Forum Replies Created
- jayhinrichs wrote:Emma,
that is why I suggest anyone who wants to by inner city should only look at the properties on a Sat. 10 to 4 you will get the flavor really quickly…..
Right Jay, you couldn't say it better…
Interesting thing, close to a modern MIRACLE: Last fall, at the end of October, last day on a reno job, after cleaning the whole house, we've pushed outside all the materials and the tools. Dark, hungry, tired,nobody could figure out what was inside or outside the van carrying all of the crew's stuff. The very next day I passed by , together with my PM, for a last inspection before I had to leave him the keys. It was around 4:00PM (almost one full day after we left the property). When we've got there I couldn't believe my eyes: right in front of my property was our big commercial vacuum cleaner and a pretty voluminous tool box. Nobody took them ! I think this could be consider pretty much the 8-th wonder of the world…
Jay, I felt your anger 2-3 posts above. This is our world and we can't do much to change it – eventually accept or avoid it the way it is. In the summer, half of all the houses' porches in almost every block is filled with people laying on old recliners, sleeping on blankets, or drinking beer with the neighbors. All of them are on welfare! Next year is their spouses' turn or children, if they old enough. It's a rotation of Section 8 dependents. For some, the reward worth the risk, for some not – depends on each one's capability of acceptance and balance of things. I consider myself a very conservatory, low risk taking type, but I invest in that area based on what I know. You might think that I'm not a normal guy if I say this but I'm way too calculated in everything I do. I love to learn, learn and learn (I have 3 bachelors and last November I've got my Executive MBA – I'm bragging now), I like to research a lot – this is the way I was raised and educated. I'm not considering myself a wealthy man – my wealth is in my brain and in my soul, I like to not judge people but when I see what happens in Detroit and some other "dark" cities and hoods in the US, when I see the level of ignorance, doubled by the well-known arrogance and flashiness I feel sometimes that I want to explode – and I can't… I don't want to comment anymore.
Emma171, you are lucky. In Michigan (not only in Detroit) it was extremely, extremely hard for me to find somebody available to help me. All the guys on Craigslist – very busy, friends of some friends I have there – very busy, etc. The prices? Almost double of what you can find in Canada (in Vancouver, the survival rate is $19/hr – if you make less than $38k/year you are on Government's list for help). As an out of state investor, if the locals feel you that way, you're done – it's gonna' cost you double than usual.
Emma 171,
Your 2-nd post touched a pretty sensitive aspect. Today I spoke with my PM in Detroit, as we want to help Richard with his wrong investment. I told my Manager the whole story (I've sent him all the Richard's post on this forum connected with his 730 issue) and he replied that this is a long and wrong story in Detroit. Everybody knows there that the OZs are effectively jumping on their head when they find out about the opportunities in the US. Most of them end up being scammed by a bunch of people belonging to the same species as that Andrew Allan and after that turn to some other companies hoping to fix what's already badly broken. My PM says that almost every month he has an investor from OZ or New Zealand who is referred to him and he spends his time and money trying to fix the un-fixable: bad properties, very wrong locations, overpriced properties, etc. About the OZ killed while collecting his rent, the story is a little bit different: the OZ investor was crazy enough to live in the property he purchased in Detroit, with no white guy in at least 10 mile radius. His tenant was a young lady, who claimed to be abused by the OZ in exchange for the rent money (so he was collecting his rent but in an Unorthodox way). Like any other dude, who cares for his daughter's honor – her father killed the guy during a very hot dispute. That's the story everybody knows in Detroit.
Anyways, the point is FOR ANY INVESTOR COMING OUT OF STATE – LEARN AS MUCH AS YOU CAN AND EDUCATE YOURSELF IN THE US REAL ESTATE. IT'S ABOUT YOUR MONEY. YOU CAN FIND TONS OF INFO ONLINE. You know what Oprah says – "when in doubt say NO" . It will save you.Emma171,
Every time I buy a property in Detroit or outside Detroit I use licensed people: RE agents, title company , etc. I'm looking for seller's disclosure all the time; I NEVER buy from individual owners! I'm looking only for transactions with warranty deeds; I never deal with QCDs or special deeds (unless there are Fannie Mae, Freddie Mac or other Government's entity and have a strong foundation). Selling LLCs makes the transaction smoother (for me, at least, because I represent a honest side), but yes, you are right – it circumvents the right and the only way it should work. But the problems arise when when you expect the least. Even if I purchase through LICENSED people, I still had problems (small ones though), due to their negligence or, in some minor cases, due to a small greed (the type of "let's get this closed so I can get my money faster") unjustifiable for their position, in my opinion. I can't stretch ehough the need to come educated in any RE market in the US if you want to avoid future unpleasant surprises, which in some cases can't be fixed. That's my opinion anyway.
Thanks a lot Jay.
Excellent lesson. Happy I asked.
Funny thing: Two weeks ago I had a client from Toronto who own multiple multifamily building there. He was interested in one of my properties I have for sale and, finally quit on working with me. His decision was based on the fact that the price I was asking ($42k for a 4 bedroom rented for $850, Section
was way too small to be true. He was thinking about a scam…I laughed so much after that…You know, not having any information about the place where you want to invest leads or to loose the money, or to loose an opportunity…Yes Jay,
It's tough to work in the hood and in my opinion, all the hoods present the same dangers and opportunities, more or less – the hood is the hood… When you consider those being almost equal, what's the only thing which drives an investor more towards one or another? The posibility of getting more money out of the investment – the cash-flow. But you have to face some other bigger dangers – the FAKE wholesalers, the SHARKS. They sale anything, anywhere, as you mentioned and don't care if their client will or won't be successful after that. In their own eyes they are the big guys, the big business men, the real investors… I think this is the BIGGEST THREAT what an out-of state investor has to be aware of. I did my homework, I did my own research and the Detroit reality is far from what the majority of wholesalers are presenting to their potential customers; you just can't buy a property anywhere just because the street looks clean and the price is more appealing than you've ever dreamed- there are lots and lots of other factors to consider. The good areas for investing (believe or not but there still are good, safe areas in Detroit) are very small and located in certain parts of the City. Most of the RE Detroit agents don't know them. The wholesalers are not interested in them because you won't the volume; the houses popping out on the market in those areas are insufficient to sustain their huge businesses and that' s why they purchase in bulk from banks (packages of 50+ properties). What's worth to rehab and sell it gets done, what's not is foreclosed on. Investing in Detroit requires a certain knowledge about how to CORRECTLY purchase the properties with a Warranty deed ALL THE TIME and using Michican Licensed people, how to CORRECTLY rehab the properties, to whom CORRECTLY rent them, take all the necessary steps before wiring the money to anybody else. I can't believe how Richard had the courage to wire the money directly to Allen without any safety net.
For me personally, it's not mandatory to sell anything, as I'm pleased with my investments. If someone wants to purchase from me, it's OK as I'm not into scamming anyone, if I can make some more money out of my business I don't mind, I'll go further, get more houses, rehab them the way I know it has to be done and go on. Before any transaction I like to inform my customers and to give them as much inf I can about the City, the properties, the investments, the legal stuff, etc. I like to sleep well at night if you know what I mean…A question I wanted to ask you since I discovered the topic about getting money from the US banks as a foreign investor: how an investor in the US can get a buy-to-let mortgage from an US bank and if you know some details? What I found online has multiple references to UK, not US.
jayhinrichs wrote:I can only relate my dealings with Jeremy lent him money on two houses he did not repay. Would not communicate unless pushed to the limit by going semi public…I think you feedback is very good…. And I know some of the better players there in Detroit that have gravitated to land contracts… Land contracts have about a 50% mortality rate IE they stop paying within 24 to 36 months… but then you just sell again.
key is to not have your house trashed while you wait for another land contract buyer
Right, Jay, you have to transform your house into a fortress, if possible. There is a company in Detroit who is using some tough materials (almost bullet proof) for boarding the properties. I think the price is $150/month and the house is practically impenetrable.
As for the Land Contract, is better to try a rent-to-buy tenants for 1 year, in order to qualify them (as they know this is to be their house-they'll take good care of it), and after that to have the house sold with pretty tough conditions (15-20% down payment, 5-7 years amortization at 7% rate, another 10-15% balloon payment after 2-3 years); if it stays this way good, if not you've made good money and re-sell again as it's back to you.Jay, take a look at what I wrote Richard yesterday:"Hi Gavin.
Nice meeting you, even if the circumstances are not the most fortunate ones…Some quick thoughts, just after searching a little bit, without knowing anything about the actual shape:– you've bought the house from one of the biggest wholesalers (in my opinion he is the biggest) in Detroit : Jeremy Burgess. He's not a scam artist but being only money oriented sometime things get out of his control.– the neighborhood is NOT one in which myself I want to buy a property. Even is in the one of the good investing areas of Detroit, is close to 2 dangerous Detroit "landmarks": River Rouge Park and (this I learned in my first day in Detroit-never buy close to it) Grand River Avenue. Even if the block (because investing in Detroit is about the block not the street) is a good one, it will be hard to find someone willing to rent in that hood, maybe a Section 8 tenant, with a low rent…Why do you think the seller didn't renovated it (most of the time he renovates all the GOOD properties in GOOD areas)? He didn't want to take the risk of spending the money and renting it at a lower than usual price. The house is clean though inside and outside and the rehabbing cost it should be in the 8k-12k range, depending who do you want to rent it to. A Section 8 rehab will cost a little bit more , as the inspection will be a little bit more severe. The whole street looks pretty clean and I can say the owners on that street take care of their belongings; this is a positive fact– one of the things I adhere very strongly is to never buy anything else that SOLID BRICK HOUSE in Detroit. It has more value (I think the cheapest house I owned had a past value in 2004-2008 of at least 150K; yours was valued at 89K in 2004) and says a lot about the neighborhood (poorer people with limited possibilities). If the whole street, or block has a single wooden sided, aluminum sided or vinyl sided exterior I quit on buying anything on that area – this says something about the immediate area. The only exception to this rule is when I buy multifamily or out of Detroit properties. That's a different story.Anyways, I'll send my PM to take a look at the property, send my some pictures and some inputs with his ideas…We'll get in touch soonOvi"
The first mistake Richard did was to not check on the area where the property is located. It's not a bad area, but not a very good one and no way I was to invest there, and especially in that dwelling type. Have no idea if the house was rented or renovated, but supposing it is in a good shape I highly doubt that it will sell more than $15k-$18k (for cash transactions). If Richard doesn't want to keep it and slowly recover his money through rent, the next idea which comes to my mind is to sell it through a land contract, as those are in great demand right now in Detroit. Anyways, my PM will give me the right numbers after he'll pass by.
Yes, Jay, you are right again – the rent was WAAAAAY overstated. You can get $800-850/month only in exceptional good (with regards to Detroit) ares in the City. In my opinion Richard can't get more that $450-500/month in that area, maybe $600, with some luck and hard work from the PM.
Regarding Jeremy Burgess now: I personally don't know him; I spoke with the guy on the phone when I brought some Canadian investors in Detroit and he had some properties available for sale, as I was buying outside Detroit, at that point. He had great properties, the price was so-so (he even gave them a discount based on bulk purchase, which is pretty rare from him, as he personally states), but what changed my investor's mind was his insistence and the way he started another approach ("if you don't want to buy just come to my office, we'll stay at the table and I'll teach you everything you need to know about investing in Detroit for $1000/hour"). I know people working with him (not for him) and everybody has only good words about Jeremy. The commission I know he spends for selling through a third party is $2500/property. He moved from Seattle 7 years ago when he'd seen the potential Detroit offers. He lost $400k in the first year due to his lack of knowledge in Detroit RE investing. Anyway, he recovered, he sells around 100-150 properties/year now and he is the leader of Detroit's probably biggest RE club called Renegade Detroit Investors Real Estate Club. Around 50 people from all RE (investors, RE agents, brokers, hard money guys, title-insurance-banks, etc., etc. ) gather once a week and discuss about Detroit's RE market, share opinions, create JVs, teach new investors, etc., so from this point of view he does something creative and helpful for the others. I don't know anything about his scam artist's side and never heard anything about it.
In Richard's case, Jeremy is not to blame as he did his job – he sold the house for the market price at that time, but what has to be questioned here is for how long in what kind of circumstances Andrew Allan and Jeremy worked together. At the first sight, Andrew Allan <moderator: delete personal comment>.
If Richard rehabbed the house and had a tenant move in you have only the case against the PM, who ran with the rent money. Opening a case against Andrew Allan seems a little bit late (under $25k is a Small Claims court case and it did pass more that 1 year since the action took place, so it will be dismissed from the beginning), so for any legal action against any of those guys, probably an attorney will have the best idea how to do it.I agree 100% with you Jay, but also Emma171 is right, as well. In a nation where everybody can sue everybody for any reason, the existence of the LLC is mandatory for an investor in order to protect his/her assets. I've heard stories when the owner had to pay large amounts for tenants injured (real or…) on their property. My insurance agent told me stories about people buying mansions based on the money they've got from a car accident or some other type of injury… He told me that (I didn't know this fact and I bet that most of you don't know it, as well) Michgan is the only state in the US where the insurance medical claims can be unlimited! That's the reason many people, especially those living close to the border of Michigan to the other states, move in Michigan only for this reason.
I, personally have what Jay suggested: an umbrella policy hold by my umbrella LLC which covers ALL the other LLCs , owning the properties. The premium is 50% than regular (based on the multiple properties) and it gives the advantage of covering a lot more than the usual insurance.Gavin, please send me all the details about you transaction or at least what you have in mind for the future with regards to that particular property. I can send my PM there to take some shots , if you like , and asses the present situation. But if you'll give me just the address I bet that I can tell you pretty much all you'll have to do if the isssue is what I think…Send all the info please.
jayhinrichs wrote:thats what we want to prove to our Aussie friends that there are good guys out there that will help them….thanks for stepping up appreciated and I am sure Gavin will appreciate it as well… Now he may already have this covered but at least we are offering…..
JLH
If we can help, we'll do it! This is another way of rewarding ourselves
OK Jay. I've sent him a private message. I'm waiting for his answer now. If it will be in my power to give him a hand, I'll do it, for sure.
Detroit, like (or more like) any other place where out-of-state investors are expected is FULL OF SCAMS. I've heard so many stories…Jay and Kilermice,
You both are so right in your statements!
But, this is how I see the it: depending on the term of investment you have the short-term and the long-term, of course. For the long-term, to be sure that your money will be safe , you have to find low risk investments, that's why I find your TWH model very clever, but hard to be considered by someone out of the US, as it's hard to be understood by someone who's not familiar with promissory notes, IRA, 401K, etc. I, personally find it as being an excellent idea. I remember I've read some years ago about something similar – it was you or somebody else; I don't know, but anyways very good model and set-up.
To deal with safe (low risk) and long-term investments you need a pretty good amount of money, which will be recovered in a long time (10 years +). If you have that money, it's OK. Even if you have a small amount, is it worth to invest 40k now and get them back in 10 years, when the currency conversion will be different and the future value of the money will be on some other level? I don't know …
I think lots of investors have small amounts (20-100k). How can they invest them? Some people are looking for a faster recovery and of course who offers this kind of deals other than high risk investments? Let;s not compare them with the bonds or the mutual funds; there are some kind of another story…Where can you find a RE deal which meets both: low cost and fast recovery? Of course, hard hit areas like Detroit, Memphis, Atlanta, KC, etc. (they might have something in common…) where the economical, demographic, financial condition are somewhat different that regular class B US neighborhoods. Do they present higher risk than the others? Of course. But, now depends on the knowledge of the wholesaler and the ability of him/her to provide properties in areas safer than the average (because everything comes to this, at the end). Let's take Detroit, in my case. Do I consider it safe? As a whole – No WAY! As considering small pockets, block communities – YES. Everything depends on how much you consider stretching the term "safe". If the places where I invest right now will ever disappear, that means the whole City of Detroit won't be there anymore; I have good reasons when I say that. I know investors in the area who sell 100-150 properties/year to foreign investors, in worse than mine areas, with higher prices (they don't even negotiate) and are making tons of money and I haven't heard anybody complaining , yet. The only thing sustaining those communities in Detroit are the wholesalers, right now. In those distressed areas where nobody wants to even drive, everything is collapsing. Are the investors interested in those? Of course not.
As I said it before, things come to everyone's perception. You can't generalize and put Detroit, KC, Atlanta, New York , LA etc. in the same bowl. Each of the bad areas in those cities have their own "jewels" – it's just hard to find them. The bigger a city is – the bigger its good areas and the bigger the bad areas… Will those bad neighborhoods disspear? I doubt it…
Will I be in the same area 10 years from now? I don't know. I try my best to protect my business through giving the best to my clients. That's all I can say.
I'm willing to learn from investors more experienced than me and that's what is keeping me on this forum yet.
quickchick wrote:Anyone on the forum who has actually borrowed from a us bank without a #SSN recently? I'm sure this will be a hot topic for many! Ruth propertyinvestingusa.com Phoenix AZI have a SSN and I had an excellent credit history until 2006, when I left the US. When I opened my first bank account as an US investor last year, I asked the Account Manager to take a look at my credit history, as well. Surprise: zero, zilch, Nada, Sahara everywhere. I've been told that if I don't use my SSN for 5 years all the credit history is erased. OK- I said, I'll apply for a Credit Card as long as I have a SSN. Of course, my application was denied. I asked them about the possibility of borrowing some funds from them, based on how much money I deposited in their bank and based on the income I'll have from my properties. I've been told that I'll need at least 1 year business history and they'll have to check out my INTERNATIONAL credit history (respectively the Canadian one) – pretty polite refusal.
Another story: I tried to get some money (in the US, of course) to buy some properties in Vegas. Very nice and knowledgeable Realtor, very nice financial adviser… I've been told that, as a foreign national, if I want a mortgage, I have to put down at least 35% out of the total cost of the property and the Federal law doesn't allow them to give me LESS (!) than 70K, representing the other 65%. So, overall, if I want to purchase a property with mortgage on it, that has to be valued at least at 100K. So, were will be my cash-flow…? They said that having a SSN doesn't count.
Any inputs on the same topic guys?jayhinrichs wrote:Squatters is a very big issue on the West coast especially California… You can get some one out of a house in portland in 45 days for 400 to 600 dollars as long as you do everything right… You do one part of the eviction wrong,, and the tenant will call for a trial.. And then you need an attorney blah blah balh, and the attorney the tenant gets will just plea bargin with you to pay a little less than what your attorney will cost.. Its a racket for sure…. Cash for Keys is the only way to go in a squatter situation.. There are people in CA that follow the foreclosure lists and move into a home wait for the person who bought it at the sale to show up… Demand 2k to move and off they go to the next one its a cottage industry there..Exactly the same thing happens in Michigan (see Detroit). It happened to me once, I needed 1 month to take the squatter out and after that FULL RENO ! Before she moved, she called some friends and …no more electrical wires, no more bath tub, no more sinks, no more counter-tops, no more cabinets, dirt everywhere on the floor, and the list can go on. And I bought the house in "move in condition"! After I finished the reno I've sold it unoccupied for an easy $8000 profit. But with what headaches…
jayhinrichs wrote:Lawsjs, I think you can go to the american consulate in OZ and get docs notarized ?Good one.. Ha, ha, ha
Another example: on of wife's very good friends purchased a property in Portland, Oregon together with her sister with the intention of opening a restaurant. Her part in the whole deal was $100k. She had a very good business plan and she got the E2 investor visa! But what happened after is ridiculous: they left the house unoccupied for almost 1 month after closing. When they finally wanted to start the reno job, it was impossible doe to some squatters who occupied the property. So, cops, lawyers, court, bailiff …the whole package… When finally they've got rid of the squatters decided that the restaurant will cost too much (in reno + appliances + furniture, etc.) and decided to rent the house to 2 guys. The result: now my wife's friend and her sister are in court in the US because the 2 dudes (see tenants…) were caught with having a grow-up in the basement…
This grow-up thing is HUGE here in BC, Canada. I have many friends-investors who were in a lot of trouble because of renting to some loosers…Alex, did you get my message?
was way too small to be true. He was thinking about a scam…I laughed so much after that…You know, not having any information about the place where you want to invest leads or to loose the money, or to loose an opportunity…
