Holistic Flipping

I am writing new 2 year goals for myself in both my personal and business life. Trying to get a good comprehension on where I am at, the talents and assets I have, my personal passions and how to apply them over the next two years to good results in our community.

I have been thinking about starting a business flipping houses now for about 6 years and have helped many clients in their businesses doing flips and investments but have not entered the area as the actual "flipper" as it were quite yet.

The real reason I want to flip properties is because of the return it gives to my community. Flipping can make a home that was once an eye sore a source of pride. It can take a local person that might be looking for a job and put them to work. It can add one more amazing family to the fabric of my community. Additional to all of that I would like to add another couple of layers to further enhance the Holistic approach to flipping.

I want this home to have solar panels, I want raised beds in the backyard, I want to home to retain its historic qualities and products to be added to it from that time period. And I also want a part of the profit proceeds to go to a local non profit that will help for the advancement of our local youth.

I am in the process of structuring this business with hopes to start "Flip-Ypsi" next year. If you have any input on this process or would like to hear more of my ideas I would love to chat. I have carefully thought thru this process and know that it will be difficult to layer this type of deal but this is the type of dedication that our community needs and deserves.

Ypsilanti Is The Place To Invest

This morning I was trolling thru the Hudhomestore.com website and checking out properties in Detroit listed below $10,000. There were some really nice properties but I was not very familiar with the specific neighborhoods and what I knew about a lot of the locations was that there was a lot of crime and blight in those specific areas. As I scrolled thru the listings a home in Ypsilanti that I am familiar with popped up that was on the market for a little over $30,000. And I thought I should share some of my experiences representing investors in our city and how investing in Ypsilanti makes so much more sense for you and your money than investing in Detroit currently does.

To start I want to talk about the homes that I have already sold in the last two years in Ypsilanti that make particular financial sense to a smart Investor that is looking to purchase the home and rent it out anywhere from 2-5 and then list and sell the home. Here are the names of streets and a little info about five specific homes I want to talk about today

$25,000 four bedroom home rented at $1,000 per month needed a new kitchen and some carpet

$26,000 three bedroom home rented at $9000 per month no work needed besides paint

$21,000 three bedroom home rented at $850 per month new kitchen and new hot water heater installed

$30,000 three bedroom home rented at $900 per month no work needed

Now, lets say that you got a typical mortgage on one of these homes with 20% down in this case lets round that number up to include closing costs and go with $7,000 down. Also, lets say that you need to put $2,000 in to work on the home for improvements so up front you will be putting in $9,000 and mortgaging around $20,000. Lets include your monthly taxes (by the way the taxes in Ypsilanti Twp are around $1,000 per year at this range and the city would be at $2,000 so we will average the two), and your homeowners insurance into the mix just to make sure we are accounting for all costs:

$20,000 30 year mortgage at 4% $95.00 per month
$900 per year for homeowners insurance $75.00 per month
$1,500 per year for property taxes $125.00 per month

For a total of $295.00 per month

And lets be conservative and say that you rented the home out for $800 per month over the course of 5 years. We will also account for an extra $1,000 per year to account for any repairs on the home that might come up for a total of $5,000.

$800 X 60 = $48,000 - Total Mo Payments 17,700 - Repairs $5,000 = 25,300

So over the course of 5 years you will make roughly $25,300 in income when all accounted for just to review that is an extra $5,060 per year. At this point you could have contributed all of your earnings to your mortgage payments and paid off the mortgage on the home. If you have not done so you are still in a good position because this is where it gets interesting.

Lets assume conservatively that the house prices in your neighborhood rise just an average of 2% every year that you are in ownership of your investment. And lets say that you paid $25,000 for the house but got a deal and the house was assessed at a value of $30,000 when you bought it, and the home is now worth $35,000 (this is very conservative I would imagine that the gain would be closer to 25% in the next 5 years). At this point you list and sell the home there are some commissions involved and you end up selling it for $30,000. if you have already paid off the mortgage then you just made $30,000 congrats :D. If you have yet to pay off your mortgage you will do so and gain about $12,000 on top and add that to the $25,300 you gained over the last 5 years.

Lets go back to your initial investment of $9,000 and see where we ended up in terms of ROI. So, obviously this is a serious investment and takes time patience and often frustration so lets say that you spent 100 hours per year dealing with this home and since time is money lets quantify that at $20.00 per hour of time spent making this investment work. So, we are going to quantify that time spent as an additional $10,000 expenditure. So, to review we have invested a total of 46,700 into this home whew thats a lot of money. But lets look at what we gained as well $48,000 in revenue over the 5 years + the $35,000 we sold it for = $83,000 for a net of $36,300!!!!!! By the way that is a 400% return on your investment in 5 years

Lets look at another 5 year investment of $9,000 that will again that much.........oh what there isn't any oh yeah thats right I forgot. A CD would currently net you $9,000 investment about $500 over 5 years.....$500

Happy Day!!!!

Is it just me or do things just seem to be headed in the right direction for both Ypsi and Detroit. Maybe my news is always filtered to positive and uplifting news stories. Or, maybe just maybe we are heading towards good, sustainable, positive growth as a region and more importantly as a people. 

Everyday, I am hearing or experiencing another positive movement in the news that will help to bring better lives for our poor and under educated. More enriching lives for those of us that we would call "Middle Class" . And probably more money for those that have means and are ready to invest it in our recovering and reshaping region. 

To start I am so encouraged to hear all of the positive news on the transit plans. It sounds like as a region we might actually be able to come together to help solve this long term problem that has been plaguing us for an extremely long time. The fact is young smart engaged individuals don't want to have to drive everywhere, and they want public transit. This is just as true here as it is in any vibrant region in the United States, and Detroit is just the last to get on board. Here are a few articles that really gave me hope on this subject of late: http://goo.gl/1SfaJ, http://www.annarbor.com/news/public-iI don't know maybe its just me? Maybe nobody else has noticed all of the amazing an positive news in terms of growthnvited-to-give-input-at-ann-arbor-connector-drop-in-sessions-in-december/, http://www.annarbor.com/news/ann-arbor-to-detroit-commuter-rail-officials-hope-to-hear-next-week-whether-refurbished-rail-cars-pa/.

In addition to this amazing news there has also been so much positive news here in Ypsilanti in regards to how we are going to use our city and how our young people will be educated. For those of you that don't know the Willow Run and Ypsilanti School districts just were approved by a vote by the people for a merger, the first of its kind considering both of the school districts are failing and in major debt. 

I have had the honor to be placed in a group of 200 other Ypsi Schools shareholders to help these two new districts re-form into a school system that we all can be proud of as Ypsilanti residents. It looks like a great new start to the financial and organizational problems that have plagued our schools for over a decade. 

http://www.annarbor.com/news/ypsilanti/whats-next-ypsilanti-willow-run-merger-supporters-dive-head-first-into-uncharted-territory/  

All I can say is that if these types of things keep up, that it will be great news for all of us :D

Futuring Real Estate in Michigan

      Yesterday my new Real Estate Agency Howard Hanna invited the top Realtors from our company to the Toledo Museum of Art for an amazing lunch and an amazing tour of this amazing museum. After the lunch our company President Hody Hanna spoke about the future of real estate in Michigan.

     Howard Hanna recently bought the brokerage that I have been working for (Edward Surovell). And what Mr. Hanna started talking about was all the reasons they have decided to take an adventure into the Michigan Real Estate market, by purchasing our company. He started talking about the unemployment rate and he said that "over the last 18 months the unemployment rate in Michigan has dropped at a more aggressive rate than any other state in the country". This is obviously a good sign for real estate as the more people that are coming back to work the more can afford to purchase homes.

   He also talked about the fact that people usually start getting aggressive about buying a home when they really see the market going up (which makes sense), comparing it to stocks and when a stock starts to rise how many people all the sudden feel a need to get in before its too late. And he as well as I can see that the market is starting to rise here in Michigan and cant stay this low much longer.

     I can see Michigan's real estate recovery on the horizon in the news as well. This week Chrysler added 1,250 new jobs (not old jobs new jobs) http://www.foxnews.com/leisure/2012/11/15/ap-source-chrysler-to-add-1250-jobs-at-3-detroit-area-factories-in-near-future. And the government granted Detroit 6.5 million to remove one of Detroit's biggest eyesores http://www.foxnews.com/us/2012/11/15/vacant-housing-project-where-diana-ross-supremes-lived-before-motown-stardom. I know that this is just some good news among a sea of negative news out there in the world, but I guess its a choice on how you want to view the world.

    I am so excited to see what will happen next in our great state and am looking forward to doing my part in helping our cities shine.

The Ypsi Times: Renting Vs. Buying in Ypsi

The Ypsi Times: Renting Vs. Buying in Ypsi: So, have you been asking your self what if it makes sense to buy yet? You are not alone more and more renters are becoming home owners every...

Times They Are A Changin'

Things in Ypsilanti are a changin' today I visited the new Bona Sera Resturaunt on the corner of Michigan Ave and Washington in downtown Ypsi and it was amazing. This business popped up do to the property owners adjacent to this business "MIX". The owners Ed and Bonnie were inspired by a visit from EMU business college on a visit that looked at their business and how to move it forward. They wanted to do something with the vacant biz across the street so.....they did it. For a little under a year they ran MIX Marketplace a weekly pop up market for local vendors. The Bona Sera Supper Club became involved when renting the space for non profit fundraiser dinners (here are more details http://bonaserasupperclub.com/).

This is just one of the examples of what an inexpensive commercial space can do for businesses and a city. I can see the economic momentum starting in our fair city with the addition of Red Rocks, and the Wurst Bar just to name a few. The next question we have is how will these impact affect our city and the real estate market?

As people become more and more interested in sustainable living, walkable, and bike able cities more and more people will want to see what Ypsi offers. I am going to attend the Regional Transit Meeting in a few weeks and this will be the next step in a progression of value in our city and our region. Soon there will be a day that homeowners in Ypsi can take a Bus, a Train, or Bike to just about anywhere. Being able to spend so much less time, money and energy on commuting will really affect the way we live and in turn greatly benefit our community.

The only question for the potential home buyers out there is are you going to be ahead of the curve or behind it? Because one thing is for sure the Times They Are a Changin'.

Ypsi Real Estate Is Hot

Are you looking to buy? Well you are no longer alone I work mainly in Ypsi and Ypsi Twp. and I cannot begin to tell you how the market has changed in the last few months. One of the reasons I have not been posting blogs is because I am too busy showing homes and writing offers. I have shown my clients well over 200 homes since the start of 2012, and closed on seven homes as well as had 12 accepted offers.

One thing that has been particularly notable is that there is many more people looking to buy than looking to sell. For the region we are down 14% year to year on the amount of homes listed. That means that there are less homes on the market and with more and more young people getting turned on to buying vs. renting there are more buyers than ever.

One home in my neighborhood that was priced at $99,000 had eight offers on it in three days. I wrote an offer for $15,000 more than the asking price, and we were no where near the top offer on this home. This has been happening increasingly in "hot" neighborhoods, and because of this the prices for homes listed has also been increasing. A lot of this has to do with the warn temperatures for the winter, but even more of it has to do with people realizing that they are paying more for rent than they would for a monthly payment on a home. All I am saying today, is don't be a turtle on this opportunity to change your life in a dramatically positive way, and start thinking about the home you always wanted as a reality, not a dream.