Looking to get into land-lording in Metro Detroit area, Michigan

[matter atoms]

Hello,

I'm interested in getting into land-lording in the metro-Detroit area of Michigan.  Does anyone have any opinions on the area and how it stacks up against other real estate markets?

Additionally, I'm new to the whole rental property thing.  I've done a fair amount of reading on the topic, but it is far from having any real world experience.  Is there anyone in the area who'd be interested in meeting up for food (on my dime of course) to share your thoughts/experiences, recommendations for property management, etc.

Thanks!

-matter atoms

[Guava]

Metro Detroit is a huge area with a lot of different types of properties. Are you looking at the high end rentals or the lower end in places with higher poverty and low rents? Or something in between? How familiar are you with the area? Are you interested in single or multiple family properties?

[matter atoms]

Metro Detroit is a huge area with a lot of different types of properties. Are you looking at the high end rentals or the lower end in places with higher poverty and low rents? Or something in between? How familiar are you with the area? Are you interested in single or multiple family properties?

I guess I'm not sure.  It's hard for me to say since I've never done it before.  I think I'd be interested in higher end rentals, since I'd rather not have to deal with a tenant who would trash the place.  I am quite familiar with the area, I've been living in Troy/Sterling Heights area for my whole life.  I'd probably want to start with a single family property "to get my feet wet".

[Mr Mark]

Well, at least you're not from SOCAL or Brooklyn, like everyone else wanting to get into the D rental scene! ;-)

Check out Bigger Pockets (although the topic of Detroit is a rather passionate love it/hate it sort of topic). Avoid cheap houses (you'll be tempted, but remember a new boiler in a 30k house is a disaster for returns vs a 120k place) and turnkey rental outfits (usually a total scam, but they are good at getting money from out of town greedy suckers). Start with 1 SFH in a suburb (preferably really close to where you live) with good schools that will be low maintenance (no roof/HVAC issues). Are you going to be your own property manager?

Find and attend a few real estate meetups and talk with landlords and developers.

But please don't think there aren't a LOT of experienced and smart people already active with the same idea. What's your edge?

[Guava]

I think I'd be interested in higher end rentals, since I'd rather not have to deal with a tenant who would trash the place.  I am quite familiar with the area, I've been living in Troy/Sterling Heights area for my whole life.  I'd probably want to start with a single family property "to get my feet wet".

Any tenant can trash a place, even if they are paying  $2k a month.  You might be surprised how people break things you will go your entire your life without ever having broken.

A SFH in the Troy area could be a good first step. Make sure you check your numbers before you buy. Also be familiar with the rental laws in the area to see if you need inspections or anything else.

Other things to consider:
Will you manage?
Will you do repairs?
Will you allow pets?
Are you prepared to evict someone?
Are you financially prepared for an extended vacancy or unexpected large repair?

Think about what can go wrong and if you are ready for it. For example at a SFH last year the well went bad ($5k), decided not to renew contract of less than desirable tenant, said tenant stopped paying rent for a few months (~5k), trashed the place (~3k damages) and had to be evicted (~1.5k fees). That was all in a few months and 9 months later and the former tenant still hasn't paid a dime. Then the new tenant backed into the garage door and destroyed it his first week in the house and we had another large expense (new tenant reimbursed but we had the up front fee). How would you handle that? Things can go very wrong very fast sometimes. In the last 7 years we had never had one expense over $100 in that house until last year.

Also what Mr Mark said.

[matter atoms]

Are you going to be your own property manager?

Find and attend a few real estate meetups and talk with landlords and developers.

But please don't think there aren't a LOT of experienced and smart people already active with the same idea. What's your edge?

I'd like to be my own manager to start.  Partly because I think it would be helpful to do it myself for learning, and also to save some money. 

Do you have any suggestions on where I could find such a meetup?

I guess I do not have an edge haha.  But from the same token, there are a lot of people investing in index funds out there with a similar idea so how does one get an edge in that marketplace?

[matter atoms]

I think I'd be interested in higher end rentals, since I'd rather not have to deal with a tenant who would trash the place.  I am quite familiar with the area, I've been living in Troy/Sterling Heights area for my whole life.  I'd probably want to start with a single family property "to get my feet wet".

Any tenant can trash a place, even if they are paying  $2k a month.  You might be surprised how people break things you will go your entire your life without ever having broken.

A SFH in the Troy area could be a good first step. Make sure you check your numbers before you buy. Also be familiar with the rental laws in the area to see if you need inspections or anything else.

Other things to consider:
Will you manage?  Yes for starters.  I figure I can save some money and learn more this way.
Will you do repairs?  Not unless it is something simple.  I'd need to develop a good relationship with a handyman/contractor I can trust.
Will you allow pets?  No, I've been in too many homes where there's a very noticeable odor.
Are you prepared to evict someone?  I'd probably use an eviction service for this.
Are you financially prepared for an extended vacancy or unexpected large repair?  I do have a fair amount of money on the side.  Also, I plan on following the 50% rule which I would think would help mitigate some of this risk.  Should I be more conservative?

Think about what can go wrong and if you are ready for it. For example at a SFH last year the well went bad ($5k), decided not to renew contract of less than desirable tenant, said tenant stopped paying rent for a few months (~5k), trashed the place (~3k damages) and had to be evicted (~1.5k fees). That was all in a few months and 9 months later and the former tenant still hasn't paid a dime. Then the new tenant backed into the garage door and destroyed it his first week in the house and we had another large expense (new tenant reimbursed but we had the up front fee). How would you handle that? Things can go very wrong very fast sometimes. In the last 7 years we had never had one expense over $100 in that house until last year.

Also what Mr Mark said.

EDIT:  See my responses above in BOLD