E030 Cross-Boarder Real Estate Flipping in Detroit with Sav Almeida
iTunes and Google/Android Listen Links: https://linktr.ee/theandrewhines
Greater Hamilton REI Meetup Group: https://bit.ly/2VSSc9i
In E030, Savio “Sav” Almeida talks about how he packed up his bags in the Greater Toronto Area and headed down to Windsor Ontario to start aggressively growing his real estate investing business on the other side of the border in Detroit, Michigan.
Sav did his first flip in Oakville Ontario and considers the experience a bit of a ‘disaster’. Sav believes that generally speaking, it’s ‘hard to flip properties’. His realization of this was the primary cause for his decision to find a location with lower barriers to entry.
When Sav started investing in Detroit he was focused on stretching his ‘real estate dollar’ as far as he possibly could. Sav talked about how he started buying in the $50,000 range for a single family, brick home (he said he won’t even touch a stick-framed home because he thinks the value just isn’t there) in the Bagley district of Detroit and how he eventually scaled up to buying in a few other, very specific areas as well.
With an average purchase price of around $50,000 for an old Victorian home to flip in Detroit, Sav invests about $70,000 on average in renovations and is usually selling his properties between $150,000 and $200,000.
Sav assured me that he is typically able to sell his properties inside of 3 weeks because of the price point they are in. They are considered to be “starter homes” which is great for Sav and his buyers because that is a massive segment of the market.
After closing costs, carrying costs and all other fees Sav believes his average profit per flip is approximately $30,000.
One important area of the conversation was this discussion around risk exposure. Here at home in Canada (for me) the real estate values have consistently been on the rise. While it’s nice to see my existing properties going up in value so significantly, the rise in value has increase the amount of money I have exposed on every single deal. To have purchase + improvements totaling more than $500,000 for a $40,000-60,000 in profit, it just doesn’t really seem like the risk is worth the return. For this reason, I really love what Sav is doing by flipping in Detroit. To be able to expose only $100,000 to $150,000 per deal with an average profit of $30,000, the numbers make a lot more sense for the average flipper and getting into the market is a lot more achievable.
Sav stressed in the interview that market research is critical. He recommends looking into ‘sub markets’. Sav discussed how he went to many meet-ups and met with wholesalers to learn where he needed to be investing and how he needed to be conducting his business in order to be successful. Sav said that he eliminates a lot of his flipping competition but playing in a higher price-point for Detroit.
For finishes, Sav is typically making his properties a bit nicer and has been starting to install stone countertops, stainless steel appliances etc. Sav says the Detroit real estate market is coming back and is growing. He’s seen price competition and greater competition in the real estate market in order to get his product sold.
Some other interesting parts of the conversation:
Save doesn’t fill gas in the core of Detroit because he feels that it attracts attention from people he doesn’t want to get attention from. Sav doesn’t have his Nexus card for cross-border travel because he doesn’t like the idea of being tracked.
On top of investing in Detroit, Sav invests in Windsor for long term buy and holds. He uses the BRRRR model and joint-ventures everything so that he can keep investing on a larger scale. He says from a business point of view, when asked about Windsor he responded with “it’s awesome”.
Andrew Hines is a real estate investor from Burlington Ontario and he’s primarily invested in London Ontario. As of the time of publishing this video Andrew has a approximately $4,000,000 in personal real estate holdings and aspirations of growing his personal cash flow to $10,000 per month (and then $20,000 shortly thereafter).
While he takes an alternate approach, Andrew preaches use of the BRRRR method to achieve financial independence and he has become quite proficient in construction management, building and development due to his value-add approach to real estate investing.
Andrew owns several companies, including a construction general contractor, and has built out multiple investment property units in Southwestern Ontario Canada.