I went to see another Detroit home Friday night before packing our bags and getting ready to spend the three-day weekend in Holland, Michigan. My agent arranged the walk through, and I clarified upfront who would be present. You guessed it… just the tenant and me. My agent wasn’t showing, the listing agent wasn’t going to be there. Just me.
Nobody cares to show up, and I get it. We’re talking about homes that are in the $40k-$50k range. That leaves little for a real estate agent to make on commission, so they’re just not interested in doing much. But it also sucks.
How things work when buying Detroit rental properties
Imagine making an offer on a house based on a few (usually unrepresentative) photos, an address, and either Google Streetview or a drive buy in your car (if you decide it’s worth the time). You can only go walk through the property once because there’s a tenant in place and the owners don’t like disturbing them any more than they have to.
That means you have to arrange for an inspection to be done generally on short notice (24 hours or less). But you don’t do that because you aren’t going to buy most of the houses you see anyway, and that ~$300 per inspection will add up quickly. So you you rely on what little real estate knowledge you have to conduct your own visual inspection while chatting up the tenant, trying to be respective, and handling any other distractions.
On Friday those distractions included three young children. They were the only ones present when I showed up at the home. The oldest (probably about twelve years old) answered the door after a handful of knocks and a younger kid peeking through the window announcing my presence. He explained to me that his mom wasn’t home yet but she was on her way; she knew I was coming.
Naturally, I asked him if it was ok if I came in and looked around or if he’d prefer I wait for his mom. He said I could come in, and when I double checked with him, explaining it was no problem to wait and I didn’t want to make him feel uncomfortable, he looked me up and down, flashed a slight grin and exclaimed, “Nah, you’re straight”.
Clearly this kid wasn’t the least bit threatened by a clean-cut white guy. I couldn’t help chuckling at his reaction as I entered the house. The boy retreated to one of the bedrooms, rejoining his video game as I began poking around.
After walking around the house and playing hide-and-seek with the four-year-old for about 20 minutes, the tenant (mom) showed up. I talked with her a bit about the house, some issues she’d been having with water backing up in the basement drain when she did laundry, and talking to her about her new job at MGM Grand Casino as a cocktail waitress.
I already knew she’d been notoriously late on rent so I prodded a bit there. Apparently, she’d lost her job after her employer lost their contract with another company. But she’d just gone through orientation at MGM Grand and was starting this weekend. She seemed excited. That was evident. One of the first things I’d noticed when stepping into the house was a framed certificate that said “Welcome to the Team”. It was from MGM Grand.
Overall the house was in good shape. There are a few issues that need to be addressed, but that’s always the case. I also love the location on Somerset Ave. in Morningside right near Mack Ave. It really feels like Mack Ave. could see some cool shops, restaurants, etc. move in and become pretty neat. So I like having some exposure there.
A tenant that’s notoriously late on rent definitely concerns me. Inheriting tenants comes with added risk, but I like the house enough to take it on. I’m hoping she can get back on track with the new job, but I also know she hasn’t even paid rent yet this month.
Every time I go see a house it’s a unique experience. And just about every time it’s uncomfortable for me, especially these ones where I’m flying completely solo. I am not a social person by nature. I dislike small talk and common pleasantries, but it’s something I’ve been forcing myself to work on. Getting out of my comfort zone has been healthy, and so far the experiences have been positive.
I also love real estate. Something about building and homes is fascinating to me, especially these older homes that are nearing 100 years old. The craziest part is seeing and evaluating the homes is likely the easiest part. It’s going to be a whole other ballgame when I start placing and dealing with tenants.