US Jumping in the US market in 2018

Detroit lost this bid, unfortunately - because of reliance on cars and not enough public transport!
What else do you expect from the Motor City

 

No sugar coating - it is a rough place indeed - however in 'patches' only.
perhaps this would be a better depiction:
35% is super rough
25% is bad
20% is okay
15% is nice
5% is excellent

Don't expect to pay 25K in the "okay", "nice" or the "excellent" suburbs...

 

Hope Atlanta wins @Karina !!!
But I guess with the Traffic jams situation plaguing Atlanta, it does not stand a very good chance imho.

 

Good to know @LGP that you have invested in Michigan.
I love Farmington Hills, one of my favorite suburbs of MI
Love the food options there and yes there are a lot of Indian students renting in Farmington.
Another suburb I did like was Troy, but the access to Detroit was like 45 minutes.
Whenever I visit Detroit, I stay at the Radisson at Farmington Hills as it an easy 10-15 minute ride to my properties.

 

@GentleChief

just read this quote from a US forum that really reminded me of what you are doing in detroit.

"Detroit is a goldmine for someone with strategies for detroit conditions and a money pit to anyone with easy money ideas"

So basically if you can solve the property management/ collections problem and manage the asset well you can make it a profitable venture. Credit to @GentleChief who has been able to create strategies to manage these investments to make them profitable.

 

Thank you @Karina, kind words indeed.
Much appreciated.

Few things matter when one decides to get into Detroit.
Firstly scale - no less than 15 properties mindset.
With this Property Management gets easier - your PM gives you their attention.
If one is thinking of 3 or 4, it is just not worth the trouble and that's when investor horror stories come from.

Your property manager earns 80 dollars a month on a typical Detroit rental.
Not much at all given the amount of dramas with tenants, collections, illegal dumping issues (yes that is a common problem where people dump stuff on your front yard and you get a notice of fine for 500 from the city of Detroit) etc etc.

You must be ready to give the tenants a payment plan if they are late.
And evict them if they fail to keep up the payment plan. Your follow-up should be spot on.
90 out of 100 times your PM is not going to follow up with tenants "on time".
No matter how good your PM is. Work overload is a factor of life.
That is when things go pear-shaped.
If tenant's rent is due on the 1st, and there is no one enforcing the collection of the rent by the 3rd, forget the rent for the month. Period. This is Detroit.
People on average make 9 dollars an hour - that is 1440 per month.
That is the national average minimum wage earners.
And they have burning expenses all the time!

But we have also learned to be very nice - to our nice tenants.
In most cases, we never raise rents during the tenancy. Only during turn-over.
So people feel that we are "good landlords" and that they are not victimised.
And we also give a X'mas hamper worth 150-200 dollars to our exceptional tenants.
It is important to make your customer feel valued!

 

Running it like a business. Smart play.

 

Plenty of very nice places in Detroit metro, but you generally want to be out of the detroit city area and into one of the surrounding counties.

I used to live in Michigan and have spent a lot of time there

 

Great post @GentleChief
I couldn't agree with you more on scale - you need volume to make someone work for you. In atlanta we have over 500 properties under management with one company. That gives us the leverage we need to have our managers work for us and care about our investments. Like you said if you have 1 or 2 properties you have no leverage with people and you can't get them to do things for you when things get hard. This is 10 x more important in a market like detroit with low income tenants.

Like Steve Mcnight has always said, look for problems, if you have the skills to solve the problems you will make money. 38k houses can be a goldmine if you have the skills to manage the problems.

Forget about buying a few and handing these to a local property manager. Anyone considering it needs to understand it takes a lot more effort than that to make money on these.

 

Kudos to you Bala, volume is key in any US market and micro managing PMs, otherwise it will impact on cash flow


Detroit not for the faint hearted.

 

Its the only way it will work in US market IMHO

 

500 properties under management in Atlanta is fantastic @Karina !!!
GREAT work.
I was looking at Lawrenceville GA (Northeast Atlanta suburb) and every property listed under 250K is either Pending or Contingent!!! The market is super tight.

Hope you are going well with your sourcing...

 

I

When were you living in Michigan ?
I expect the game here is changing very quickly from what I have read and prices of property today is much higher than 2 years ago

Perhaps @GentleChief can elaborate

 

"Scale" @GentleChief thank you.

 

A side issue Atlanta market is crazy, very tight

I placed an offer on a property sadly already under offer in 1 day

Will keep hunting and trying to source off market deals

Making the numbers stack up is getting difficult as prices continue to rise

Flips are great if you can source good deals


MTR

 

@MTR Thanks,
I once read about an investor owning 50 'doors' back in 2011 and I thought jeez that is unbelievable!!! It seemed like an impossible task to manage them. Just could not fathom the enormity of the task.

But today with 73 under the belt, I feel (just as you do) the journey has just begun and I am hungry as I was when I bought the first one in QLD. Some Experts may say it is not a volume game, but I would humbly disagree.

Very few investors, if at all, can call them financially free within a 15 year period who have invested in 2 or 3 Residential properties in Australia (even in Sydney/Melbourne)...

Yes, one can be financially free in a 30-40 year period with these 2 or 3 properties with the combination of:
a) Growing Capital growth
b) Decline of the Principal owing
c) Increasing rents

Technically the pension from the State would kick in before that property sets you free

 

So true
US market has been amazing, still is....

My business partner owns 179 doors all in Atlanta, mind boggling.... you know who..... and still collecting, I am his apprentice

 

@GentleChief
We bought a few in lawrenceville and surrounding gwinnet county areas, quite a few under 100k back in the day. Have not bought in gwinnet county for years now. Still sourcing deals, supply is the lowest I have seen it since I started buying in Atlanta. We do get off market deals through the relationships we have built over the years with agents. Multiple bids on anything that's listed on the MLS.

I am loving following your journey in Detroit. I was always skeptical of that market but you have proven it can be done.

 

I recall many negative comments when we were all buying in USA in 2011

But here we are today lots of good stories to share

Great thread

 

@GentleChief 73 properties amazing! What's exciting about that is not the number but the passive income you are generating every month. 73 properties that actually put money in your pocket, that's what's exciting.
I couldn't have even imagined in 2010 when I started the US housing journey that I would buy so many properties. I think when you come across an opportunity and it makes sense and you are making money you think why stop, keep going, keep buying and you see a way out of the rat race and a way that you can build a passive income for life. When I bought my first US property my dad said to me that this was the start of something really big for me. 46 properties later and I can't believe I am so close to having purchased 50 properties for my portfolio and I know I will get there. Can't stop at 46 right! It was never about the number, it was always about finding good deals and wanting to take advantage of them. Why not buy another one and another one if they put money in your pocket.

What I love about the US housing journey is how its changed my life. I gave up being an employee years ago now. Its given me the freedom to do what I want with my time. Its meant I could look after my family when they needed me most and the next chapter for me will be travelling the globe with my hubby with the passive income from the US investments picking up the bill. That's the plan as soon as I am free of family commitments.