8.5%. This means that investment properties in Detroit have enormous potential to pay off the initial investment quickly and turn into profit streams.

Upside #2: Low Entrance Requirement
Obviously, in a market where houses come in such a wide range of prices and actual values, it’s going to be possible to get in on the housing market for less money than in a market where houses are consistently kept near their actual value. This makes Detroit a choice market for people who want to turn a small amount of initial investment into a decent amount of cash flow.

Upside #3: Growth Happens
The Metro Detroit area is a mix of wealthy, fast-growing areas—and the opposite of that. As it happens, that’s a great recipe for finding homes in areas that are going to start growing, provided the overall economy of the area keeps trending upward. As the Metro Detroit area is trending upward and seems to be set to do so for quite some time, this makes finding likely investment homes easier here than in many markets.

Upside #4: Proactive Government
The City of Detroit is strong on its position that the real estate market in the city needs help—and they are definitely helping. By demolishing sizable tracts of empty, deteriorated homes, the city is in the process of “filling in the crater” that is the housing market of the suburbs surrounding midtown and downtown. Add to that significant improvement projects like the Cuts, a series of long, narrow parks connecting inland neighborhoods to the river, and the question becomes not if the real estate market is going up in value, but how fast.

4 Downsides to This Market
Downside #1: Risk is Inescapable (and Dire)
Effectively the flip side of a low entrance requirement, the risk of investing in a market where there’s little correlation between house price and house value is that it’s surprisingly easy to get caught in a trap where the home you just purchased for $80 ends up being worth -$60k. It can happen! Detroit homes are often loaded with debts that must be paid before anything can be done with them, and not all sellers are particularly inclined to be forthright about what their houses come with.

Downside #2: Costs Also Vary Wildly
It’s not that hard to find a house with a great rent-to-value ratio, but it’s important to realize that R2Vs are based on gross rental income—and costs in the Detroit area can easily be significant enough to turn your net rental income negative if you’re not careful. Getting an accurate estimate of your home’s future costs is one of the most difficult tasks associated with successfully navigating the Detroit housing market.

Downside #3: Proactive Government
As much as the government is doing great things for property values, they’re also in the process of causing a significant problem. To wit, the city has declared that it will soon start enforcing its long-ignored rental registration laws, meaning thousands of landlords in the city is going to have to choose between bringing their ancient, abused homes (currently being rented to extremely iffy tenants) up to code or selling them. For most of these homes, the cost of renovating up to code isn’t worth it, which means the supply of genuinely bad homes to purchase is going to shoot up.

Downside #4: Poor Tenant Quality
Speaking of iffy tenants, Detroit has far more than its fair share. It’s not something often spoken of, but those thousands of empty homes sitting there deteriorating aren’t all empty. There are a scary number of squatters and an equally scary number of ex-squatters who have managed to trick their way past an inattentive landlord’s tenant screening system. And yes, they are exactly the kind of nightmare tenants you want to avoid at all costs. So don’t come to Detroit unless you have a passion for screening tenants (or a local property manager who knows the tricks working for you).

The Takeaway
The honest truth is that the question in the title is overly simplistic. Detroit real estate is an amazing investment opportunity if you are a risk-tolerant, assertive investor willing to put in the effort to check every last detail of a home (and every tenant) to the nth degree. The risk-intolerant, hands-off, procrastination-prone, and detail-averse should investigate markets with less risk, and accept that their potential rewards will naturally be commensurately lower as well.