If you’re like every other real estate investor I know, you don’t have enough. New investors wonder how they’ll ever get enough money to purchase a house and invest in real estate. Seasoned investors find themselves hitting a plateau of private money after they’ve hit their “comfort zone”. I’m here to tell you there is more private money out there than ever and it’s all ripe for the taking. But… Let me back up.

Private money is far superior to other forms of financing because of the following:

• Lower costs than hard money
• Less paperwork than loans
• Faster and easier access to the money
• Opportunities for partners to reduce your costs

Using private money will help you:

• Buy houses faster
• Make all cash offers
• Purchase more real estate
• Make more money
• Have the life you’ve always wanted!

I don’t know about you but this sounds great. If you’re wondering how you make this happen, read on…

I’ve had the opportunity, in the past, to work with a financial genius that used to make GMAC millions of dollars in their finance department. He then left the corporate world to form several successful companies including a real estate company that has done a tremendous amount of business. This man, Adam J. Davis, has taken his financial prowess and focused it on raising private money. All in all he has raised hundreds of thousands of dollars for real estate investments and the best part is, he’s taken his proven strategy and made it available to you. Check out How To Buy Foreclosures With Private Money

I don’t normally tell our subscribers about informational products because most of them are just spouting off the same information that doesn’t get you anywhere. The reason I am telling you about How To Buy Foreclosures With Private Money is because this product is truly a step-by-step guide to getting you massive amounts of private money.

I could go on and on about the product but why don’t you check it out at How To Buy Foreclosures With Private Money and let me know what you think. With the knowledge to get hundreds of thousands of dollars in private capital, I know you won’t be disappointed.

Successfully Yours,
Jared Pomranky

Urban Detroit Wholesalers has and continues to be the place for premium turnkey Detroit investment properties. For the last 3 years we have had many requests for smaller services from the do it yourselfers who didn’t need or want turnkey properties but still needed assistance with some of the smaller things.

Now, we offer services ala carte for all investors who need the assistance of a great team on the ground. Here are some of the services that we provide: ACR’s, inspections, videos of properties, gc estimates, insurance for vacant properties, rent estimate, and much more. All services are paid in full upfront and you are invoiced via paypal.

For a full list of all of the services and the cost of these services, visit Detroit Real Estate Services

If you don’t see a service that you require, contact us and we will see if it’s something that we can do and what the cost would be.

For all of you who love our turnkey properties, don’t worry, we still have those!

Jeremy Burgess

If you drive around Detroit it is obvious by the number of vacant houses that there is a significant “ghost inventory” of foreclosed houses and a quick check of the MLS shows that the vast majority are unlisted.

Based on all of the information we have it looks like the federal government is backing the big banks so they can hold onto the foreclosed properties and release them slowly over time. This means that unless the government changes its support of the big banks, we are not going to see the REO’s inventory anywhere near what we saw in 2008.

That means that the good old days of just focusing on bank owned properties needs to change. For those that have been investing for several years you will remember what we use to have to do to get deals. If you are looking for deals, it’s time to go old school again. Start looking at probate deals, short sales, pre-foreclosure deals, and good old fashioned distressed sellers.

I must admit that even I got a little lazy looking for deals the last couple of years with all of the REO’s on the market. Like always, we must change with the times. And the times are definitely changing.

Jeremy Burgess

First-Time Homebuyers (FTHBs): First-time homebuyers (defined as not owning a home in the last 3 years) are eligible for up to 10% of the purchase price or a maximum of $8,000.
Single taxpayers and married couples filing a joint return may qualify for the full tax credit amount.

Current Owners: The new tax credit program now gives those who already own a residence incentive to move to a new home. If they’ve owned a primary residence for 5 consecutive years out of the last 8, their eligible for up to a $6,500 tax credit.
Single taxpayers and married couples filing a joint return may qualify for the full tax credit amount.

What this gives us is a tremendous opportunity to help first time home buyers buy our properties and utilize the tax credit. While you can’t use it as a down payment, it can be used for principal reduction of the mortgage when the buyer receives the tax credit. A couple of great resources for more information on this is the Renegade Detroit Investors post on Ways to Take Advantage of the Tax Credit Extension and an explanation of our First Time Home Buyer Program.

Post comments or contact us if you have any questions.

Jared Pomranky

Detroit real estate offers excellent bargains that are very difficult to find in the rest of the world. Our price points are very low (around $40,000 for purchase and rehab) and these properties still rent out for $850-$950 a month. It doesn’t take a genius to figure out that’s good for cash flow. If you add into that the weak dollar, which gives European investors another discount when purchasing our properties with the conversion from Euros.

Most of the European investors we talk to are investing for the cash on cash return and for the long term prospects of the investment. Unlike many U.S. investors, they aren’t looking for the “get rich quick” investment and are willing to invest in a solid property for the long term. This is going back to the way real estate investing used to be and I think it’s a great model. With Detroit foreclosures you get the best of both worlds. Monthly cash flow for a good cash on cash return and purchasing at 50% of the actual value of the house, which means great long term (10 years) prospects for value.

While there are some exception, for the most part European investor are finding successful real estate investors from Detroit so they can leverage their experience on how to create successful investment properties. Real estate investing is different than it is in Europe and Detroit is different than the rest of the United States or even Michigan. There are specifics in Detroit properties to watch out for like water, taxes, neighborhoods, specific streets, City requirements, ordinances, and other items. Working with a reputable Detroit real estate company will ensure that you know how to navigate through these. A good place for foreign investors to get more information is at our Detroit Real Estate International Questions page.

Our experience has been that more and more investors are coming to Detroit as it’s a great return on investment that doesn’t require a million dollars of investment capital. We have sold properties and made successful investors of European investors from England, Ireland, Scotland, Germany, France, and many other European countries. If you’re interested in investing check out our Detroit Real Estate site or leave a comment.

Jared Pomranky
Detroit Market Expert

The $1,000 Detroit House
This is the single most frequent request I hear from investors. “I want to buy the $1,000 house that I heard on the news”. No you don’t and here’s why. Detroit has great prices but it has it’s limits. The $1,000 house is that price and still for sale for a reason. Here’s what I’ve seen with the $1,000 or for that matter the houses that are more than $1,000 but still cheaper than you usually see in Detroit:

• They are in bad neighborhoods that are hard to rent, have very low rents, and have a high probability of vandalism and theft to the house.
• They require so much rehab work you will end up spending as much as the other houses after fixing it up.
• They usually have high taxes, back taxes or both.

I have seen people that invest in areas with some amount of success but for the most part I have seen them doing most of the work themselves, not fixing up the house to code, renting to anyone that walks by, knocking on the doors to collect rent, going to court often for evictions, and living close to the area. They may end up getting a good cash on cash return but they are spending a lot of time to get it.

The Great Looking House in a Bad Neighborhood
I see houses come across my desk every day that don’t need much work, have reasonable taxes, and have reasonable prices. That is until you look at the location. Location is key in Detroit! You can have the best house but if it’s not in a good neighborhood, you will not be successful. Bad neighborhoods will leave you with a house that isn’t rented and will quite possibly be broken into and vandalized. This happens very rarely in the good neighborhoods. See our report on Detroit Investment Secrets for more on good neighborhoods.

The Great Neighborhood and Great House with No Contacts
You must have great on the group contacts or be working with a company that has great contacts in order to be successful in Detroit real estate. Contacts like contractors, property managers, property security companies, mortgage brokers, insurance agents, and other critical contacts are a must. Make sure that anyone you’re working with has long standing relationships, documented processes, and a lot of experience working with everyone.

The Great House with High Taxes
Taxes vary greatly from house to house, in the same neighborhood or even on the same street in Detroit. If you’re not checking taxes or taking them into account, you’re gambling with your investment. Taxes are our biggest qualifying factor after location. Taxes and location make or break a deal.

At Urban Detroit Wholesalers we take into account these factors and more in providing great deals to you. Don’t just take our word for it as we post all of the due diligence that you need to know on each of our houses. View our Detroit Foreclosures to see contractor estimates, a rehab checklist, public records, appraisals, pictures, video walk throughs and everything else you need to know to make a buying decision.

If you’re new to investing in Detroit, I suggest reading our Detroit FAQ (Frequently Asked Questions). If you’re investing from out of the country, we have created many successful investors from a wide variety of countries. Our processes and contacts insure that you will be successful investing from abroad. Read our International Detroit Investing FAQ.

Successfully Yours,
Jared Pomranky

Currently the deadline for a buyer to qualify for the first time home buyer credit (maximum of $8,000) is November 30th. This means that closing has to occur before December 1st with the title dated before that date. Anything later and the buyer is out of luck. There has been a lot of speculation that the first time home buyer program would be extended but this WSJ article brings to light quite a few things that tell us otherwise.

The issue comes not with the first time home buyer program but with FHA backed mortgages. The FHA guarantees loans with as little as 3.5% down and with falling prices in many areas, that leads to them insuring properties that are upside down on the mortgage. With FHA loans in default at a record 7.5%, that leaves the FHA with prospect of dwindling reserves and an increased liability for the future. The FHA has a government mandated minimum reserve and if it doesn’t have that reserve, drastic measures could be taken.

Officials worry that the resulting losses will help push the FHA’s reserves below the level required by Congress. The value of those reserves will be revealed in the agency’s annual review due Sept. 30. If they have fallen below the minimum, that could prompt a new round of questions about the role government should play in stabilizing the housing market.

With the prospects of the FHA falling below their minimum reserve amount and mounting pressure from lawmakers to not only have the FHA meet that reserve but decrease spending, it looks like the first time home buyer credit is an easy target for the chopping block. It’s the easiest and most likely as law makers will just have to do nothing with it (i.e. it would have to come up for a new vote to get extended).

What I think about the first time home buyer credit
Overall I feel that the government should not be giving money to people for specialized programs and that less government spending is better. At first this is how I felt with the first time home buyer program but a recent conversation has me thinking the tax payer isn’t getting such a bad deal with this program compared to the millions of other tax payer dollars that are spent each day.

The first time home buyer credit equals more house sales. Increased house sales means more jobs for local regions but that isn’t enough to make it worth while. Increased house sales in an area like Detroit means that there are more foreclosures that are going from vacant non-performing assets to fixed up, lived in houses with people that are paying property taxes and everything else that a person pays for owning a house. There are many dollars that are invested in local regions and governments with this program.

What this means to you is that you have a limited time to let your buyers take advantage of this tax credit. Whether you want to invest in a house and resell it our invest in our program. Our First Time Home Buyer Program helps the buyer utilize the tax credit to use as a down payment by reducing their principal owed. What this means is that you get more money up front on the program. It’s an excellent program to use in Detroit or anywhere in Michigan without the tax credit but it’s a no-brainer with it. Contact us for more information on it so we can get everything closed by November 30th!

Successfully Yours,
Jared Pomranky

In addition to our traditional program where you purchase the house from us and we manage the whole process, we are also making the program available to any property YOU own in Michigan! (ask us for details)

There are far too many details to put into this newsletter so I suggest you visit First Time Home Buyer Program & Tax Credit Information to view the details

What do you need to get started?
For our traditional program you will need a $45,000 investment and for our new program where you bring your own house, you just pay for licensing the program (rehabilitation of your property and rehab management are also available)

We have brought together the best brains in the business to not only give you the most profitable first time home buyer program but also the most secure and legal program. Visit First Time Home Buyer Program & Tax Credit Information for more information

Successfully Yours,
Jared Pomranky
Detroit Market Expert

There are actually a couple of key events that happened in February 2009 and they both have to do with bad policy. In Detroit we had Sheriff Evans institute a foreclosure moratorium for Wayne County and we also had all of the large mortgage lenders including Fannie Mae and Freddie Mac agree to suspend foreclosures. On the surface these seemed like very reasonable and humane acts. If you dig further, you’ll find that all it did was give false hope and will probably lead to a longer down market.

As Jeremy stated back in February when discussing the Foreclosure Moratorium in Wayne County,

I have a significant amount of experience with short sales and loan modifications and it has been my experience that most people are not capable of making any considerable payments towards their mortgage. Most people have had something catastrophic happen that stopped them from being able to pay their mortgage. There is no loan modification program in the world that fixes a lost job, divorce, or death in the family. Often their debt to income ratio is so poor that a foreclosure now is better than a loan modification that ends up in foreclosure in the near future.

Furthermore,

If we stop foreclosing on houses and we know that most of the loan modifications will be unsuccessful resulting in more foreclosures; we in essence dammed a river. When the moratorium is over, we will have a flood of foreclosures further wiping out property values and creating even more problems.

This is no longer speculation, it is fact. We have seen foreclosures go down and we have seen prices increase on these foreclosures. But wait. Look at the graph below from RealtyTrac. It shows foreclosure filings decreasing quite a bit until May of 2009. What happened in April to make foreclosure filings spike so high in May? Yes, both the national and local foreclosure moratoriums were lifted.

You might ask why we’re still seeing a decrease of foreclosure inventory and an increase in prices. In Michigan we have a 6 month right of redemption on houses. What that means is that once a mortgage company has foreclosed on a house, the lender has to wait 6 months before they can take ownership of the house, put it on their books, and get it listed with an REO agent. Given that it takes the lender a month to foreclose on the property after the filing, we’re looking at a minimum time of 7 months until they can get the property listed. In all reality, we’re probably looking more like 8-9 months for a bank in Michigan from foreclosure filing to being listed.

When lenders decided in April to lift the foreclosure moratorium and start foreclosing again, they had a huge back log of foreclosure filings that they had put on hold and every other property that had come along since then that needed to be foreclosed on. That’s when the time line started. Looking out 7-9 months from that date and we’re looking at November 2009 to January 2010 for the flood of foreclosures coming on the market. Right during the slowest time of year for real estate in Michigan.

What this is going to do is flood the market with an oversupply of foreclosure properties. Using simple supply and demand rules, if demand stays the same and supply increases, prices will fall. Is this all bad? Definitely not. It’s a necessary correction in the market from the false bottom that was created. It also brings a tremendous opportunity for those that are ready to take advantage of it. I have been buying houses in Detroit steadily this year and I will continue even though I’m buying less houses because of the prices right now. All that it’s going to mean for me and the investors that I work with is the opportunity to purchase more properties at excellent prices.

Of course there will be doom and gloom spread in the national media outlets about the fall in prices in Detroit and the average person will think the world is going to end but two things will remain the same. 1. Investors will still be identifying opportunity and making great money and 2. there will still be many retail sales (as there are today) that will help keep the non-foreclosure market from dipping too much. With Detroit rental markets and first time home buyer programs being stronger than ever, this is definitely the best time to start or to continue investing in Detroit real estate.

Successfully Yours,
Jared Pomranky
Detroit Real Estate Listings
Free report on Detroit investment properties

Recent estimates have showed that there are 44,000 plus vacant houses in Detroit and these Detroit housing statistics show slightly higher (although notice the sharp decline in the past couple of months). That’s a lot of vacant houses. You may be asking with that many vacant houses, how can we ever hope to get the supply/demand ratio to a reasonable level and fill this supply. To answer that, we have to dig into the numbers.

In a recent conversation with Yianni Kopanakis of Motor City Blight Busters, we talked about the oversupply of houses. Yianni explained that fully half of the vacant houses in Detroit right now are beyond repair to both homeowner and investor alike. In other words, these houses are so far gone that no one wants them. I guess taking out 50% of the houses fixes part of the supply/demand issue. What about the other 50%?

For the other 50%, we need to look at who is buying and occupying these houses. We have either an investor that will purchase for rent or resale, a homeowner that will purchase retail (retail sales at decent prices are still occurring. Check out the Detroit Free Press list of sales for Detroit to see 10 of 24 homes sold for $75,000 or more week ending June 21st and 13 of 38 the week before), and renters. If you’ve been involved in real estate for very long, you quickly find that retail buyers (homeowners) and renters will just not accept a house that isn’t fixed up. In my experience and the experience of the non-profit Motor City Blight Busters, Yianni Kopanakis, and other real estate investors in Detroit that I have talked to, there are very few houses that we come across that need little to no work.

Where does this leave us now? We’re left with a lot of vacant houses that is comprised of mainly houses that need to be fixed up or torn down. Where does that leave the demand? If you’ve been investing in Detroit cash flow properties, you’ve noticed the increasing demand for quality rental properties. Our houses are getting rented faster for better prices because of the lack of supply of these quality rental houses. The same goes for first time home buyer houses.

This creates an incredible opportunity for the problem solving investor that wants to take the properties in the great areas that need some work and is willing to fix them up. The houses will rent well and through quality first time home buyer programs can even sell well. The demand for this limited supply is high. Also, through the City of Detroit demolition list and through non-profit organizations like Motor City Blight Busters, the properties that are beyond repair can be demolished and hauled away.

As with many answers and solutions to problems, it’s not always the surface answer that’s correct. Dig into the details and you’ll find the real answer.

Successfully Yours,
Jared Pomranky

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