Investing FAQs

How do I choose a property?

We update our website frequently and all of our properties for sale are listed under the “Available Properties” tab. Each listing has a price, pictures and cash flow information listed. Some properties are still being rehabbed and the final completed pictures are not available yet. Choose the property you like best.

What information do I receive to make an informed decision?

With each property for sale, we provide a financial analysis, which outlines the income, expenses, cash flow, and return on investment (ROI). To view, click the “Available Properties” tab). Next, click, “Property Financials” in the box next to the property description. To determine the cash flow of each property, we analysis the following:

Mortgage payment: We determine the monthly principal and interest (P & I) by taking the current market interest rate, 30 year fixed loan with 20% down. Of course, a cash buyer will not have a P&I payment.

Property taxes: We determine what the adjusted non-homestead taxes will be. This is determined by taking the current State Equalized Value (SEV) and multiplying by the city millage rate. Watch this short tutorial to learn how to understand Michigan property taxes:

Rents: Rents are estimated by taking the average rental rates based on the city, neighborhood, market trends, size, and features of the house. If the property is already rented we use the actual rents.

Property Management: Our recommended property manager charges a flat monthly fee.

Insurance: Our recommended insurance agents provide an average monthly charge for a rental policy.

Rental Registration: Annual fee to register the property as a rental with the city

With the provided information, an investor has all of the information to make an informed decision.

I’ve chosen a property I want to purchase, how do I “lock it up?”

Our properties are sold on a first-come, first-serve basis. If you are a cash buyer, we will send you a purchase agreement (PA) You must sign the PA and send it back with an earnest money deposit (EMD) in order to “lock it up.” Upon receipt, we sign the PA and forward it to the title company. Once title work is complete, we schedule a closing.

If you require bank financing, first you must be pre-approved with one of our recommended lenders. You must fill out a form and fax/email to our lender who will qualify you within 72 hours. Once you are approved, we send you a PA. You must sign the PA and send it back with an earnest money deposit (EMD). The lender will also send you a “good faith estimate” (GFE), which outlines all of the closing fees, interest rate, etc. Upon receipt, we sign the PA and forward it to the title company. Once title work is complete and financing conditions met, we schedule a closing.

mortgages

What do I need to be pre-approved for a bank loan?

There have been a lot of changes in the lending industry. All borrowers must be full-doc borrowers meaning that you will provide the lender with all of the documentation they require. The following criteria is the ideal rule of thumb to be an excellent borrower:

Credit Score: a mid score of 680 is ideal. Lender will pull credit after he receives the pre-approval form.

Debt-to-Income: monthly debt payments need to be 50% or less of your monthly income.

Debt payments are taken from credit report and the borrower must prove income with w-2’s and/or tax returns. Proof of funds: must have enough cash in a liquid account (checking/savings) to pay 20% down payment plus closing costs.

What happens if I’m not the ideal borrower?

If you do not meet the criteria to be an excellent borrower, we suggest you still submit a pre-approval form to our lender. He can determine what is needed to become the ideal borrower or may have a program that “fits” for you.

What happens to my EMD?

Your EMD is applied toward the purchase price at closing. If you are not approved for a refinance loan, your EMD is returned. If you do not close for other reasons, you may forfeit your EMD.

How do I close if I am out-of-state?

The title company will email you all of the docs. You print 2 copies, sign both copies, and overnight them back to the title company. Next, meet with the title company and sign both copies and the title company mails you back your copy. It’s that easy!

What additional costs do I pay at the closing?

In addition to the purchase price, you as the buyer have the normal closing costs associated with purchasing real estate, namely, pro-ration of taxes, appraisal, settlement fees, recording fee, etc. At the time of closing, you are provided a closing statement outlining all closing fees.

How do I take title to the property?

At closing you will receive a warranty deed in your name or company name that is clear of any encumbrances.

How long does it take to close?

If it is a cash purchase, closing takes place as soon as title work is updated, usually 2 weeks. If it a bank financed purchase, closing typically takes 30-60 days.

When do I pay my property taxes and insurance?

If it is a cash purchase, you will pay your property taxes when they come due each year in July and December. Insurance can be paid annually or monthly depending on how you set it up with the insurance company. If it is a bank financed purchase, typically taxes and insurance put in escrow and paid monthly with your P & I payment.

How do manage my tenant?

Once you purchase a property, you enter into a rental management contract with the property manager. He/she handles everything from filling the unit, registering the property with the city, city/section 8 inspections, collecting rents, maintenance calls, etc.

How do I get my rent checks?

Management of your unit is outlined in your rental management contract with your property manager. The property manager will collect rents, take out his/her fee and any other fees and mail you the balance.

Why are the prices so cheap?

We buy distressed properties at a discount and have systems and contractors in place to minimize the cost. We price all of our properties to cash flow. As a result, they sell quickly and we never have a large inventory of houses. Most our properties are sold immediately after we acquire them.