To have property that is consistently cash flowing we invest only in locations and properties that meet very specific criteria.

Many good people will be forced to rent over the next couple of years at a minimum. The prevailing banking industry crisis is likely to keep mortgage money tight for at least another couple of years, other than to the few “conforming” buyers who can qualify by Fannie Mae standards. It is not likely that self-employed or recently unemployed will qualify for loans even if they have a good credit score. The idea of selling quickly on cash to new mortgage terms is all but dead. Just because they cannot qualify for a mortgage doesn’t mean they’re a deadbeat. Smart people, good people, people with families and children—they need to live in a real house in a real neighborhood and have a real long-term landlord (not somebody who is a reluctant landlord but couldn’t sell their old house). In the past, many of these people were buyers but now they can’t buy, at least not by using bank mortgage money.

In the 2009 through 2011 time frame, our focus will be on select single family house sub-markets within the Detroit metropolitan area. We do not invest in the low-income neighborhoods consisting primarily of other rental properties where nobody wants to live. These are far too transitional and are very difficult to attract stable, quality, long-term tenants and possible buyers. Instead, experience shows that the older, established neighborhoods, communities, and school systems that are a “step-up” from the tenant / buyer’s current living situation attracts a more serious tenant who is usually frustrated by their inability to buy. They really need a plug ‘n play property plus a serious owner they can “work” with about managing and possibly buying the house some day. These people usually have some ties to the area already. There are relatively few such serious landlords and properties in these type of neighborhoods. These were historically owner-occupied neighborhoods with long-time residents.

So our tenant / buyer is usually a two parent household with an income ranging from $3,500 to $8,000 per month. We seek out single family homes that are large enough for a family of four but not excessively large to become costly to operate and maintain (and we believe the increasingly older tenant population will become much more concerned about these issues). We are seeking out properties which can be bought and remodeled for $40,000 or less, and yet still have appeal enough to consistently draw rents in the range of $1,000 to $1,400 per month.

We are much more able than is the general public to see the new houses hitting the market, giving us quicker access to the best deals. We are licensed in real estate in Michigan, thus allowing us real-time access to new listings on the MLS and their listing brokers. Relationships are nurtured with the listing agents for bank foreclosures to keep ourselves established as a credible buyer. As a part of our normal work routine, we are constantly searching the streets for the best deals.