Rental Snapshot

23 May

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.

DET BURN 2

DET BURN

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.

4 Responses to “Rental Snapshot”

  1. Matt Clarkin May 23, 2013 at 3:24 am #

    If/when interest rates go up… won’t that put a lid on housing prices? It’s almost like a bond, 95% of people buy a house based on what their mortgage lender tells them they can afford. If interest rates even go up to 5% (historically a low number), that’s going to drastically reduce the amount of house someone can afford. I’ll agree with you, that its a great time to buy a single family home for the long run where you can lock in a low monthly payment, but any place where you will outgrow, or need to sell in a few years, probably should be cautious.

    Keep up the good work.

    • justinsadauskas May 23, 2013 at 3:49 pm #

      Good points Matt.

      I think interest rates rising will slightly slow the market, but my guess is that people are going to buy, buy, buy for a while. Legislation is also another risk, if they tighten up lending policies further, but overall still bullish, even if rates rise a little. I saw Bernake say that he wasn’t planning on it.

      I should really revise my stance on buying a house. I am very pro-rent if you are not settling longterm – I agree with you 100%. The idea is to buy a house and hold it for 30 years to reap the anti-inflationary hedge.

      Also, I shouldn’t have said real estate trends are “easy” to predict, just easier than most other investment vehicles.

  2. Ryan Schwebel May 23, 2013 at 6:34 am #

    I told you I was notified after every blog post 😉 The appreciation doesn’t surprise me in the least, they keep reporting better housing sales data now all the time. What do you think about the real estate market in the LA / San Diego area and Las Vegas vs. Detroit?

    • justinsadauskas May 23, 2013 at 3:51 pm #

      Honestly, I don’t know about other markets. I think the markets that got hit the hardest will see the biggest gains – FLA, AZ, LV, MI etc. I’m really no expert on the overall real estate trends. You got beat to the comment punch this time. You’re slipping.

Leave a Reply to justinsadauskas Cancel reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out /  Change )

Google photo

You are commenting using your Google account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s

%d bloggers like this: