You have this great idea. You hear Detroit is the Come Back City. It's out of bankruptcy, people are moving back to town, more of the tech industry is moving in...naturally it is time to buy these cheap houses! All you need to do is call a real estate agent, find yourself some trusted renovators, then find a property management company that works in Detroit. How hard could it be?
Lemme tell ya just how hard all of that is! (But it's okay, I have solutions too.)
Choosing the location. If you look on Google earth and see the rest of the street you may not see that the house just to the left of it is gorgeous and well maintained, but the rest of the street is abandoned and it's surrounded by abandoned businesses. Do you even know what year that Google image was taken? No! Solution: You need a local person who drives the city regularly who knows where the thriving, desirable pockets of Detroit are. Sorry, there won't be houses for $1,000 there either, but still the prices will give you a good ROI. We know where these places are.
Choosing your Real Estate Agent. We agents make our money off commissions. We get commissions when you hurry up and buy it. Our famous line is, "All it needs is a little paint and it's move-in ready." Solution: You need the agent who is also in charge of the renovating and tenant placement and keeping the buyer happy for the long term benefit of a good ROI on his investment. I'm not after the piddly commission. I'm looking toward the future because I think like an investor because I am an investor too.
Finding your renovator. Have you heard of the woes of those contractors who don't show up once they have their deposit or if they do, they sure don't do the job you thought they were going to do, but then they follow it up with a bill you sure didn't expect? That's typical anywhere. Solution: Don't even deal with THAT mess. Buy the house once it's already renovated. No big surprises that way. How did I solve the contractor blues? My head contractor is my husband. He's in it too for the final ROI for the investors. What is good for our investors is good for us.
Finding the property management company that isn't going to rip you off. A favorite tactic of property management companies is to bill you A LOT for maintenance. Or to place the first rental applicant that comes through the door without doing appropriate background research. Solution: Our company believes in transparency. We show you maintenance receipts and photographs. And our backgrounding checking is extensive. We want long term tenants. We want the tenants who will give YOU the best ROI. We won't even sell you the house unless the tenants have proven themselves to keep the house up and pay rent timely for three months.