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How to Buy Detroit Investment Properties Part 3

7 Keys to Successfully Investing in Detroit Real Estate

In How to Buy Detroit Investment Properties Part 1 we discussed the first two keys to successfully investing in Detroit real estate (timing, location). In Part 2 we discussed keys 3-5 (desirable, price, cash flow). In this final part 3 we’ll discuss the last 2 keys to successfully investing in Detroit real estate.

6). Condition:
Successfully owning investment property requires the property to be in good condition and as maintenance free as possible. The problem is many of these properties that investors are buying in Detroit are in disrepair and some are in major disrepair. Deciding what repairs to do is often a difficult and puzzling decision for many investors. Click here to see a video of items to repair on an investment property. There is a fine line between not doing enough and doing too much. Most investors do either of the 2 extremes. My strategy is to take care of all capital improvements initially so that over the life of owning the property I won’t have to worry about it. For example here are some major items to repair:

• Roof: replace it has 10 years or less life expectancy
• Windows: replace metal or wood with vinyl
• Siding/facia/soffit/gutters: Make sure any damaged siding, facia, soffit and gutters are repaired, water tight and working properly
• Plumbing: replace all galvanized pipes with new copper or Pex pipes
• Electrical: hard wires smoke detector, replace nob and tube electrical boxes, new plugs/switches, and GFI’s to code.
• Mechanical: replace old, inefficient furnaces with newer forced air
• Flooring: ceramic tile in kitchen and bath, chocolate brown carpet (hides stains)
• Kitchen: repair/replace cabinets, paint.

If the above items are all taken care of initially then the only repairs over time will be carpet/paint-type repairs. When doing initial renovations, I ask myself, “what do I need to do so that I don’t have to repair this item for another 10 years?” I also recommend making each property comply with local and state code as well as section 8. Once you learn what they like to see, make each property meet their requirements. For example, section 8 is really big on screens and sidewalks. Most municipalities are very concerned with handrails.

7). Property Management:
Owning investment property should be as passive as possible. If you want to buy Detroit Investment properties, plan on hiring a good property manager (PM). A good PM will advertise, screen tenants, sign leases, make sure utilities are switched in the tenants name before moving in, conduct property inspections, fill out legal paperwork such as lead-paint disclosures, collect rent, field calls, coordinate routine repairs, file evictions, register rental with local city, hold deposits, and much, much more. Most PMs charge up to 10% of rent and/or a placement fee. this is money well spent and should be factored in when determining the cash flow before investing. I recommend working with with a PM that has experience in your area. He/she will know the rental prices and will keep you aware of what’s going on locally. Also, choose a PM that has experience working with non-local investors. Many of these PMs we direct deposit rent proceeds into the investors bank account.

In conclusion, there are seven keys to successfully investing in Detroit real estate. If you  are considering investing and want to buy Detroit investment properties, be sure to:

1. Buy at the right time
2. Buy in the right location
3. Buy desirable properties
4. Buy at the right price
5. Buy for cash flow now
6. Buy properties in good condition
7. Use a property manager

And remember: it you want to buy Detroit investment properties, it will require some commitment and long-term vision but if you follow these seven keys to success, you will prosper!

Be sure to read, How to Buy Detroit Investment Properties Part 1 and Part 2

Jerry Norton is co-owner of Equity Services, LLC. His company provides investors with fully renovated, positive cash flowing investment properties for under $50,000.

To learn more about how to buy Detroit investment properties, visit our site and download our FREE worksheets “Rental Income and Expense Tracking worksheet” and “Financial Analysis Worksheet.”

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