Detroit - Lots of Money to be made? (tenants, foreclosure, investment)

[Miles_]

Last night, I was in a Chat Room, and the topic turned to the Foreclosure Crisis going on right now...one of the guys in the Room started talking about how he was pulling in over Six Figures every quarter, from the Property he owns up in Detroit.

Of course everybody in the room was skeptical, and thought he was lying, but I don't understand why he would go through the effort to make all this up? The guy seemed pretty knowledgeable.

For the more experienced members on the board, does his information sound accurate? or Do you think he was bull sh*tting?

I'm a transplanted New Yorker who hustled up some cash, and had nothing to do with it. One day I was watching CNBC, and they had a feature about how houses in Detroit were selling for less than used cars. I was just sitting there like "bull****". I hopped online, saw it was true, and was on the first ***** smoking up to the D.

I dove head first into this real estate madness as a landlord/developer, and I love it. I've been buying tidy, single family houses with driveways, garages, and on quiet family-oriented streets in nice neighborhoods for $3,000 to $5,000 a piece plus $1,200 in taxes, and renting them out Section 8 for $800+ each. In North Jersey, a piece of crap rowhouse (or semi-detached) in Newark with no driveway and $5,000 a year taxes would run $250,000+. Since Section 8 is federal, the rents are the exact same. I'm upto 53 houses, and have 2 more under contract. They're renting like hotcakes. My squad came up here too. They also have about 50 between the 4 of them. We're netting almost 60 grand a month in government guaranteed cash. Once we hit 250 houses, we're gonna hire a property management firm, move to South Beach, and just mack out and live off our rents.

I was a true knucklehead in my teens, have a record, never stepped foot inside a college, and couldn't get a job if my life depended on it. There's no other city in the world that would have made this possible so fast. That's why I love my adopted city so much.

To make a long story short, I was in the drug transport/consignment business from 12 to 16. At 17 I was a drug mule, and I got busted a few weeks before I turned 18. My exit strategy all along was to snitch, so when they got me up in the precinct, I was singing like Tweety Bird. They couldn't shut me up. The beauty of being a mule is you know kingpins on both sides, so you have 2 people and their crews to snitch on. I was caught with weight, yet ended up only doing 88 days. I also got to keep almost all of my dough.

I sat on the money, loansharked a little, and did little minor bull****, drove no car havin' hookers and strippers around to their appointments until I was 26. That's when this Detroit thing just fell in my lap. My boys and I had $500,000+ cash when we came up here, roughly half of which was mine. The first 25, 30 houses I bought and fixed up were cash. It wasn't until later that I realized I ****ed up. I had no credit or job history, so the cash I put out became dead money 'cuz I couldn't pull it back out via equity loans. I was using my rents to buy more houses, so it was taking forever too long to build my reserves back up. That's when I had to go the hard money route. My money guy financed my last 9 houses, and he's happy with my performance, and wants to keep it going.

In the meantime, I've been scrambling to get my **** together. I've incorporated my company, got my credit to a decent level, and got the IRS off my back. They found me, bent me over, and jammed me up real good. I never filed a return until I was 27, and they gave me 2 weeks to file 6 year's worth. Everything's going smooth now, but I wish I had used the hard money since day 1.

I own 53 houses here in Detroit...The beauty of The D is that, realistically, properties don't have to rebound. They can all go down to $0 for all I care. Section 8 pays above market rents (in the $700 to $900 range). If you buy all of your properties in decent neighborhoods around schools, Sec 8 voucher holders will fights to move in, and you'll recover your initial investment within a year.

I only use hard money lenders. I had no credit, never had a job, never paid taxes, had felony drug and weapons convictions and jailtime on my record, yet still had no problem getting funding. A lot of rich suburban jews are scared to travel below 8 Mile, but realize the potential of the market. They piggyback off us at outrageous interest rates & points. I see Warbucks get his financing between 12 to 15% and 3 points. I'd kill for those rates. I pays 10 points and 18%.

Also, since it'll take me years to build a credit profile, I can't refinance out of my loans through conventional means. Therefore, my exit strategy is basically to amortize my loans over 12 months. For every 30 grand I borrow, I have to pay $2,750 a month back. My sister's up here too and uses the same guy. Both her and her husband's credit are over 720, so they can amortize their loans over 30 years with a 5 year balloon.

Hard money lenders are starting to tighten up a little, tho.. but you just need to find one guy to believe in you. If you do right by him, he'll do right by you.

I rent strictly Section 8. The money's guaranteed, so the carrying costs are the least of my concerns. I'd probably get called a liar, and kicked out the room if I told you how much I'm putting away every month, but it's a sweet, sweet life.

The beauty of Detroit is that almost everyone else is broker than a mofo. If you've got money, you live like a King, and can exploit them all, male and female alike. Qualified, talented contractors renovate your houses for scraps, and the chicks up here **** like there's no tomorrow thinking you're eventually gonna throw some dollars at them.

The property taxes are between $100 to $200 a month on the houses I buy, insurance is about $50 to $75 a month per house for fire, vandalism, builder's risk, and liability. I had a dude mow one of my larger lawns for $5 the other day, and my tenants cover all of their utilities.

I moved to Detroit 11 months ago to get a piece of this foreclosure madness, and I been straight raping the city ever since. I'm up to 53 rental properties, I'm closing 54, 55, and 56 next week, and I have no intention of slowing up until I hit at least 200.

If you have the patience to learn the business, and the cash reserves to withstand minor drawbacks, there are very few endeavors with such small barriers of entry in which you're gonna cake so nice in such a short period of time. It's like someone said earlier.. everyone's gotta live somewhere. And if they don't have the money, the government will subsidize them.

The real estate hustle is the truth.

Yup, we're gettin prison raped. He knows he's pwning me, I know he's pwning me, and he knows I know he's pwning me. But like you said, the houses are so cheap, it doesn't really even matter.

The houses I buy are in slightly better neighborhoods than where the sub $1,000 houses are selling. The properties I cop are usually in the $3,000 to $5,000 range, and need about $5,000 worth of work. If my lender spots me $10,000 for the purchase/rehab, my points are only $1,000. That's a month and a half's rent.

The monthly payments are considerable too, but the way reconcile the numbers in my mind is that, technically, the taxpayers are ones really paying it. Their money is funding HUD. Barack just pumped another $11.2 billion into the housing assistance payment program, and those rents in-turn go right into my and my lender's pockets

[le roi]

So he's a Detroit slumlord, career criminal, and possibly a patholigical liar? awesome, good for him. even if it was all true, I'm skeptical that the money would be worth it.

[killer2021]

Avoid detroit. If there is any money to be made in detroit it is highly speculative. The big automakers are going bust and unless that changes there won't be much money to be made. One of the big problems with detroit is crime and vandalism. Your properties will get vandalized if left unrented to good tenants. A lot of these cheap properties are damaged and when you purchase you are required to bring it back up to code, in other words a huge waste of money.

If you can't rent out the property with positive cash flow, the property is worthless as an investment.

Now I am not saying that you can't make money in detroit, you can just it is a lot more difficult.

[actomsel]

Not a complete bs thing I think, but the background on the guy seems shady at least. There are some cheap houses in the suburbs etc. from some preliminary research I have done. I say find a good property manager that can give you advice about the area and what to expect. Check them out thouroughly before moving forward with them. Understand that being a landlord can be a second and third job. No one makes money for free, but it can turn into a great living when done well.

[middle-aged mom]

I see a BS flag.

This guy can weave and write a good story. Sounds like he watched a lot of Sopranoesque reruns.

[austin-steve]

bs. do the math.

[JayCT]

Actually I knnow people in Atlanta that are investing in Detroit this way too. I don't knw the whole story but they are buying foreclosures, fixing them and then selling for a modest profit. They have been doing it for over a year now. Don't know how well they are doing but I don't think they are losing money. You should note that Detroit is a big city and even though the car industry is a big part of it, it is not the only business. Jay

[marmac]

If I was the one getting rich doing it, I would tell no one.

Why invite competition ?

[RobE]

Whether the guy's purported story is accurate or not, if he is renting to section 8's, all it would take is a beef with a buddy of one such renter who has also been a frequent guest of Michigan's finer compulsory hospitality outlets and bang! he gets himself a little spontaneous cerebral air conditioning.

[todd00]

people can be anything in chat rooms, its a liars paradise. its a place where all the women can be slim and beautiful, and all the men, wealthy, macho men. when i see pple bragging about what they got in a chat room setting, i see a very insecure person weaving a story of success, they wish was reality. this person could be anyone, a student thats taken a couple business courses while watching some bad b movies, or someone thats tried real estate and failed, or even a section 8 renter, the list goes on and on. it sort of sounded like a bad infomercial, where the punch line is buy my tape series. and you to..can be on your way to easy street..like me. a waste of his time typing it, and a waste pasting it as well.