To Michigan Investors,
I just want to get a sense how are people doing out here in Michigan. Do your activities slow down?
What do you do now? Buy and hold or flips?
What’s your average day on market now? And which area do you do? Are there any bad ones to avoid?
Thanks.
it seem hard to buy here in mi. i been putting in good offer and the bank just sitting on property waiting on a full offer some of these houses been on the market for over 6 month. i think the market call for a buy and hold or you will be taking lost because it a buyer market and there alot houses just sitting up
Makes you wonder what’s going on. I would think banks can’t expect getting full price at this kind of market unless they want to ride it until the market picks up again.
Hmm… I need to do some flips to raise some capital. This would be interesting.
The Mid - Michigan area is defnately a buyers market. Prices here are “soft” and there is a LOT of homes for sale. FYI - Michigan currently has the fith highest forclosure rate in the country.
Thanks for your response.
What do you do now, Mike? What’s your strategy or are you sitting back waiting til the storm passed?
Doesn’t it seem like buying and renting would be a good strategy? Rental rates still seem pretty strong. I’m not sure how high the vaccancy rates are though. Michigan is a big area of interest for me since I’m originally from there. I think the biggest issue is population decline due to the loss of thousands of automotive jobs. I saw the auto industry going down the toilet and ran while I could.
Michigan is my home and it’s where I invest, for better or worse. I am making money renting single family homes but my experience is that it’s most profitable at the lower end of the market. (My most profitable rental is a trailor) I would rather by foreclosures and rehab and flip. My last investment was just that and I should clear about $40K on it. Right now it is rented though, and I’m about breaking even on it. My money ( profit ) is in the equity
My experience, through all the rough economic times that Michigan has experienced in the last 25 years, is that good, clean single family homes are never hard to rent. And rents are pretty good here, considering…
Thank you for all your responses.
I live in Michigan myself, in Southeast area. I am currently renovating SFH in a hope to turn that into a rental. I am looking at another property now to do a flip to build my capital. And then buy more properties and hold. I would like to build my cashflow for the long term.
That’s why I am asking at the current market is it still possible to do a flip since there are over supply of houses out here in Michigan.
I wonder which state has the highest foreclosure.
Check out this article on foreclosure rates:
http://www.realtytrac.com/news/press/pressRelease.asp?PressReleaseID=100
How do you figure the rental market is good? I am seeing 100K houses in a $500 rental market. What’s the mortgage on a 100k house and how can you pay that and the, taxes, insurance, vacancy and advertising and etc?
I am seeing a lot of houses that older investors are holding onto that they bought in the seventies and have a $50 a month mortgage if any and no reason to raise rents as they are getting their money.
I am starting with the Sub2 investing. I have one house so far and have just put it on the market. I thought it was a low mortgage and a good deal. Most of the bites I have gotten so far are from renters who are paying $400 to 600 in rent for the same size house. They can not see the advantages of paying 850 PITI for the sake of home ownership. I will find someone for it. I just have to find a home buyer not a renter.
Art
Where in MI are you from , Art?
Hi Rulz
I am from south central MICHIGAN, Jackson county, Lenawee County, Hillsdale county, washtenaw etc. Those are the areas that I primarily work.
I have given up on Rental properties as the profit margin seemed to small or actually negative with rent rates versus, mortgage rates. I don’t have a lot of capital to invest in down payments on houses, and I have not beeen able to find anyone that is willing to d an owner finance at terms that would allow me to make money. i don’t have the out side cash flow to carry a negative.
I have since started looking into Subto and lease option or Land Contracting out as a form of seller financing. I currently have a house farther north up near lansing. The mortgage is about 150 to 200 more than most rental rates in it’s area, so I am doing a Land Contract. I have had about 15 inquires in 3 weeks. Three serious ones.
It is FMV last year of about 90-95k. I cleaned it up a little and L/C it out at 100k for two more years it should be worth 110k with 3 years appreciation so my buyer should be able to refinance it. Underlying mortgage is about 82k with the 1k down and 800 transfer tax.
My first one. Asking 6k down with about 100 added to the base PITI per month.
We shall see.
Hi Art,
Very interesting strategy. Haven’t looked into those yet. I just bought my first property about a month ago and am hoping to turn that into positive rental after it’s done with the fixing.
How long have you been doing this?
I’m curious how the L/C goes for you. I’ve heard some people say to stay away from it at all costs. I do know one highly successful REI that swears by L/C.
He says you need to think like a bank. Don’t just make money on the house, make it on the financing too. His contention is that a good down payment minimizes your risk and people default far less than you think. He says it’s under 5%.
Even if they default he said it’s not bad since you can usually sell it again at a higher price and get another down payment.
I have been doing the book buying and studying for about two years. Made several forays into it but was unsuccessful. Trying to many options I suppose. Had to look at my resources and apply what I had, and stick to it.
A lot to learn yet, and as usual that costs a lot of money in the form of mistakes.
I think that you can make money in the rental market but you have to buy real cheap, and expect a lot of sweat and time to make it marketable. I don’t have time or a lot of money. Although as a carpenter I should be doing that more as I have the skills, just not the resources.
I am told that the national average for completion of a CFD or L/C is something like 70% and that for a Lease Option it is 10%. You have a higher vacancy rate with lease options but you still have a risk with L/C. I think you have to have an exit strategy all the way. I intend on buying out the buyer if I have to if they go into default. I figure it better to give a little money now rather than foreclose, and lose legal fees and time.