When I met Lucile over at Motor City Brewing to discuss the best way for her to start investing in real estate after retirement she looked pretty hesitant. So, I asked her what else might be going on that could be feeding her doubt. After a moment, she admitted that entering the real estate investment industry with zero experience—and as a woman to boot—had her believing she’d be fighting an uphill battle to prove herself. And, she didn’t want to fall flat on her face trying to do it.
When I told her that there were more women in real estate investing than ever before and that both men and women worried whether their lack of investing experience would be a professional hindrance, she relaxed. Plus, I reminded her, one of the main reasons I’m so successful is that I have the ability to pick out good Detroit real estate deals from the bad ones, which is why she sought my advice to begin with. And, that kind of expertise can be learned—by anyone.
How to Choose Detroit Real Estate Deals Like a Pro
Contrary to popular belief, succeeding as a new real estate investor rarely hinges on your past experience. It certainly doesn’t matter if you’re a man or a woman. People from all walks of life buy, rehab, and sell property—usually after they’ve decided they’re more right for real estate than whatever corporate ladder they’ve been trying to climb. Though some, like Lucile, plan to start investing as a means to earn extra income and stay busy once they retire.
Whatever your case may be, it’s your training as a real estate investor that’s going to have a bigger impact on your success than your former resume. And, the best real estate investing education companies will teach you what to look for to determine if an opportunity is actually a good investment. They’ll also help steer you clear of the kind of mistakes that can sink your career before you even get it off the ground. So, don’t skimp on your training if you want to learn how to choose Detroit real estate deals like a pro right out of the gate.
Of course, as a longtime metro Detroit investor, I can get you started in the right direction. And since I have a real passion for the work, I’m happy to do it. So, here are the basics I shared with Lucile regarding how to better determine if a real estate investment opportunity is a good one:
When buying investment property in Detroit, location matters. The investment opportunities that tend to offer the most bang for your buck are typically found in communities on the cusp of transition, like Fitzgerald and North End. It’s easier to find fixer-uppers that are owned by financially-distressed homeowners in these areas. And, provided you’re able to buy houses at below-market value and stay within budget on your rehabs, you also have a good chance of selling at a price that makes the new homeowners and your pocketbook happy. Plus, by getting in on the ground floor to help Detroit’s up-and-coming neighborhoods fully transform, you have the opportunity to do some good for the community, and property values, too.
What you don’t want to do, however, is to make decisions about an investment property based on location alone. Just because investors are clamoring to buy in Islandview doesn’t mean you should spend what you can just to get in. Overpay on your purchase and you may not be able to get out with any returns.
The condition of the property you’re thinking about buying can make or break your ability to realize potentially good returns. And, that includes what you can and can’t see. Obvious cracks running along the walls may indicate foundation issues that you aren’t ready or willing to deal with. Mold growing behind the walls might rightly invoke the same response—as long as you know it’s there.
That’s why performing a home inspection is critical before closing on any deal to make sure it is a deal. If what looks like a minor fixer on the surface turns out to be a major money pit in the end, you can wave goodbye to your ROI. And, since vacant, abandoned, neglected, and vandalized homes still dot the landscape in neighborhoods like Boston-Edison, the likelihood you’ll run into prohibitively expensive rehabs is high. So, before you run out of money trying to fix one, don’t make the mistake of skipping the inspection before buying it in the first place.
Holding and Hidden Expenses
There are other expenses besides your cost to buy and renovate an investment property in Detroit, no matter where it’s located or what condition it’s in. And, the failure to consider these when evaluating a deal could do a lot of damage to your potential returns. For example, there is the cost to hold the property while you’re performing repairs. And, holding costs include everything from keeping the lights on to protecting your investment property with the right insurance coverage.
Then, there are the costs associated with any liens, back taxes, or other encumbrances that become your responsibility once you own the property—whether you uncovered them during your due diligence or not. You inherit uncooperative tenants and squatters that need to be evicted, too. And, with Detroit having one of the worst squatter problems in the country, that could add up to a lot of legal fees—and a lot less profit.
Unfortunately, one of the biggest mistakes real estate investors make is incorrectly calculating the numbers even after all else has been considered. And, it’s earned the top spot because getting the numbers wrong can rob you of the potential returns you were expecting to gain. Do that too often and you could lose your career, too.
The only way to ensure that you stay on top and avoid making few, if any, rookie mistakes is to use a real estate investment analysis and valuation tool that accounts for all of your expenses. Using a tool that doesn’t consider local material and labor costs or the expense of holding the property won’t tell you what you should buy the property for—or, whether you should buy it at all. And, as it happens, you can find the best available tool on the market exactly where you can get the most comprehensive training.
The Best Tools for Turning Pro Fast
In some ways, I was able to empathize with Lucile’s concerns. When I started looking for Detroit real estate deals back in the day, I was young and inexperienced. Barely out of my twenties, I’d only ever held one job and it had nothing to do with real estate. So, I was more than a little concerned that I would not be taken seriously. And, truth be told, I had to work hard to prove myself. But, that was then. Times have changed and so have the tools that help you turn pro fast.
In fact, by becoming an independently owned and operated HomeVestors® franchisee, like I eventually did, you not only get initial and ongoing training to invest in real estate, you gain immediate access to HomeVestors’ proprietary valuation tool, ValueCheck®. Since ValueCheck® takes into account your potential costs to help you correctly run your numbers, making the right offer feels like second nature from the get-go. It’s the best way I know to help you tell the potential deals apart from the surefire duds.
Don’t make the mistake of waiting to turn pro. Contact HomeVestors to learn how you can get access to some of the best tools in the business today!
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