Dennis Fassett How to Write Your Story

This is a presentation that Dennis Fassett gave at Junes 2012 Renegade Detroit Investors meeting. He teaches you how to write your story in a compelling way and why it is important.

Check out Dennis here: Cashflow Mercenary

Nothing beats actually being at the meeting, meeting new people, and asking our speakers questions directly. Unless you like making less money of course:) Make sure you make it to the next meeting!

Be a Renegade,
Jeremy Burgess
The Detroit Market Expert

Top 10 Issues Buying Non-Owner Occupied (NOO) Properties

Buying investment properties is not something that should be approached lightly. There are many issues you should be aware of that could cost you.

  1. Always get title insurance, especially if buying foreclosure. You may have to order your own, but do so to protect against unpaid liens, taxes and water bills.
  2. Even if paying cash, don’t forget to insure the property the day you buy it.
  3. Always inspect the property the day of closing, especially if vacant. You do not want to discover surprise vandalism or accidents after closing as it’ll then be your problem.
  4. NOO CANNOT be financed in an LLC with FNMA/FHLMC. Title must be in borrower’s name for at least 6 months. Flipping from LLC to your personal name, starts 6 month clock.
  5. Whether your plans are to refinance or sell, document your rehab work. Take before pictures that make the property look as BAD as possible! Redoing a kitchen or bath? Take the pictures when gutted. Keep all receipts for rehab work. Avoid paying cash for labor! You will need all this to justify rapid increase in value for refinance or for the buyer’s lender if you sell.
  6. No loans on NOO under $30k, no guarantees if under $50k. NOTE – this is loan amount based, not value.
  7. Cannot finance a property listed for sale until off the market for at least 6 months. We sometimes have lenders that will do 90 days, but DON’T rely on this.
  8. FNMA/FHLMC now require 6 months ownership seasoning on all cash out transactions.
  9. If you sell your rehab to buyer getting FHA financing, YOU must own the property for minimum 90 days. If owned less than 180 days, FHA also usually require a second appraisal that underwriter must order.
  10. No zero point deals on NOO, expect to pay 1-2 points at close. Rates will usually be about 0.75% higher than rate for primary residence loan.

Drew Sygit
CMPS, CMC, CRMS, CMLO, CALO, MBA
248-356-DREW (3739)
www.TheLendingEdge.com

Metro-Detroit Michigan Real Estate Club

A Real Estate Bubble in Detroit?

Real estate investors from around the country (and the world) are scooping up cheap real estate in a Detroit market that fundamentally, has too many homes.

Detroit, MI – Sales of Detroit residential properties are up 18% from last year, which is good news for the hard hit area.

The question is, who’s buying these homes?

According to a recent report from the National Association of Realtors (NAR), first-time buyers are accounting for 53% of sales nationwide this year.

In Detroit though, many homes being sold are distressed properties that need major repairs due to stripping, vandalism and weather-caused issues.

Not properties a first-time buyer would typically be interested in.

Let’s look at what’s selling:

Total Year-to-Date Detroit Sales = 2737

Distressed Sales

Sales Under $40k

Sales Under $10k

Sales under $5k

Sales under $1k

93%

97%

75%

48%

11%

(January 1 to March 31 2009)

Comparing 2008 to 2009 numbers shows an interesting trend:

Increase from 2008 to 2009

Distressed Sales

Sales Under $40k

Sales Under $10k

Sales under $5k

Sales under $1k

80%

27%

71%

89%

140%

(comparing periods: Jan 1 to March 31)

Since it’s unlikely first-time buyers are responsible for buying homes under $10,000 that need major repairs, and no one would buy a second home as a vacation property in Detroit, that leaves only investors as the ones responsible for the increase in sales.

In a recent Detroit Free Press article, the director of the Detroit Area Community information System, Kurt Metzger, was quoted saying that Detroit’s population is 853,000.

That’s a hopeful number. Our management company is seeing half our applicants looking to leave the city of Detroit. I’ve heard estimates that the realistic number is closer to 600,000.

Why is this important? Because a decreasing population in Detroit means an over-supply of homes. Some estimates have Detroit with 40,000 homes too many.

Shrinking population and too many homes means it’s highly likely that many investors are buying homes that have no future except demolition. And if that’s true, it would then be true that investors scooping up homes under $5,000 may be really just bidding against each other.

Sound like the recent condo bubble in south Florida? There speculators flipped condos between themselves, pushing up prices, until the bubble popped. Those stuck with the properties at that time got burned.

Now it’s important to understand that the entire population of Detroit won’t be leaving. There are great areas of Detroit that are stable and where home-buyers and tenants want to live.

A real estate investor looking to buy in Detroit has to understand the market and identify the desirable areas. Not easy to do when you’re from out of state or out of the country.

An out-of-state investor I first spoke with almost a year ago, called me out of the blue this past week for help. He bought a 4-plex from a local investor for $40k, who also promised to rehab it for him. That was 6 months ago. Nothing’s been done to the property and he can’t even get ahold of the seller. He bought the property based on an appraisal of $110k supplied by the seller, that he now thinks was “generous”. He’s gotten repair estimates from contractors for $50k. He bought the property using funds from his home equity loan on his primary residence. He was counting on rental income from the property to help pay that loan and can’t really afford it otherwise. He’s now worried about losing the home he lives in due to all this.

This is an example of why we can’t remind investors often enough, how important it is to deal with REPUTABLE people that know what they’re doing in the Detroit market.

Otherwise, you could easily get stuck with a property destined for the demolition list that could also put you into bankruptcy.

Drew Sygit

Southeast Michigan Real Estate Club
Drew’s Mortgage News

Greatest Redistribution of Wealth EVER. Get Yours!

Recently I have been thinking a lot about the saying, “May you live in interesting times.” If NOW doesn’t qualify, I’m not sure what does! Of late I have been reading almost obsessively on The First Great Depression to find as many parallels between then and now. I have been shocked about what I have learned by studying this history.

Everyone knows that times were tough for many. There has high unemployment, an increase in poverty, the stock market crashed, many businesses and banks failed, and farmers were some of the worst hit. Amazingly enough, and what they leave out of the history they were teaching us, there was a very large redistribution of wealth. Many investors and business owners became millionaires during what was supposed to be an impossible time to make money.

Those that were successful innovated and did things that others weren’t doing. One of the best examples was when Proctor and Gamble turned to a very young and unproven form of advertising, radio. P&G started adverting and sponsoring radio shows during the great depression and experienced large market share growth and profits.

I can see a parallel between radio advertising during the great depression and how some innovative companies are experimenting with advertising on social networking sites like Facebook, Myspace, and Twitter. Some companies like Starbucks have really embraced the new online social networking revolution as evidenced by @Starbucks on Twitter.com. Jared, Drew, Jeanna, and I can attest to the power of online social networking and in the last year over 65% of our sales came from this “free” source for marketing.

Other companies like the Chicago Bridge and Steel Company found new markets for their products. Before the great depression, Rail Road Companies accounted for 25% of all steel used in America. The great depression really hurt most rail road companies which resulted in a decrease to 6% of steel used in America. The Chicago Bridge and Steel Company changed course and was able to secure contracts to provide steel to construction companies who benefited from FDR’s New Deal which resulted in The Tennessee Valley Authority, many government buildings, and roads.

Another great example is how IBM, during its lowest earnings ever, invested over $1,000,000 (at that time this was an enormous amount of money) in a new research and development facility. This facility made giant leaps and produced some of the most advanced data processing machines at that time. Shortly after, FDR created the Social Security act which created an enormous demand for data processing machines and IBM went on to profit greatly and as a result utterly dominated the IT industry for 50 years.

The first great depression resulted in a very large redistribution of wealth for those who innovated and took bold action. I can see the same thing happening right now in America. Nobody of course is calling what we are in a depression but I think it is hard to ignore the fact that we are and I think it many ways it is worse than the first.

Yet I see many Renegade Investors making massive profits as they innovate and take bold action while others wait and watch.

We live in exciting times and we are witnessing what I believe is the greatest redistribution of wealth in American history. Be a Renegade Detroit Investor and get out there and Get Yours!

Be a renegade,
Jeremy Burgess
Detroit Market Expert

Southeast Michigan Real Estate Club
Free Report on Detroit investment properties “how to”