Jared Pomranky ~ Detroit Foreclosures

“When written in Chinese, the word ‘crisis’ is composed of two characters - one represents danger, and the other represents opportunity.”

Now I’m not fluent in written or spoken Chinese so I have no idea if this is correct or not but it makes a very good point. Throughout Michigan in the past couple of years, even more so in Southeast Michigan, I have heard newspapers, workers, and everyone else state that our economy is in some form of a crisis or another. I’m not arguing the fact that we have significant challenges with our economy and the real estate market right now. What I’m arguing is where our focus should be.

Whether we have an auto industry “crisis”, housing “crisis” or any other sort of “crisis” there are two ways to look at it. While keeping the challenges with any situation in mind, I always choose to focus on the opportunity. We don’t face “problems” throughout our day, during the week or even with our economy, we face “challenges”. When we have challenges, we will analyze and overcome them to see an opportunity or more importantly, create an opportunity. When we see problems, our brain stops working and we all get in a slump.

There is tremendous opportunity for all of us if we just open our eyes and see it. If you can’t see an opportunity, create one for yourself! We’ll get nowhere if we just sit around and wait for something to happen, wait for an opportunity to come around or wait for a deal to fall in our laps. Don’t be the person that looks back 5 years from now and tells all their friends about the opportunities they missed and how they could have bought that business for pennies or they could have bought that house for a tenth of what it’s currently selling for.

There are more opportunities in Metro-Detroit right now for entrepreneurs and real estate investors then there has ever been. You just have to know that there are opportunities and there are challenges to overcome in seizing those opportunities. We can act scared and timid in real estate and business right now or we can be bold, realize our challenges for what they are (something to overcome), and take advantage of all of the opportunities before us.

Entrepreneurs don’t focus on the danger, they focus on the opportunity.

Be a Renegade,
Jared Pomranky
Renegade Detroit Investors
Metro-Detroit Real Estate Group - Renegade Detroit Investors main site
Metro-Detroit Real Estate Blog - Renegade Detroit Investors Blog
Detroit Real Estate Deals - Deals and market info
Free report on Detroit Real Estate Investing - Investment Secrets

Here we are in the 2009 Real Estate market and you're doing things the same way as you always have and expecting the same results. Well, I'm here to tell you that 2009 is going to be a wildly different real estate market than 2008 and will be different than 2010. This requires you to innovate and change with the times or expect bad to mediocre results. Many investors refused to change in 2008 and they are no longer with us.

Social networking is something that you will need to embrace in 2009 in order to get connected and stay connected with current / former / future clients and professionals. Terry Bean from Motor City Connect has opened my eyes to the possibilities of powerful tools like LinkedIn, ActiveRain, Facebook, and Twitter. Much of the information I'm sharing below was learned from Terry at his social networking presentations and is only a small subset of the vast information that he has to share. If you like this information, make sure to also visit Terry at Motor City Connect and Networked Inc.

LinkedIn

LinkedIn is a site that you definitely need to be on. It is like an online business card that shows your company details, links to your sites, and connections that you have. It's good to build good links and content for Google to find and is also a great place to make new connections through Groups, Questions, and Invitations.

Find Us:
- Jeremy Burgess - LinkedIn
- Jared Pomranky - LinkedIn
- Metro-Detroit Real Estate - Renegade Detroit Investors Group

ActiveRain

This is a real estate related social networking site that provides great avenues for blogging, getting real estate information, and making great connections regionally. It's another avenue that someone can find you as a real estate professional in your area.

Find Us:
First Sign-up for ActiveRain Here
- Jeremy Burgess - ActiveRain
- Jared Pomranky - ActiveRain

FaceBook

FaceBook is a more social site than the previous two. You will notice that people are much more relaxed and will post photos of friends and family. It's a good place to connect on a much deeper level and to also catch up with old friends and schoolmates.

Find Us:
- Jeremy Burgess - FaceBook
- Jared Pomranky - FaceBook

Twitter

Twitter is for the early adopters. Not everyone will "get it" but Twitter is an excellent tool. Think of Twitter as a public text message that's limited to 140 characters. You can choose to "follow" someone to see what they're "twittering" about and others can choose to follow you. It's a good place to get news information, let people know what you're doing and what you're thinking, and find out what other people are doing. My advice, if you're going to sign-up, is to completely fill out your profile, follow a couple of people you know (like Jeremy and Me), and tweet (write) some interesting posts that are non-marketing (i.e. informative). The best way to build a network on twitter is to grow it slowly and not use it solely as a marketing platform. It's social.

Find Us:
- Jeremy Burgess - @JeremyBurgess
- Jared Pomranky - @JaredDetroit

You don't need to join all of these to be successful but starting Social Networking sooner rather than later will make a huge impact on your Internet Marketing and your business. I look forward to getting connected!

Successfully Yours,
Jared Pomranky
Detroit Market Expert
Detroit Real Estate - Wholesale Deals - Main site
Detroit Real Estate Blog - Detroit Investment Information
Detroit Investment Properties Free Report - Free Detroit Investment Information
Cash Flow and Property Analysis Spreadsheet - Property Evaluator
Secrets to Hard Money Lending in Detroit - Free Report for Lenders

Here we are in January of 2009 in Michigan. The auto industry, economy, and the real estate market are in turmoil, which is what makes 2009 the year you MUST take action in real estate. Yes, you’re reading that correctly. There is an unprecedented opportunity in real estate right now that we will not see in our lifetimes because we will not see the <insert cliche term “Perfect Storm”> of events that have occurred to get us to where we are right now. Housing prices are lower than than they have been in decades (not even counting inflation) yet rental rates remain stable.

What happens when housing prices decrease while rental rates stay the same? Let’s see, less invested capital for the same return. That means your cash on cash return and your overall Return on Investment (ROI) is higher.

Why isn’t everyone rushing in to buy property in Southeast Michigan right now, you may ask? Well, there are plenty of buyers in the market right now buying investment properties. My company, Urban Detroit Wholesalers, has sold properties to investors in many different states and have even garnered attention from overseas investors. It seems to be fear and uncertainty that keeps many metro-Detroiters from moving ahead with investing.

All it takes is looking at the price of houses, the ability to rent, and the cash flow that you’ll receive. Even the most conservative investors can see that there are literally thousands of excellent deals to be had in Metro-Detroit. This market excites me and it makes me want to get others excited about the opportunities! Don’t be the one kicking yourself because you didn’t get involved.

I want YOU to take action. Yes, YOU. I don’t care if your investing in Detroit, Eastpointe, Redford, Saint Clair Shores, Grosse Pointe, Royal Oak, Oak Park, Southfield, Troy, Downriver or anywhere else in Michigan, you need to make a move.

If you don’t know where to start or you need excellent contacts, you need to make it a point to attend the next Renegade Detroit Investors Meeting.

Be a renegade,
Jared Pomranky
Metro-Detroit Real Estate & Entrepreneur Group
Metro-Detroit Real Estate Blog

I hear investors and would be investors talk all the time about timing the market. Now relatively few of them actually say “timing the market” (because most people know that it’s very challenging to do) but their description of what they’re trying to do is just that. They talk about waiting for the bottom so they can buy at the lowest price possible or they talk about waiting a little longer to get it just a little cheaper. These investors usually describe themselves as “looking” for a good deal or the right time to buy but they are really just suffering from analysis paralysis (spending all their time analyzing deals or the market and never taking action).

Let me tell you why trying to time the market or the thinking that you should way to buy at the bottom is flawed. Let’s just say, for example, that real estate prices are going to drop another 10% and that represents the bottom of the market. We have Investor #1 that is currently investing and doesn’t subscribe to trying to time the market. They will buy good deals now and buy good deals later. Investor #2 is someone that subscribes to waiting for the bottom of the market to buy.

You have investor #1 that bought a house right now at $40,000 (appraisal at $80,000) and got it rented out, he bought another house when prices were 5% lower at $38,000 (appraisal at $76,000), and he bought a third house at the bottom of the market when prices were down 10% for $36,000 (appraisal at $72,000). His net result for buying houses now and buying in the future when the market bottoms out is 3 houses that he paid $114,000 for and are valued at $216,000 (3 times $72,000). That’s $102,000 in equity plus any rental income (~$200/mo. per house) that was received during that time.

You then have investor #2 that beat the odds and was able to time the real estate market perfectly and buy exactly at the bottom of the market. Not only that but even though he hasn’t been buying houses, he had all of the systems, processes, contractors, Realtors, title agents, other professionals, and financing in place at the exact time needed to make their one move, which all goes off without a hitch. They purchase a house at the bottom of the market for $36,000 that appraises for $72,000 giving him $36,000 in equity.

Now, 10 years down the road let’s say the housing prices have increased 20% from the bottom. Who’s ahead? The investor that bought one house at the bottom or the investor that bought before the bottom and at the bottom? Well Investor #1 ends up having 3 houses that he owes $114,000 (not counting paydown) on that are now worth $259,200 giving him $145,200 in equity. Investor #2 has 1 house that he owes $36,000 that is now worth $86,400 giving him $50,400 in equity.

That leaves Investor #1 ahead by over $94,000 in equity! Not even mentioning all of the additional rental income (Close to 3 times the amount of cash flow Investor #2 received) and three times the write-offs that they will receive.

I know, I can hear you talking already. Prices are going to increase by 20% in ten years from the bottom of the market? Well, if values only increase 10% over that 10 year time frame, Investor #1 is ahead by $80,400 in equity. If prices don’t increase at all from the bottom over the next 10 years, Investor #1 is still ahead by $66,000 in equity! Plus, as mentioned above, Investor #1 will get almost three times more write offs and cash flow over that same time period. Who’s ahead now?

Whether you followed the numbers or cared to read through the analysis doesn’t really matter. The main point is that the investor that takes action now on conservative investments is always going to have the jump on the investor that tries to time the market and buy at the bottom. The investor that gains experience and assets now and in the future will have a much greater advantage by having the experience, processes, and contacts to take advantage of the market. The investor that is waiting for the bottom of the market will rarely be able to pull the trigger when they think the time is right.

Take massive amounts of focused action by working with other investors that are doing what you want to do and stop worrying about timing the market!

Be a Renegade,
Jared Pomranky
Renegade Detroit Investors

Metro-Detroit Real Estate Group
Metro-Detroit Real Estate Blog
Detroit Real Estate Investments
Detroit Cash Flow Properties - Free Report

Detroit. Just saying the word will get you a reaction wherever you are in the World. People respond to hearing Detroit with talk about automotive, cheap houses, and jokes about it being crime ridden. The sad part about the last one is that most people that talk bad about Detroit have no idea about the City and most have never even been to the City. They respond to media reports and hearsay to formulate their opinion on what Detroit is.

Well, I've had enough of all of this talk about Detroit and explaining it one on one to everyone. Here is a list of the common myths and misconceptions that I hear from people about Detroit.

Detroit is all a Ghetto

The perception of Detroit from people that don't know it is that Detroit is all a ghetto. The houses are all in terrible shape, everyone is unemployed, and the whole City is in general disrepair. Saying that all of Detroit is a ghetto is like saying that all of Michigan is like Detroit. Detroit is like any other big City. There are good areas and there are bad areas. What people don't understand is that there are EXCELLENT areas in Detroit. The houses in Northwest Detroit where we invest were built for the upper class back in the 1920's and 1930's. They are beautiful brick houses in great neighborhoods where people care about where they live. Houses are kept up, lawns are maintained, most families own their house, many are college educated, and many make $40,000 or more per year. Does this sound like a ghetto? There are areas that are not nice but they are no worse than areas in Chicago and other big cities.

Detroit is Crime Ridden and any house I invest in will never be safe

Security is a concern in any big city and Detroit is no exception. It is, however, not a war zone where you have to dodge bullets and everyone's a hardened criminal. The areas that we invest in include people that are as averse to crime as you and I are and don't want to live in a crime ridden area. There have been great strides taken in reducing crime and it's working as estimates of violent crimes from 2006 to 2007 are down. This goes back to the area you're in. There are bad areas of Detroit that are not as safe as great neighborhoods in Northwest Detroit and Downtown. You need to find out what these areas are and invest there. Security on houses is a must with any vacant property (suburbs or City), which includes properly securing the doors and boarding up vacant houses that are getting rehabbed. It may be different from where you invest but crime and theft in good areas of Detroit do not need to be a big concern.

The houses are cheap but you can never get them rented or the rent is too low.

The rental market in Detroit is stronger than ever and rents are keeping steady. What happens when more people get foreclosed on and can't get a mortgage for a new house, less people can qualify for a mortgage on a new house, and less people are buying houses just because of uncertainty in the overall economy? Hint: The answer is there are more renters in the market! What that means for cash flow investors is that houses are easier than ever to get rented out. Working with a qualified property manager that understands the area gets houses rented out quickly. Also, as people move from declining areas of Detroit, in the bad areas, to better areas like Northwest Detroit, there becomes even more demand for these houses as rentals.

I will be a slumlord if I invest in Detroit Properties

Being a slumlord is not determined by the area you invest in rather it is defined by the way that you maintain and manage your properties. I do not condone being a slumlord for moral and monetary reasons. First off, being a slumlord means that you do not fix-up the house very well, you cut corners, and generally make the house an undesirable and unsafe rental. Slumlords don't fix things when they break and they usually can't get a reputable management company to manage their properties because of this. What does that mean? It means that it is harder to get your house rented because you have to do everything yourself (i.e. not using a property manager) so you will most likely take longer and you have a less desirable house. How easy do you think it is to attract and retain tenants when they're living in these conditions? Not very. When you fix-up houses and maintain them like reputable Detroit investors do, you not only get it rented easier and retain tenants longer, but you make more money. You get higher rents and you get it rented quicker. There are slumlords in Detroit and many of them work in the bad areas of Detroit. Listening to their stories is probably where most of these myths and misconceptions are born.

The returns aren't that great for the risk you take

The returns on Detroit investment properties are excellent when you invest in the right areas. On purely the cash flow and paying cash for properties, investors are seeing returns from 10%-15% annually. This is not taking into account equity, which is 50% on more for all properties we work with, and future growth. Rental rates in Northwest Detroit are anywhere from $850-$950 a month give or take. That's excellent for being all in on a house less than $40,000!

You can't invest in real estate and make money unless you do the work yourself or have great connections with professionals in Detroit

This myth is partially true but it's not that you have to do all of the work yourself. Please do not think that you have to get out there and swing a hammer, clean a toilet or knock on a door to get rent. This is just not true. The returns above include management, vacancy reserves, and maintenance reserves just so you don't have to do anything. Have qualified professionals that understand the area and what needs to be completed do the work. Where do you find these people? Every person that purchases a house from Urban Detroit Wholesalers receives access to our exclusive list of real estate professionals that we use on each and every house that we invest in. We're talking about reputable inspectors, general contractors, property managers, security companies, insurance providers, mortgage brokers, and absolutely everything else that you need or will ever need to take a house to a fixed up, rented, cash flowing, retirement providing asset! Not only that but we refer so many investors to these professionals that you not only can be assured that the job will be completed correctly the first time but you will also get the best price because of the volume. And... We also want you to be successful so we manage the rehabilitation and coordination with all of the professionals for you.

I know there will always be the naysayers on Detroit that refuse to listen to logic. What I say is good luck. Anyone else that's willing to look through the veil of media doom and gloom and stereotypes that other have, join me in investing in this wonderful city.

Successfully Yours, Jared Pomranky Detroit Market Expert

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