Array Management Group

Archive for April, 2009

A real estate partnership can be a good way to invest in properties if the partnership is formed correctly. A partnership allows investors to pool their resources in order to reduce their risk and increase their leverage.

In today’s real estate environment partnerships are becoming a common tool for investors to acquire property. Because of tightening credit markets and oversupply of housing, it’s important to leverage your money to prepare for surprises.

There are some things to look out for when forming partnerships. If a partnership is not properly formed and maintained it could cause you some serious financial damage. Follow these 6 tips to limit your risk while investing.

 1.  Know your business partners

Always partner with someone you know and trust. It may be a good idea to have an attorney check out your partners to make sure they are clean. It’s better to investigate upfront then to find out later that your partner has been sued several times.

2. Have an attorney review all documents

Having legal paperwork done right will keep you out of trouble and protect your interests if you need to go to court. Even if the paperwork looks legit, have an attorney review it to make sure you are protected.

3. Do your own research

Double check the facts presented to you by your partners. Obtain comparable sales and market research from your own sources when you are not sure of the values in the area. If you can, do a drive by of the target property and area to gain a comfort level.

4. Control your money

 Keep any deposits for an investment in an escrow agent account until you move forward with the project. This will help protect your money in the event the project falls apart.

5. Use contingencies as escape routes

When investing, you should incorporate contingencies to protect yourself. Give yourself plenty of room to walk from the deal if something goes wrong. You don’t want to be stuck in a bad deal that you can’t get out of.

6. Treat everyone involved fairly

When a successful deal is completed it’s important to preserve the relationship. It’s hard to find quality partners so make sure all parties are happy and fairly compensated.

As you can see, preparation is the key when forming real estate partnerships. I hope these tips can help lead you down the road of financial success.

Look No Further!

For More Info Contact info@arraymg.com

Detroit is the largest city in Michigan. Many neighborhoods are clean, safe, and consist of hardworking everyday people. Because so much of the local economy tied to the struggling Big Three, many homeowners have had to leave their homes or sell at rock bottom prices. 

Because of the economic conditions, the real estate market is ripe with opportunity for any real estate investor with the money to invest in this great city. Well, for many real estate investors this is the case. However, there are still pockets of people outside of Detroit that have misconceptions about the city.

 I would like to debunk some of the myth I often hear about investing in Detroit.

1. Detroit is one big Warzone

 The perception around the country is that Detroit is a place where the houses are all abandoned, everyone is unemployed, and the neighborhoods are riddled with crime.

The truth is that Detroit is no different from any other metropolitan area. Sure there are bad areas but there are also very good areas. Detroit also has some of the best suburbs in the entire country.  My target investment area is Northwest Detroit where the homes were built for the upper class back in the 1920’s and 1930’s. They are beautiful brick houses in great neighborhoods where people have pride of ownership. Homes are in excellent condition, lawns are maintained, many homeowners reside there, many are college educated, and many make $40,000 or more per year.

2. If I invest in Detroit my property will be vandalized and I’ll be unsafe

Like any other major American city, security will be a point of emphasis in Detroit.  However, it is not a huge ghetto where drug dealers are on every corner and shootouts on every street. From my experience, most residents are adverse to crime and are committed to making there neighborhoods safer.

Your level of safety depends on the areas you are 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 put your focus there. Security on houses is a must with any vacant property, 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.

3. Houses are cheap but no one is renting

The rental market in Detroit is like a hot rental market on steroids, it keeps getting stronger. Because many people are getting foreclosed on and the credit market is tightening, 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. These conditions create more renters in the market! What that means for cash flow investors is that houses are easier than ever to get rented out. Also, as people move from declining areas of Detroit, to better areas like Northwest Detroit, there becomes even more demand for these houses as rentals.

4. I’ve heard horror stories, my experience will be bad

 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 horror stories come from

5. 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 20%-25% 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!

There will always be skeptics who listen to the doom and gloom in the media and they won’t change their minds no matter what happens. For the rest of us, now is the time to take advantage of a tremendous opportunity. I invite you all to join me in investing in this wonderful city.