My "not so" pleasant experience of buying a home in Detroit…
My "not-so-pleasant" experience of buying a home in Detroit
Hello friends, I wanted to share with you the buying experience of a home for rent in Detroit accompanied by an "experienced investor". I purchased a home in Detroit through the guidance of an experienced investor recommended to me who offers his services for a fee of $ 5000 for buying, renovating and renting the property.
The guy presented some calculation that was supposedly done by one of the customers showing a return between 12 and 15 percent and on paper it looks good, America Versano…
The experienced investor has purchased for me a house that he says is located in a neighborhood of "blue collar" class, will answer a neighborhood of working people working.
A house that was abandoned and sealed against burglary for several years and therefore obtained it at a "bargain" price of $ 29000 3 Bed, 1.5 Bath, 800 Sq.Ft.,.
The renovation, valued at $ 10,000 and two three-week work, was spread for almost half a year and cost 14,000, a result of a lack of attendance and supervision of the renovation in the field, by the investor or someone on his behalf, which surprised me that it has no representation Property, contractors were replaced and at the end after half a year from the purchase (which comes I pay property taxes and insurance on the house) the house was finally rented for a year.
During the rental year, a repair ranging from one hundred to five hundred dollars appeared every month. Pumping a flooded basement, clogging squirrel holes, blockages in the sewer pipes, water pipe problems, electrical problems, a $ 1200 fine for renting without a permit and more.
The management company's handling was unsuccessful. At the end of the year the tenants gave up and left. Meanwhile the house stood empty for a few days and was broken into again several times. Doors, bathroom cabinets, sinks, a toilet and of course the heating system, heater and stove were stolen from it, which is the favorite thing for thieves in the area. I was tired of the bargain and decided to get rid of it despite all the losses of renovations and repairs and thefts.
I contacted a salesman of the management company and asked him about a price that could be obtained for the house as it was sealed as I bought it and he said that the offers we would get would probably be in the 20,000 range which surprised me completely since I bought it for $ 29,000. I turned to the experienced investor who bought me the house and asked him to find me a buyer at the price he bought me, but he said that Israelis do not buy at such prices only Americans. Which caused me an identity problem since I bought at such a price…
So when you embark on such an adventure, if you still insist, you should make sure that the person who offers you an accompanying process of purchase, renovation and rental, has a representative in the field on his behalf who will act on your behalf as if you are there in the field. Ask for recommenders who have experienced problems of unsuccessful renovation and abandoned tenants to see how it was handled by the lender and the management company. Try to see how many houses were sold in the neighborhood you are buying. When there are no problems there can certainly be 12% flowing yield, but only in theory and practice And the blue collar is a little more gray
Idan Shalev
Sucks a lot, and it's clear that whoever you worked with is failing at best and beyond that at worst. The thing is I personally know amazing lenders and entrepreneurs who do a wonderful job for people in the same business model. I have no interest. I write what I think. And I think a little self-examination as to what our responsibilities as customers will not hurt. After all, you are describing a deal at insanely high risk. A property in catastrophic condition and an entrepreneur you probably haven’t checked enough on before. Always the responsibility for our failure is also on us. It has a name. Due diligence. To the entrepreneur. To the transaction. And it appears that insufficient due diligence has been done here. And again there are amazing lenders who do a beautiful job. Wish you next time to succeed !!
I'm sorry you went through this and have a big aspiration for sharing, most of the posts are of success stories and few dare to share information about bad deals from which one can sometimes learn much more from another success story.
Very unfortunate such stories.
It is very important to learn a little bit about things before getting into any investments, certainly in overseas transactions.
Anyone thinking of putting their money on real estate in the US must first learn the buying and selling process in the US.
Learn how to check numbers, how much the house is really worth
How much really the market price of the house
How much really the rent is in the area
And so on
These are things that are relatively easy to find out with the help of an internet search but it is more important to talk to professionals in the area.
Realtors, contractors, financiers, other investors.
They are very easy to find in Basilo and Facebook groups.
I say "trust and check"
Someone tells you something, gives you a number - turn around, everything is fine.
I am now going to check this number through three unrelated and unrelated sources.
I was burned out buying an apartment with owner financing with an Israeli link Motti Katz until I finally returned the apartment to its owner.
Why do not you name the lender
Feel free to tell also in Taking Off for Economic Freedom, a story from which there is much to learn
Thanks for sharing, one version or another of your story has happened to many and good, few brave to share.
Can I share and give credit? I want to give this as an example of something on my page
I think I know who "handed" you this deal, he tried it for me too… I checked a lot with local agents who warned me about it.
Very unfortunate to hear… Although sometimes transactions just do not succeed but here really carried that you describe a case that resulted from the inexperience of the lender.
As one who went through a similar story in the beginning, all I have left to say is ask raise your hands, keep going, learn from the case, learn lessons and come out strengthened!
Feel free to send a message if you would like to consult a bit
Successfully!
The amount of diggers in this industry is staggering time and time again
Sorry to hear about your experience, but it's a shame you give us the impression that it's not possible, to the best of my knowledge and experience that more investors are happy with sand real estate than investors who have had a similar experience to yours. We just do not hear about them
I invested in the US and my experience was and still is very positive. I recommended to a number of friends to invest with the same company that manages my assets and everyone is satisfied and got richer in a very short period of time.
There is no easy money and no safe investment, the chance of failure is clear in advance and all possibilities must be considered, but it is always like that
Tomer Savir
Publish the name of the company through which this happened.
Do not see a problem with this as long as you do not lie, the public right to know so as not to fall.
In general, the amount of crooks in this field is simply delusional.
I wish all the researchers on the news channels to enter the niche of "US real estate investments" for them it would be a gold mine.
There is no substitute except to see if you can work alone with the broker and with the renovation contractor, which I recommend you do not despair, I am also an investor who started two years ago, I bought a house in a good neighborhood in Detroit (amounts higher than yours) I renovated and rented through a management company I also had many disagreements with them The truth is, part of it is my fault, but part of it is because of them, for example in Detroit I need a rental certificate that I didn't issue before I rented the house, I received high fines for this in my opinion, they should have instructed me on this and more and more... In the end I got fed up because everything that came in from the rent came out as expenses, I cut them off with the help of an editor Dean I know after 18 months that the property was rented again cost me money... I went back to the broker I bought the house from and put it up for sale, I got twice what I bought for it! In other words, I bought all the losses and came away with a nice profit. What I learned when you invest abroad, besides investing in property you also invest in the people who work for you there!. Because I was surprised, I bought another property in the same neighborhood, renovated it, and now I've asked the broker to rent it to me (she's trying to convince me to sell), I want to keep it for a year. In principle, take some tips from me, you don't buy a house for rent in neighborhoods in Detroit where the base price is less than 100K, it doesn't work! You also do not buy a house with two bedrooms, it is difficult to sell it later to home owners, likewise you do not buy without a garage and without a basement. And you don't buy in a block that has over 10 percent empty houses, and you don't buy at all if you don't have a broker straight from the area and a renovation contractor straight from the area!
Agree with every word. Various "lenders" are usually not field personnel, licensed agents, or great intellectuals. Find a reliable company with the right recommendations that works in the field and use a lot of common sense if you are offered a return of 15% saying in English if it is too good to be true, it usually is !!
Bummer. Learn from it and move on.
Very sad to hear. You would share the name of the "expert" so people would know to beware of him. A short story about Detroit: in 2015 I went to see some buildings in Detroit itself, neither a suburb nor shoes. Pure Detroit. Without going into the numbers, some realtors out there have shown me buildings with numbers that literally make you a millionaire in two years or less. I also went to two seminars that week by local management companies that I wouldn't let manage a grocery list. To cut a long story short, the deals were hot and crazy on paper...but a small problem, when you enter a complex of 132 units and as a matter of fact, all the family members are sitting on every balcony, in the middle of the day, looking at you as an intruder, you realize very quickly that you have to enter there with a special unit to collect rents . I still didn't give up and told myself I didn't have the courage to do it alone so I called some brave ones. Everyone including everyone said **no**. I offered one of them a partnership of 50.50 when he put less than me down payment and still said no. Conclusion - doesn't mean you can't work in Detroit, but do yourself a favor and don't invest a dollar or even one shekel in this city without having seen, done, checked and most importantly you have people there. And certainly not to invest with an accompanying "expert" in such a city or in such areas in the US unless that expert actually lives close to the area in question. Good luck next time. By the way, without going into too many investigations about how the expert got to this property, with a very high certainty it came from an auction when the first one bought it for less than 10K and maybe even got it for free and paid taxes.. and the same expert probably ordered 10K there in the sale including the 5K escort fee His.
So moving away from such deals, remote control in a foreign market deters me. Thanks for the instructive story and good luck later
Avi Yaacov
Boils.
What is the situation now? Did you manage? Did you sell? Need Help?
thanks for sharing
thanks for sharing
Evyatar Gerzi
Thank you for all the sharing and as you wrote a representative in this area MUST. Hope you also have successful deals that you made and did not give up because there are also a lot of good and professional people