All Forum Posts by: Jay Hinrichs

@James Hamling buyers agent is not forced to make an offer. I put the choice of ethically behaving in their court. Full stop

Still has his website up, has a guest host on podcast but publishing articles under his name.

Looking like more and more this one is going to get pretty ugly.

Turnkey Real Estate Investing | Turnkey Property Investment

The no response thing is just absolutely maddening.   One of two things occurred - either the principal is on to something else and just doesn’t give a sh.. about the people who trusted him with their money; or his attorney advised him to have no contact with investors lest he say something they can use in a lawsuit.  But even if that’s the case updates should be sent out no less often than quarterly and answers provided after being checked by legal counsel.  

I had an acquaintance in the syndication business contact me after the 2008 financial debacle and tell me that continuing dealing with irate investors, properties hemorrhaging money, tenants not paying rent, and vacancies was resulting in a mental breakdown, ill health, and hospital stays.  I suggested he have his attorney petition the court to have a trustee appointed to orderly liquidate the assets.  He did such; the investors got a rational professional to contact and gained confidence that the trustee would obtain the best results possible.  My acquaintance no longer had to deal with the extreme negativity of the situation, went back to being an accountant, and to this day remains happy as an employee with no delusions of running his own show.  Everyone want to own the business; until the first Friday payroll’s due at 5 and you have nothing in the bank. 

I was talking to a client the other day who made a funny but true comment that got me thinking: they have done extremely well with their property but would have done almost equally as well if it had been vacant the whole time they’ve owned it. The rental income is small potatoes for them compared to the real bread and butter which is the appreciation that have had over time. They were joking about just skipping the tenant headaches and keeping their properties vacant from now on.

Of course it's better to have someone living there to keep the property up and for that extra income, but my point is that in a really good location, the rental income is secondary to appreciation. With an STR, it's more of a business than a traditional real estate investment, and location is even more important. In the best locations, a property will do well regardless of the vacancy rate/ operational side of things simply because the land and location are going to increase in value by enough to offset any operational hiccups. Not so much in bad locations that are boom/bust or for properties where the underwriting depends entirely on low vacancy rate and smooth operating, which doesn't always happen.

8 years in and things are still good. No reason for us to move to another type of investment.

Ignore the past. Analyze projected returns for the existing property going forward vs projected returns from your alternatives and you'll have your answer. Include all returns (IRR) and not just monthly cash flow.

Quote from @Jay Hinrichs:

Quote from @Joe Hammel:

Metro Detroit has what 99% of Real Estate Investors want. Couple hundred bucks a door monthly cash flow, solid ROI, and yes plenty appreciation. (#1 appreciating city 2023)

I personally make well over $100k/yr cash flow from my portfolio here. All of which, I’ve purchased within the last 5 years.

There are 2 types of people who dog on Detroit..

1. People who don't actually own property in Detroit

2. People who did it wrong and weren't able to execute.

If you do it right, it’s arguably the best market to invest.

Purchase: $80k-$130k

Rent: $1100-$1500 (no rent control in MI)

1% rule: .9%-1.4% rule deals

Coc ROI: 4-12%

Total ROI: 20-40%

Cash flow: $50-$250/door (after all expenses and budgeting for maint, capex, vacancy)

Appreciation: 3-10%+ (has been double digit for a decade)

Location: C+, B-

These numbers are based on the "sweet spot" in Metro Detroit. These are largely in the suburbs and some markets within the city. You can find higher ROI (on paper) here and probably in other cities…but the probability of actually collecting rent significantly decreases. Where these numbers are found, there is a very high rate of rent actually being paid.

We have over a dozen Fortune 500 companies just in Metro Detroit with huge Healthcare, Auto, and mortgage industry National footprints. Ford, Rocket mortgage, Beaumont hospitals and more. All complimented with Amazon fulfillment centers, google, and more tech manufacturing jobs.

The bad reputation of “Detroit” comes from OOS investors wanting sub $40,000, D class properties in poor condition, because they pencil out to 2-3% deals on paper. We don’t buy those.

We have found what works and repeat it as much as funds allow.

Detroit has one the highest rent to price ratios in the country…and we focus on the best balance of price/location within the area.

Here is a picture of my portfolio if you/anyone is curious.

Looks like your determining equity by taking ARV and sub tracking the loan amount.. Instead of your all in costs?  do I have that correct ?  

That’s correct.

@Jay Hinrichs Thank you. We did not had an experience with the houses with crawling space. That's why we got an inspector. Was is part of his tasks to look for the vent and mention that, or it is fall into the building codes? In the inspection report he clearly mentioned that all the vent and moisture preventions are ok.