New Blogging Strategy: I’m not a great writer and it takes me a lot of time to write anything readable. I’m going to keep my blogs shorter, but hopefully I will blog more regularly.
Residential Rental Investment Portfolio
Right now here is what I have:
23103 Avon – Rented $1100/month
Bought value = $50,000 Zillow value = $81,507
23430 Allor – Rented – $850/month
Bought value = $38,000 Zillow Value = 47,294
29810 Greater Mack – Rented $1000/month
Bought Value = $60,000 Zillow Value = $81,700
22624 Mylls – Rented $1050/month
Bought Value = $62,000 Zillow Value = $69,211
A lot of people say Zillow zucks. But not me. I love, love, love Zillow. It’s just the best quick snapshot of what a property is worth. As you can see, my properties values are up significantly in 1-2 years.
Real estate is super predictable. Predicting price movement and which neighborhoods will do better than others is rocket science. It’s not like a stock market where (theoretically) all public information is priced in. Barring a black swan, real estate will continue to go up.
As a tangent, the actual city of Detroit (I invest outside of the city) is an interesting speculative play. I’ve heard a few compelling arguments recently for a super quick comeback.
Dan Gilbert, eccentric owner of the Cleveland Cavaliers and Quicken Loans, has pumped a ton of money into Detroit – a project he calls Detroit 2.0; a vision for a revitalized tech-oriented Detroit. He’s buying up skyscrapers by the handful.
He wrote one thing about a city reconstruction that I found interesting. You have to bring the stores and the people at once. People won’t come without stores, and stores won’t come without the people. You HAVE to bring them together. It’s something I never thought about before and he’s right. The thing is though, it’s all moot if you can’t bring the jobs. I don’t think you can force-feed it 100%, you need some job growth. Anyway, it gives me hope that a super smart billionaire is trying really hard to save Detroit. I’m still on the fence. At times, the work seems insurmountable.
I also have my 3 land contracts, but they passed some new laws, the SAFE ACT and Dodd-Frank and nobody – not even lawyers – can interpret how many a non-licensed person can legally write. So for me, there will be no more seller financing. No big deal though, with the market ready to go nuts, rentals are a slightly better bet than land contracts.
I use a management company now because with the Non-Performing Notes business I don’t have a lot of time. They take 10% plus the first month rent, but they deal with all the headaches. They found me ridiculously quality tenants, so I’m happy with them so far.
20901 Hawthorne finally sold for $45,000 to a Chinese investor. I made a couple bucks on that house, but nothing crazy. It was originally supposed to be a rental, but I needed to liquidate some cash. It’s a good lesson, that if you buy right, you can make anything work.
For my lakehouse, 4665 Green, I am having two open houses this weekend. I’m pulling out all the stops to sell it. If I don’t sell it, I might have to reduce the price. That would be sad.
That’s pretty much the snapshot. Hopefully by the end of 2013, I will have 2-3 more rentals.
Lastly, I’m no economist but I think at some point in the next 10 years, the U.S. dollar will have some pretty steep inflation. With interest rates at all-time lows, I suggest that you get some 30-year fixed rates, since its a great hedge against inflation. If you are thinking about buying a house, this is your nudge. Pull the trigger. Also, don’t pay anything down on your mortgage. Thanks for reading.
justinsadauskas 