advice for ROUGH market

I am in the Flint, Mi area and I have been wanting to get into flipping. The economy is poor and alot of people are losing their jobs. To make it short, My area is definitely a buyers market. If I buy at the right price, I am afraid I will sit on it for a long time. There are alot of homes that have been on the market for 1-2 years. Any advice from the forum on personal experiences?

I recall scenes of Flint, Michigan from “Bowling for Columbine” by Michael Moore. If your market conditions are caused by a major lack of employment, that is an external factor that you can’t do anything with (beside start a large company). If the issues are caused because many of the properties are in bad condition, that’s an internal factor that you can remedy. If your worried about not being able to sell or rent your property, even at a reduced price, don’t buy it. There is no place for “risk” in business. Your market might be neither a sellers market or a buyers market. Development isn’t rampant next to toxic waste dumps because no one wants to live there. You might be in a deserting market in which case you’d need to go where the money is.

I actually live about 5-10 miles from Flint. I live in Grand Blanc, which is considered a “money” area. Homes that went for 400-450k a couple of years ago, are now going for $225-275k. And these are really nice homes in nice areas. We are getting alot of executives and business people that are having to move because of their jobs and they are just giving their houses away. Homes are just not selling.
What is the best way to find a “booming” area? Would it be just to network with agent and other investors?

So it is a major lack of employment. You might call this “external obsolescence”. Small booming markets could be caused by a variety of different things. Employment is a big one. A town with 1 or 2 major employers who single handedly support the economy is a dangerous place to be. When 1 private company has many more employees than the government in the area (military bases, board of education, police, etc.), that creates a fragile economy as companies are concerned with the bottom line and nothing else. This is one of the reasons I don’t believe in market cycles, too many variables to be consistent.

Booming areas are caused by migration and immigration more than anything else. Of course population growth is a big one but that seldom happens in huge surges, even the baby boomers weren’t enough to make markets start booming everywhere. What causes the movement in population could be a number of different things. Parts of Texas are experiencing a boom partially because the cost of living but also because New Orleans had to be evacuated. Eventually everything settles down everywhere because growth can’t be sustained without sucking another well dry.

Atleast in the beginning you’ll have to follow the people but maybe down the line you can start drawing the people to you (Las Vegas is a good example). So follow the people and you’ll make some money!

Ahh…A fellow east side of l/p Michigander…Yes the economy here pretty much sucks.
It’s probably WORSE for you than myself in the Midland area. It’s still not good here either.
The entire I - 75 corridor ( in Michigan) has been deeply affected by the poor shape of the auto industry , from Sag/Bay City/ Midland all the way down to the motor city.
My philosophy is that real state prices are relative. It’s a buyer’s market, no doubt. Use that to your advantage. Buy in as stable of an area as is possible. If the home is going to sell for less ,then make sure you buy it for even less. Remember the prices are relative. They buy for less. They sell for less.
With so many homes on the market you’re going to have to make your property stand out in some way. Either by attractive financing or above average amenities/ curb appeal or other features.
There is a lot of naysayers here that say there is no money to be made buying and rehabbing. I say “Bull”. You just have to find the right property, just like in any other market.

My honest opinion is that if you do your research and know what you’re doing there is no such thing as a rough market in real estate investing.

Something people are always going to need is a place to live, whether that’s renting or buying; it’s essential. Houses are always going to be for sale, and there are always going to be some that sell, no matter current conditions of the market. Just because the market is “rough” does that stop everyone from buying? It might drastically reduce your amount of buyers, but there’s still going to be some. The trick is selling your house to those buyers, whether it’s by offering some sort of owner financing or just being the best house on the market.

If you’re buying the house at the wholesale prices why shouldn’t your house be the nicest at its price range on the market? When you flip your going to be putting all that money in to it, it should be almost a brand new house and that’s going to stand out from every other property. You just have to be sure that you don’t get greedy and price it too high.

I would be very apprehensive about purchasing anything in an area with price depreciation near 50% in just a few years while some still sit on the market for 2 years. That’s not a buyers market in my opinion, that’s a dead market. It would be a very difficult thing to find a property for such a good deal that you will still profit with heavy depreciation over the course of 2 years while being the best property on the market. Not that this isn’t possible, just very improbable. When very few people are moving to an area (like 1 for every 1,000 available houses) that is not a place to invest. Eventually, these properties will be worth less than the it’s replacement cost. If the cost of new construction is higher than the property values, get out and stay out.

Thanks for the responses! I really do love spending time reading all your remarks and personal experiences. I will continue to do more research and venture into other cities and towns. Is there a place to go and find out were the growth is? Such as the clerks office, or any other government office?

Hi Steve,
I’m frim Grand Blanc too.
I’ll tell you what we’ve done and my beliefs for this area as we are somewhat sucessfull in real estate.

We own 29 rental units from a 9 unit building all the way down to a couple of sfh.
We did a flip right before the market flopped in grand blanc and made about 15,000. in a week. That was begginers luck and I was hooked!
Other than that we have most of our rentals in the lower middle class areas like Mt. Morris and Burton.
Right now we don’t have any vacancies.
What you’ll find in these areas is that the working class ( my husband calls them the drinking class ) need a place to rent. They can’t afford ownership and if they could I don’t think they would chose ownership.
The psychology of our economy should really be studied because I think it’s very interesting.
Our house taxes actually went down this year along with our sev’s.
I would say you might not find houses to flip but the rental market is still definitely strong.
We love tax auctions and bought a three unit in Burton this way. They are held in July, tell me if you need the website.
You have to pay all cash and do your due dilligence. That includes many drive bys and even " finding " an open window to take a lokk inside.
We bought a three unit, it needed complete rehab. We bought it for about 4,800. Borrowed 20,000. for fix up with payments of 295. per month for 10 yrs.
We rent this property out for 1,200. per month. It’s worth about 100,000.
I agree with Danny the Great that our market is not slow but dead. However, that goes back to the psychology of the state, and our cities (flint, detroit) Unfortunately welfare is a cycle that our state seems to be in.
40 years ago you could get a job w/ vacations and all the benefits making 40-50,000. per year. That was w/ no education. Our residents made the mistake of thinking that gm owed them to continue that even though people would have buddies clock them out and go home and sleep or go out and drink and to strip bars (they didn’t show that in Mikes movie). Then the employees got upset when gm and other auto makers could find better and cheeper labor south of the border.
I want to say that as a business owner they had no choice and that the employees ( No… not all of them ) cooked their own goose. As a business owner I would have done the same thing.
But now somehow our complete economic down fall is the complete fault of all the auto manufacturers when we really did it to our selves.
So for years in Michigan you didn’t need education for great, easy employment. The people that came to expect this employment are our fathers ( I’m 40). They have passed this expectation of someone else taking care of all our needs without us doing a damn thing. Unemployment and welfare are certainly easy and if we can’t work at gm who will take care of us?
That is still our mentality.
If you live in Michigan Get An Education!!! Get a job. My daughter and son-in-law each found one within a week. If you can’t find a job it’s because the way you present yourself!!! If you have to wait tables and go to school its o.k.
If you can’t afford an education get financial aid or self educate!! You will be amazed at what happens if you actually try to do somthing!
No this isn’t intended for the original poster. I just had to get my opinion of why our state is in the state its in off my chest.
That being said, you can still mae money in real estate, but keep your day job for awhile untill you can fully rely on re.
Sorry about the ranting!! :-[

P.S. Steve check out the foreclosures in Grand Blanc. There are alot. Could you but low and refi. to a young couple. That’s our next move but husband says credit cards get paid off before we buy anything else.

If the price is right you should be buying!

Do you have a formula to buy?

If not let me know and I;ll get you started with a basic investor formula.

Scott Bloom, MBA, P.A.

Yes, Mike who posts often has a good formula and yes its a good time to buy.
With all ofthe bad economic issues Michigan will survive. We have sooo much going for us. It is absolutly one of the most beautiful states.
I definetly agree that it is time to buy. For now we are paying off credit card debt ( I know there are different theories on why to do or not to do this) It is the right move for us. After we do that ( should be less than one year) hopefully the market will still be bad and we will jump in without being so debt ridden.
I watch the foreclosures on a daily basis and it motivates me to pay off my debts!

Yes, Pay off those credit cards. That is not good debt!



Michigan: Love it or leave it!
This state really does have wonderfull natural assets, really cheap cost of living and NO threat of earthquakes, hurricanes or a water shortage. Too bad the economic state of the state is so bad. Hell, I’m 43 and it’s never been great since I was a tyke bouncing around in the back of my Dad’s 409 Impala.
BUT - does anyone recall the early 80’s? This economic climate is a cakewalk compared to 1981. Then unmployment was about 18% here and interest rates were about 21%. Now that really did suck. ( Oh and that was the year I graduated from High Sc hool. Time to find a job. ) Yes. the economy is not so good here but it’s tolerable. Especially looking through the rose -colored glasses of a life - long Michigander.

I graduated in 83 so I know exactly what you mean.
I have to say that I love it enough to plan my retirement around summers here and winters in the yucatan!!
Who can beat Higgins lake??

And ya know what my suggestion is? As long as your self employed You can control your destiny.
I was 22 the last time I worked for someone else.
Unless its a paper route to add excitement to my retirement I won’t work for any one else again. Just can’t see the point!

I’m staying put also. Wendy. After you weigh the pros vs the cons it’s a no - brainer. Besides, this is where family is for both my wife and I. And you never know, someday Michigan may have a vibrant, energized economic climate ( I’m dreaming here ) and we will be here to profit from it. I look around and see all the good that Michigan has to offer and know that it’s just a matter of time…maybe…
I live between Mt Pleasant and Midland ( Sanford) and things here are down but definately not out. I don’t think this area is as heavily influenced by the whims of the auto industry. The backbone here is Dow, CMU, Northwood and recreation. Homes here are not appreciating in price ,as they have in recent years, but are stable. There is currently 1300 homes for sale in Midland county, which is high historically, but not in record territory. There are plenty of good oppurtunities to find homes for rehab (at the right price) and that’s what I like to do.
And whenever I need a reality check I visit Detroit and come back to my sesnses. It’s really not that bad here.

I live in Grand Rapids, MI and out market is completely dead as well, but I figure if I can buy cheap, I can sell cheap. That philosophy has done wonders for me so far $$$$. I figure if there is still one investor in my market making money than I can, and will continue too

Eric Medemar

We owe a great deal of thanks to our current governor. She has driven so many jobs out of Michigan, and the people that worked those jobs, with them. I believe that’s why there is such a glut of houses available here (I’m in Muskegon, MI).

I’m thinking that the best way to make money in this market, other than buying cheap and renting, is to control properties cheap via option/contract and helping to arrange financing for credit challenged people who will then buy your houses under contract. (Get them finance approved first, then find them the house they need and get it under contract). Do you have connections to any really good financing for these credit poor people? Ones that don’t yank your chain until just before closing, and then come up with a dozen reasons why it can’t close.???