We all love a great underdog story, right? For as bad as the media makes it sound, Detroit offers some incredible investing opportunities right now…if you know what you’re doing. Or, if you’re working with someone that knows what they’re doing. Greg White is that guy, and he’s helped real estate investors buy, rehab and property manage hundreds of properties in the last few years. Greg shares his story in this FlipNerd.com VIP Interview, and talks about how they’ve turned adversity into opportunity in the Motor City. Don’t miss this show to learn more!
Mike Hambright: Welcome to the FlipNerd.com podcast. This is your host, Mike Hambright. On this show I will introduce you to VIPs in the real estate investing industry as well as other interesting entrepreneurs whose stories and experiences can help you take your business to the next level.
We have three new shows each week which are available in the iTunes store or by visiting FlipNerd.com. So without further ado, let’s get started.
Hey, it’s Mike Hambright with FlipNerd.com. Welcome back for another exciting VIP interview, where I interview some of the most successful real estate investing experts and entrepreneurs in the industry to help you learn and grow.
Today I’m joined by Greg White with Imagine Home Realty out of Detroit. He’s a real estate investing expert, speaker, author, adviser, and focuses purely on Detroit, a market that many people assume is down for the count. But Greg knows that’s not true. He’s here today to discuss what they’re doing in Detroit and how there’s a massive opportunity if you know what you’re doing.
Before we get started with Greg, it’s going to be exciting. Before we get started, let’s take a moment to recognize our featured sponsors.
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Hey, Greg. Welcome to the show.
Greg White: Hey, how you doing, Mike?
Mike Hambright: Good, good. Detroit is a really interesting topic. Whenever you say that word or the name of that city, people have certain connotations in their mind about what’s going on there. Obviously, the market’s been down for a while, but as I know, in all honesty, I would love, in my market, Dallas, which has been a pretty resilient market, I would love to have a bad market back. I would love to have ’08, ’09. That’s where, when the competition leaves and deals are easier to come by. I tend to thrive in those markets. Seems like there’s a huge opportunity in Detroit. I know that you believe that.
Greg White: Yeah, absolutely. To be honest with you, recessions and down markets are where we all make our money. It’s impossible for us all to flip and us all to make a lot of money whenever it’s top of the market. There’s just no room left for things. That’s one of the things that are so exciting about Detroit. Although it is coming back and it’s on its way back, still very close to bottom of market.
Mike Hambright: Yeah, yeah.
Greg White: Many of the other areas like Atlanta, Vegas and some of the other ones, South Florida where they’re already back.
Mike Hambright: Sure, sure. Well, hey, Greg, before we start talking about what you’re doing up there and some of the exciting opportunities that are going on, why don’t you introduce yourself and tell us a little bit about you and your background and how you got to where you are today?
Greg White: Sure. I’d love to. My name is Greg White; I’m a broker out of Detroit. I’ve been in real estate for 12 years. I own a real estate brokerage here named Imagine Home Realty as well as a property management company and a construction company, named New Wave Superior Property Management and Imagine Construction Management. They all kind of fall into the Imagine Home family of companies, which I own those all.
We started a handful of years ago, about four or five years ago, I started — I was doing traditional sales, just working at a Real Estate One office, a real estate executive’s office after that, just doing regular real estate. Doing all of those short sales, REOs whenever I could get my hands on them, because they were so competitive and hard to get my hands on.
Then one day I got a call from a gentleman out in California, who said, “Hey, Detroit, it’s really down and I want to buy some properties while it’s down.” I said, “Are you crazy?” I said, “Let me try to find somebody in my space that does investment properties, because to be honest with you, I don’t really have a lot of experience. Let me see if I can find you a good referral.”
So we got to talking and built a relationship. He said, “No, don’t refer me. Let’s do this together.” I said, “All right. I’m willing to, but I just want to be open and honest with you that I’m not an expert.” He said, “That’s okay. We’ll learn together.” So I said [inaudible 00:04:56].
That relationship turned into buying one property and us trying to find somebody to rehab it with nightmare stories of finding Craigslist people to rehab that. Property management companies that were ran out of people’s basements, fly by night. That guy lost thousands and thousands of dollars.
But eventually we settled that score. I said, “All right. Well, I’m going to start this myself.” Then came the construction arm of the business and ultimately the property management side of the business.
So for a year, we started with one and we did 144 properties in that first year with this gentleman.
Mike Hambright: Okay, wow, wow. Those are properties that he wanted to keep as rentals?
Greg White: Yeah. All those properties, I believe he still has most of them to this day as rentals. That’s kind of what got my motor turning. I said, “Wait. I don’t have to get in a car. I don’t have put a buyer in my car and go run around taking him to a thousand properties and show them all properties they’re not going to like. Do it this way, I can sell the property from behind my desk.” It was the greatest idea, [inaudible 00:05:57].
Mike Hambright: Yeah, yeah. Talk about what’s going on in Detroit from a coming back mentality. I mean, I know there’s still a long ways to go, but I know that there’s a right way to invest there and a wrong way. So talk about what you see that’s going on and what, I guess, maybe let’s talk about some of the mistakes that you see people making in the market.
Greg White: Okay, yeah. I’ll start there with as far as Detroit and its rebound. Detroit is kind of a scary word whenever people say it. Anybody that’s never been to Detroit, they automatically get all these thoughts and ideas in their head that as soon as they get off the plane at DTW, that they’re instantly going to be shot. That there are murders happening on every street corner. That you can’t walk around. All those things.
Detroit’s just like any other big city. Every big city has some sort of crime and things that everybody doesn’t like to talk about. It’s a little bit depressing and things like that, but every big city has that. Baltimore has it. DC has it. Detroit, Chicago has it. I could go on for days.
Point is, every big city has it. Detroit isn’t too terribly worse than that. The only difference is we have blight mixed in with it, so it just looks so much worse on the surface, because at least on the south side of Chicago or something like that, you have crime. You have some gangs. You have things like that, but there’s not too much blight. The city at least has the money and the police force to try to battle and try to clean up, enforce laws, things like that.
For a long time, between the corruption from the Kwame Kilpatrick administration, which I’m sure everybody heard about that. The guy’s in jail for, I don’t know, 400 years or something crazy like that. All these things caused Detroit to fall.
Really, at the end of the day it was auto manufacturing. Almost every single person that lives here, myself included, I moved here from Kentucky when I was ten years old. The reason I came was because my parents couldn’t find any work, so ultimately, what’s the thing to do? You go to Detroit, where you can work on a line and buy your house and have the American dream.
Mike Hambright: Yeah.
Greg White: When that collapsed, it affected Detroit really adversely. We lost a lot of population. Detroit’s population was about 2.2 million in the height, in ’03, ’04, ’05. We fell all the way below 700,000 in [inaudible 00:08:13] time.
Now we’re coming back. We’re back over 1.4 million now as of…
Mike Hambright: Wow, that’s great.
Greg White: …last month. Lots of good growth. But just to kind of give everybody an idea, you hear all those scary things about Detroit, but that doesn’t mean that it’s really that way. From a person who lives here, who spends time in the city every single day of their life, it’s still a good city and there are still a lot of good people there. It’s just depressed…
Mike Hambright: Sure, yeah.
Greg White: …as a market. And all depressed markets go through some form of this. It’s just Detroit got hit a little bit harder.
Mike Hambright: Right, right. I know that there’s a huge difference, obviously, between the inner city and the suburbs as well. You primarily are investing in the inner city, right?
Greg White: No, the metro Detroit area overall. So the metro Detroit area’s the tri-county area. It’s Wayne County, which is where Detroit falls in and then Oakland and Macomb County. I cover those three areas.
The good thing is that not only do I run these companies, but I’m a real estate investor myself. I did really well out in Vegas a handful of years ago. Did well in South Florida. Kansas City I did pretty good in, but now that ability is right in my backyard, which is great.
So I’m happy to be on the show here, which is really focused on flipping, because there’s a lot of opportunity. When everybody thinks Detroit, they specifically think Detroit. That’s not the case. The very cool thing about southeastern Michigan is we have the tri-county area. You can touch every single price point all within a ten minute drive from one another.
You can be in that downtown Detroit area and the properties around there are maybe $10 to 15,000 apiece where there’s not a lot of flipping potential. But you can go outside to the city where I live in called Ferndale. That’s maybe 10, 15 minutes outside of the city, and the properties are $100,000 and $150,000. You can get a great deal on one of those for $70 to 80 grand and flip it and make a quick $30 to 40 thousand.
There are all sorts of different opportunities here. There’s every single price point all within a handful of miles from one another.
Mike Hambright: Sure, sure. Do you invest in the city at all or do you try to stay out of the city?
Greg White: No, I invest in the city myself. I own a handful of rentals. I don’t even know how many off the top of my head. Own a lot of rentals down there. I flip a lot of properties down there. I’ll buy a property, rehab it and put a tenant in it and then some overseas guy wants to buy a turnkey. He doesn’t want to take the time to do it. He just wants to earn the rent right from that day when we’re going to do the closing, so we prorate the rent as part of closing and start signing that day. So many different options here.
Mike Hambright: You do a few different things. You have kind of a turnkey model and you have a construction company and property management that come into play as necessary. Then you also — why don’t you go ahead and talk about your model and the different varieties of things that you do for a typical investor, when you work with investors and you’re not investing for yourself?
Greg White: Sure. Whenever I’m working with an investor, first thing to find out is what do they want? That’s the most important thing to find out. Do they want to get a property that is pretty much hands off? Nice and easy. Or do they want to do it the hard way, but save a little money?
There’s two ways to invest up here. There’s the turnkey way and then I like to call it the “right way,” but it’s not always the right way for everyone.
Mike Hambright: Which one of those is the hard way and which one of those is the easy way?
Greg White: Turnkey is the easy way. You’re just buying a package. You go to the store and you buy something that’s nice. It’s in a bow. You buy it. You take it home and do what you want with it. That’s what a turnkey property is.
The other way is to buy, rehab and then flip or hold. That’s the harder way, but it’s the cheaper way. So turnkey you buy it, day one, you start making rent. You don’t have to do anything else. Management company handles everything for you. Life’s good. It’s a phenomenal investment.
You paid a little bit more, so your ROI, your return on investment isn’t quite as high. You might only be at 15 to 18%, which is amazing, by the way, 15 to 18%, maybe 20% ROI on a turnkey, because you paid a higher purchase price on it.
You might buy that one for $25,000 or $30,000. It rents for $750 a month. You buy it, done. Collect money. You can buy one of those. You can buy a hundred of those. However you want to grow your portfolio.
Then there’s the other way, which is to buy a property on or off market, which we can find together. Usually they’re an REO, a foreclosure, something along those lines. So we might buy that property. It’s identical. It’s cookie cutter. It’s right next to the property that was $35,000. But this one, because it needs rehab, we can buy it for $7,000. Okay? We’ll buy it for $6,000, $7,000, $10,000, whatever the case may be. We’ll buy it for $10,000 [inaudible 00:12:39].
We rehab it for $10,000, okay? Then you have a complete asset at $20,000. You were going to pay $30,000 for this one over here, because someone’s already done the hard work for you. You have it for $20,000. Now we put a tenant in it.
The process takes a little bit longer. The closing process takes two to three weeks for a cash deal. The rehab process will take two to three weeks, depending on how much rehab it needs. It’ll take us two or three weeks to find a good tenant, preferably Section 8, in the property.
Instead of just three weeks to buy and close on this property, now you’re looking at a month and a half, maybe two months on this one, but you saved $10,000. You can buy one and a half of these for every one of these you buy.
Mike Hambright: Sure, sure. Talk a little bit about the inventory that’s available. I know a lot of people, again, when you start to have these connotations of neighborhoods that are kind of bombed out, boarded up houses or houses where there’s squatters or vacant houses. Are these the types of, in the city at least, are these the types of houses that you’re typically buying? Are you buying them directly from a seller? Sounds like you do some REOs and some other things.
I’m kind of having these connotations of houses on eBay for $1,000, $2,000. Some of the stuff that we talked about earlier.
Greg White: Yeah.
Mike Hambright: Are those the typical deals that you’re buying? Are you buying something that’s not quite that bad?
Greg White: Yeah, something that’s not that bad. I mean, I hope I’m not stepping on eBay’s toes or something here, but if somebody gave me a $1,000 to buy a property on eBay, I wouldn’t buy the property off eBay. Same thing with a couple of different places. I probably wouldn’t buy them if it was somebody else’s money that give to me for [inaudible 00:14:10].
Not because it’s not a real property, because likely you’ll probably end up with a real property. The option is you have no idea what kind of shape it’s in.
One of the things that we focus on is I really only deal with warrantied properties. So when you’re buying the properties on eBay or a couple other things I won’t name, you can buy these properties here. They come with quitclaim deeds. Normally, the quitclaim deeds come with $20,000, $15,000, $8,000 worth of back taxes, a $2,000 back water bill. Possible liens. All of these things. So it might seem like a great deal, but it’s not a great deal, because you could have more in back taxes than the assets even worth.
Mike Hambright: Right.
Greg White: So talk about killing your equity, you can kill the entire deal that way. If I’m buying a property, a bank owned property or a private owned property or an off market property from another investor or a pool sale from Fannie Mae, something along those lines, when I buy those properties, we guarantee that they’re warrantied. Its [inaudible 00:15:07] marketable, so you’re not going to have any issue in holding that long term or even if you want to resell it. That’s the most important thing.
But as far as bombed out neighborhoods and things like that, Detroit’s a very big city land mass wise compared to some other places. We can fit ten New York Cities, probably, inside of Detroit. Maybe even more.
But out of the entire land mass of Detroit, I only buy in probably maybe 30% of it. Right now. That a year ago was only about 10% I bought in. That proves something. That proves good progress that the city’s starting to do things. They’re starting to brighten up neighborhoods. They’re doing a lot more demolition. I’ll talk about that shortly, about all the different things that the city itself is doing.
Mike Hambright: Sure.
Greg White: That area that I stick in is very small. The reason being, there’s a lot of areas in Detroit that just you don’t want to be in. They’re not great areas, and it’s not because of the people. It’s not because of the crime, although that contributes to it. There’s just a lot of areas that there’s too many burned down or vacant properties.
It doesn’t really affect — you can have the nicest house in the world on one of these streets. The issue is the end game. I can’t get it rented out. Or the investor that’s going to buy it as a flip is not going to be able to rent it out. If it can’t be rented, it’s a complete mute point. Everything we did, it’s all for naught.
Mike Hambright: Yeah, yeah. Talk a little bit about the quality of the rental market. What’s going on there from a rent standpoint? How stable is it? Do you think there is more or less turnover than other similar markets, because of it being Detroit? Just trying to get a gauge on how stable of a rental market it is?
Greg White: As far as the rental market, how much people are looking for rentals, it’s incredibly high. It’s one of the highest we’ve ever been.
Take this, for instance. We were at 2.2 million population in 2003, 2004 as I discussed. Then we fell below 700,000. All those houses got foreclosed on, so back then, people were giving mortgages away like water. If you’d raise your hand up, they’d give them to you.
When all those people got foreclosed on, the banks took those back. A lot of them ended up as vacant houses or burnt down or ultimately demolished by now, whatever the case may be. Population now went from 700 to 1.4, so that means we doubled.
But all those people didn’t have houses. They had a house at one point. They had left to find work once the auto industry crashed. But now that the auto industry’s back, they’re rehiring. Things are good. A lot of people are coming back home. Their family and their friends are here. They have to live somewhere.
Most of those people, it hasn’t been long enough for their bankruptcy or foreclosure to fall off the record. Ultimately, that means high demand for rentals. Our rental market is an absolute high.
Two things happened, remember. The economy does bad, the used car market and the rental market go incredibly high. Because people can’t afford a car loan or can’t qualify for a car loan and they can’t qualify for a mortgage. Those two things are incredibly hot out there right now.
As far as turnover, I would say we have a higher turnover than the next city, and that’s just because of the amount of rentals. I’ve seen a statistic the other day, and don’t quote me on it, but it’s something pretty close, 81% I believe it said on the news, 81% of the housing in the city is rented right now, is rental.
Mike Hambright: Is a rental, is a rental property. Wow.
Greg White: Somebody is renting it some way or another, 81% of the housing. That means that there’s only 19% home ownership in the city of Detroit. There’s a lot available, but as fast as the population’s growing again, there’s not enough good people doing it the right way, non-slumlords, to satisfy all these people that are coming back home.
Mike Hambright: Yeah. Why don’t you share a couple of experiences or stories that you have one how some people that saw an opportunity in Detroit, and either worked with — not to throw anybody under the bus — but worked with somebody or did something that as a strategy to where people are getting burned? What are some examples of people not doing it the right way? Maybe they didn’t know it wasn’t the right way initially.
Greg White: Yeah, whenever I first got into this back in maybe ’10, ’11, there was this huge thing going on. It was with these different companies that were just springing up out of nowhere. A lot were in the UK. A lot were in France, Ireland, Australia, even off on the West Coast, California, places like San Francisco, things like that. A lot of people were opening these companies and they were buying these properties and then selling them to investors with this great return and guaranteed rents and all of these things.
So these people, complete con artists, but actually geniuses, made an absolute ton of money off these people’s kindness and ultimately it was their misfortune, but what people were doing was they would buy an asset in Detroit. They’d buy one off eBay or they’d buy it wherever it may be for $5,000, maybe $2,000, whatever the case may be.
Rehabbed it, okay? Then they put a tenant in it, and they would sell it to one of these overseas people who never took the time to get on a plane to come see it. They just saw a 30% return on their money that was guaranteed, and it was the greatest deal since sliced bread. You got to get really lucky in the stock market or something like that to get 30% cash on cash return. It’s almost unheard of, right?
So these unsuspecting investors were like, “This is the greatest thing ever.” They talked to the people. The people talked real sweet, and so they sold them the properties. These people would buy these properties in 2010, ’11, for $80,000, $90,000, and they would guarantee them this return on their investment.
What the people did was they were buying this asset for $1,000. They would rehab it. They would rent it out. They were simply taking the people’s $80,000, $90,000. They would guarantee that rent for two years, so they were just paying them back with the difference between the $1,000 they bought it for and the $80,000 they got them for. They would pay them back with their own money for two years.
Of course, they would get the property deeded to them. That was a real transaction, but they were just never here, so the property management company was paying them every single month. At the end of two years, “Okay, your rent’s guaranteed. Oh, sorry to tell you. Your tenant moved out and they destroyed your property.”
All along, there was never a tenant. There was never anything.
Mike Hambright: Oh, wow.
Greg White: They would come back with this. Now the people walk away with $55,000 in free cash. That was happening on every single corner. If I had a dollar for every phone call or email that I’ve had about one of those nightmare stories, “Can you help me, Greg? Can you save this property?” I probably wouldn’t even have to invest any more.
Mike Hambright: Yeah, wow.
Greg White: That is the biggest nightmare story that I’ve heard. It happened for a real long time until investors got wise.
Mike Hambright: Yeah. Talk a little bit about financing. I know for a lot of real estate investors, obviously, getting access to capital is difficult in a lot of places. I’ve got to assume it’s more difficult in Detroit for people that want to invest and buy houses. To get, I guess, at least traditional bank money or even hard money, is that true? What do you and other investors do for capital?
Greg White: Most of the stuff we do, the good thing about Detroit is it’s such a low entry. It’s such a low investment than other things, that almost all of our transactions are cash, but it’s a lot easier to do a $10,000 cash transaction than it is to buy a property in [inaudible 00:22:29] for $110,000.
Mike Hambright: Right.
Greg White: As far as bank money, it’s almost impossible to get bank money. First and foremost, because there are almost no banks out there that will do any kind of mortgage or lending under $30,000 or $50,000. Most of our properties are well under that in the city.
Hard money, you have to have a really rock solid plan. You got to lay it out. You got to get them involved. Say, “Hey, I got this guy. Let him talk to me.” Hopefully they’ve heard of me through the industry some way or another and then you might get some hard money on it.
But most of its just cash transactions. People pulling money out of a lot of investors that have friends. People that have money to spend normally hang out with other rich people.
A lot of people will pool money together so they can do more investments. That’s probably the easiest way to do it. I would say 99% of everything we do is cash transactions, a little hard money and almost no bank money.
Mike Hambright: Okay, okay. Well, Greg, I don’t know if you know this show, I really — what I love about doing the show is to meet other entrepreneurs. I just get jazzed about hearing about other people’s businesses and stuff like that. I think a lot of people that listen do, too.
But maybe if you’re okay, we could talk about your business structure a little bit, in the context of how you started in one place and you saw a need and kind of bolted things on through your construction company and your property management company.
That’s pretty typical for real estate investors to either start as a broker or they didn’t have their license at all, but then they evolved into a brokerage and have property management, maybe hard money lending. There are some typical things that get bolted on.
Maybe, could you talk about, just kind of share your experience and why you did certain things? There’s probably some other opportunities, like I struggle with saying “no” to opportunities. I’m blessed to have a lot of opportunities, so I get bogged down. But I’m sure there are other opportunities you have to bolt things on or do something, but you chose to, “I’m just going to outsource that to this company or this person, because they can do it better than me, and I don’t want to do that.”
But just talk about how your business grew. Maybe give some context, too, to the type of unit volume you’re doing of houses that you’re buying. I know you’re doing quite a bit and you haven’t really mentioned that yet. Talk about how much volume you’re doing and then how it made sense to bolt certain things on or not.
Greg White: Yeah, absolutely. I started as, like I said earlier, about 12 years ago I started in real estate right out of high school. I graduated high school. And then I was like, no, I don’t want to go to college. I’m going to do something else.
I had a buddy who worked at a Real Estate One office. It was like, “Yeah, come to work for me. It’s relatively easy. You get your license. Spend two weeks. You’re a smart enough guy. You’ll do fine at it.
So I did that. I went and got my license. It was like, “Hey, this is better than going to college. I don’t want to have a big, huge college bill whenever I get out, not that to attend college is not a good idea. I’m just saying it wasn’t for me at the time.
So I did it. I passed, got my license. I was so excited. Come Monday morning, I go to work. I’m so excited. I got there. They gave me a desk. I got it all set up. Got my computer set up. I sat down. I’m like, “All right. Time to do real estate.”
Then I looked around and I went, “Wait. What do I do?” I literally had no idea what to do. I was brand new.
The guy, whose name was Alex; he helped me out a little bit. Gave me some leads and I started to try to build my business. I realized this was incredibly hard. It’s not at all easy to build a real estate business. I was like, “Maybe this isn’t for me.”
So I decided to go to college. I went to college, Michigan State, and graduated with a software engineering degree. I’ve always loved computers and everything. So I became a software developer. Focused a lot on building softwares, php, C++, things like that. I was in a lot of that.
Then one day I went on Craigslist and I was looking, having seen an ad that somebody was looking for a developer for a real estate software company. I was like, “This is perfect.” So I phoned the ad, and I went in for an interview. They started talking to me doing my interview, and they’re like, “Wait. You’re a Realtor as well?” I said, “Yeah.” They said, “Oh, my gosh. You’re perfect for this.” All right. Let’s try this out.
So I went in originally trying to just code. I was going to sit behind a computer, write code all day and just collect my 40 hour check and go home. I kind of put real estate on a back burner up until this point. I had sold maybe five or six houses in six years. Just was never really my passion.
But they asked me a lot of questions, so I started to do coding. Then the team would come over and they’d say, “Hey, how do you feel as a realtor about this?” I would say, “Okay.” So very long story short, I ended up getting out of coding all together. End up becoming a partner in that company. It started off with like ten users. It was a subscription based software. It had like 10 users, and whenever I left, it had 10,000 or something like that.
Mike Hambright: Wow.
Greg White: We did really well. I had a really good run with it. Did it for about two years. Made a lot of money. And I said, “Okay, I’m going to take my buy out and go do the next thing.”
But all along, I was thinking real estate, because I was really enjoying building it and helping realtors out. It was for realtors and title companies and escrow and attorney, things like that. So I remembered how much I liked it. I just didn’t like that I went to work as a real estate agent and made no money.
I took my money and I could have just went and took a vacation or something like that. I wasn’t a millionaire, but I had a decent enough amount of money, that as a young man that I could just relax for a little while. So I went back to real estate.
I started doing some traditional sales. Went to work for a realty executive’s office here in town. I started doing decent with that. It started to pick up and things like that. I was loving it. I was really enjoying it.
One day my phone rang. It was a gentleman from California. He said, “Hi, I’m interested in buying some investment properties.” I said, “Okay. I’ll only try to find somebody to refer you to.” He said — we talked. We kind of built a little bit of relationship on the phone. We talked for maybe two or three hours. He said, “No, let’s do this together.” I said, “Okay. I’m willing to try, but I have no idea what I’m doing. I’ll just be honest with you.” He said, “That’s fine. We’ll learn together.”
Come to find out the guy had been a veteran real estate investor. He’d been a mortgage broker in California for over 30 years. He was just this really big time guy. He’s like, “No. I think you’re my guy out there.” I said, “Okay.”
So we bought one property in Detroit. This was in 2009, 2010. Things were starting to get really bad and they were really cheap. So we bought one.
I said, “Okay, now we need to rehab. Let’s rehab it.” So he’s like, “Find somebody.” So I went on Craigslist. He went on Craigslist. We were looking for somebody to rehab these properties. He got his money stolen two or three different times. Just horrible situation. So he was really upset.
I was like, “Oh, well. All I can do is call again.” We went to call a bigger corporation here in town, a bigger contractor. They wanted a fortune. It wasn’t even worth it. They didn’t even want to go into Detroit.
Long story short, I said, “You want me to try to bring this in house?” So I brought the construction company in house and started to do it.
At the same time, we finally got through our first one and our second property, but we needed to rent them out. So we were sending them out to a property management company, multiple here in town. Most of them were ran in someone’s basement. Big huge property managers really were a guy in his PJs, basically come by and never doing anything.
We were missing owner payments. We were getting money stolen from us, embezzled, this that and the other. He’s like, “Forget that.” I said, “All right. I’ll bring that in house, too.”
All the things that have happened to me kind of fell on my plate more or less. I was just a victim of circumstance in a good way.
Mike Hambright: Yeah.
Greg White: All of those things, I had a crossroads. I could have either continued to search harder to find somebody to outsource it to, or I could have pulled the pants up and said, “I’m going to do it myself.” All of those have came with trial and error. A lot of them came with failures and growing hiccups and things like that.
One thing I tell my staff all the time, and I tell them and I don’t think they quite get it yet. But I tell them, “It’s really, really easy to suffer from success.” That’s such a weird statement to people. How can you suffer from success? But you really can if you don’t staff yourself properly. If you don’t have the right people in place. If you don’t have everything that you need formally laid out.
If somebody comes in and says, “Let’s buy a thousand properties,” I would love to, because that’s a bunch of money for us, but at the same time, can I handle it?
Mike Hambright: Right.
Greg White: So all the things to kind of bring everything I’m saying together was all of these different pieces that I’ve added on to what we do here and how I became so good kind of just fell into my lap. And we just grew with it. I grew steady.
Mike Hambright: Yeah.
Greg White: A couple years ago I was at the point to be able to turn away business. Now I’m at the point where if an opportunity comes to me, even though you and I apparently both don’t like to turn opportunity away, sometimes have to, because you can drown. You can really drown in success.
Mike Hambright: Absolutely, absolutely. Awesome. Well, any kind of closing statements or any comments you want to make on what’s going on in Detroit there? Then after that, tell us how folks can learn more about you and maybe get a hold of you if they want to talk shop in Detroit.
Greg White: On the topic of Detroit, as far as the actual city of Detroit, I know a lot of people are scared of it. A lot of people just hear the word “Detroit” and they want to run the other way. Detroit, for a long time has been the nation’s punching bag. Everybody’s like, “Ah, things are so bad here.” Then you’ll hear the joke, “Yeah, but at least we’re not Detroit.”
It’s really not that bad here. It’s still a city. There’s still good people here. There are a lot of things that are in place right now that are really, really turning it around.
The bankruptcy, everybody was terrified when they heard “Detroit bankruptcy,” because the thoughts of one of the biggest cities in the nation going bankrupt. Its like, “Oh, gosh. If that can happen, how bad is it really there?”
In theory, that was probably the best thing that’s ever happened to the city of Detroit was the bankruptcy. At the point where they declared bankruptcy, 88% of all of the revenue that was coming into the city of Detroit was simply paying pensions. That means there was only 12% revenue to pay police officers, fire fighters, keep the lights on, do the city services, pick up trash, all of these things.
So the bankruptcy freed all that stuff up. It’s really a sensitive subject as far as the people that had pensions and what’s ultimately going to happen with that. Nice older people who worked for the city for years and things like that.
But the city couldn’t live. They couldn’t breathe with only 12% of its revenue. So now we have 100% of the revenue, and we have a new police chief. James Craig, the police chief. He had turned around Los Angeles and some other places. He’s a really high profile guy. They went to him and said, “Hey, we need a police chief and we hear you’re the best guy in town.” He said, “I would love to come there.” So he’s came.
They got task force going on. I just saw them on the news the other day. He was out. They took down like 26 drug houses in one morning. He’s a phenomenal guy. Real rough around the edges, but he’s a phenomenal guy and he’s cleaning up big time.
The street lights are going back on. People are actually picking trash up. Chase Bank of Manhattan, or JP Chase Morgan, they committed $200 million to the city. That’s helping out. They’re demolishing a lot of the houses that have burnt down and are vacant. They’re finally getting around to tearing a lot of those down. There are just a lot of really good things happening now.
Mike Hambright: Yeah, great.
Greg White: The corruption’s kind of going out of the window. It’s still going to take a lot of time to get us back to the city that we were in the ’40s, ’50s and ’60s, but that’s okay. Because you know what that means? That means there’s a lot of opportunity for yourself, myself and all our [inaudible 00:34:06]…
Mike Hambright: Absolutely. Absolutely. Awesome. If folks want to learn more about buying rental properties or different ways they might be able to work with you or get involved in investing in Detroit, where should they go?
Greg White: Yeah, they can definitely look us up on our website, ImagineHomeRealty.com. They can call our offices any time between 9:00 AM and 6:00 PM Central time at (313) 456-9898 or email me personally. I’ll give my email address out.
I’m always willing to talk to somebody, even if it’s not even investing wise or you just want some coaching or you bought a bad property in Detroit. You don’t know what to do with it, or any of the surrounding areas. Give me a shout.
Its gwhite — first initial, last name — @ImagineHomeRealty.com.
Mike Hambright: Awesome, awesome.
Greg White: Talk to any of the other departments. They got a property. They want to rehab it or whatever, just call the office as well in the same office and we can transfer amongst one another.
Yeah, I look forward to hopefully talking to a lot of people, whether it be buying and holding, whether it be buying and flipping to other investors, or just doing some of the properties out in the suburbs.
We have amazing opportunity for actual regular flips right now. The good thing, as I discussed, with everything being within ten miles of each other, there’s a lot of money to be made flipping a property in maybe a Hazel Park or a Ferndale or a Madison Heights, some of the other cities outside of Detroit. Buy those properties for $30,000, $40,000. Put $10,000 into them and sell them for $70,000 or $80,000. Flip is probably the hottest thing around right now.
Mike Hambright: Wow, wow. Hey, Greg. Thanks for your time today. Definitely appreciate you opening our eyes a little bit to Detroit and wish you all the best up there.
Greg White: Absolutely, yeah. Thanks for having me on and hopefully opened some eyes. People aren’t so scared. Get off the plane. Come see me. Anytime you’re in Detroit, look it up. Catch a ball game. Hopefully we’re going to win the World Series this year. I’m turning 30 and the last time the Tigers won the World Series, I was about two months old, so I’m saying for my 30th birthday this year, the Tigers are going to win the World Series.
Mike Hambright: There you go. There you go. Hey, awesome, awesome. Hey, best of luck and please stay in touch, okay?
Greg White: Absolutely. I appreciate it. We’ll talk to you soon.
Mike Hambright: All right. We’ll see you.
Greg White: Cheers.
Mike Hambright: Thanks for joining us on today’s FlipNerd.com podcast. To listen to more of our shows and hear from incredible guests, please access all of our podcasts in the iTunes store. You can also watch the video versions of our shows by visiting us at FlipNerd.com.