Q1: Why don’t you guys just buy all the houses for yourselves?
A1: We are buying properties ourselves, but we can’t buy every one, and it’s beneficial to us to have other investors helping to rehab other properties, thus improving the whole neighborhood and increasing all the property values. Since we have already done all the work and set up the system we can help other people do the same thing, which is good for everybody.
Q2: I feel uncomfortable owning real estate in another city. I want to be able to drive by my property and know if the tenants are taking care of it.
A2: This is what we’ve hired a good property manager for. We’ve worked hard to set up our team on the ground. They’re good, we trust them, and we stay in close contact with them. When investing in stocks, you don’t have control over the company or fund that you are investing in.
You buy the stock because you believe it is a good value and will increase in value and/or provide returns to your portfolio. Out-of-state real estate investing shares some of the same characteristics. These Detroit properties are a good value, have a huge potential upside, and will provide immediate returns.
Q3: Why Detroit? I heard it is a bad city.
A3: Because Detroit is one of the few places where you can get such good returns renting houses. And Detroit, is, in some ways, a bad city. If you visit you may see neighborhoods with burned-out houses, empty lots, whole blocks grown into fields. There is evidence of low-income and the urban problems that accompany it.
However, you will see a lot of great things, too: Neighborhood restoration programs, grand old mansions, big businesses moving into downtown, government programs to revive the economy, buildings being redeveloped into gorgeous hotels or fancy lofts, casinos, sports venues, and growing sense of pride and excitement in the residents of Detroit.
Due to the current foreclosure market, property prices are very low and the rental market is very strong. Now is the time to take advantage of this dip in the market, make good returns right now, and wait for the properties to appreciate.
Q4: How do I know that I will be able to keep my property rented?
A4: Our property managers have over 20 years of experience in Detroit. Currently over 95% of the properties that they manage are rented, which is how we estimate the occupancy rate in our proformas. We have no reason to believe that this will change anytime soon.
Q5: What can I expect for appreciation?
A5: There are two ways to make money in real estate: Income, and Appreciation. We have chosen specific properties in a unique market so that they generate great cash flow right from the start. It’s not that we don’t believe in appreciation – we do, and we believe this area may appreciate tremendously – but cash flow is more controllable and makes a very strong base for investment. We have provided all the materials and links for you to do your own due diligence and make your own estimate about appreciation.
Q6: Couldn’t I just do this myself, without using your company?
A6: Yes, you can. You’ll first need to get to know the neighborhoods of Detroit. Then get a real estate agent, a contractor, a title company, insurance company, and mortgage broker. And a property manager. And an LLC lawyer. Make a good decision about which property you want to purchase. And then manage the project.
Q7: What if I want to come out to Detroit to see my property?
A7: You’ll probably have fun. You can meet our property manager at the office and he’ll show you around and take you to your property. You might want to meet our contractor, too, and see some of his other rehabs if yours is not yet completed. We’d also encourage you to take the time to look around Detroit and see what a unique, exciting city it is.
Q8: Is there a lot of paperwork? Can I expect this to take much of my time?
A8: We make it pretty easy. We mail or email you everything you’ll need, when you need it. You’ve got a couple contracts to read and sign at the beginning, and, if you’re intending to refinance, you’ll be filling out some loan paperwork, which is pretty straightforward. Later you’ll sign closing papers. One or two of these documents may need to be sent overnight. So, no, it won’t take much time.
Q9: Do I have to do this right now? I’d like to wait and see where the market’s going.
A9: The foreclosure crisis is happening right now. We’re buying bank foreclosures so now is the time to buy them. When it’s over we’ll probably buy properties in a different way.
Also consider: What percentage of return is your money making right now? Subtract that number from our typical cash flow percentage. The result is the amount you’re losing by not investing in these properties today.