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Show Summary
In this episode of the Investor Fuel Podcast, host Leo Wehdeking interviews Michael Evans, a real estate expert focused on managing properties in Detroit. Michael shares his journey in real estate, including his risk management strategies, challenges faced in the industry, and the importance of building personal relationships for success. He discusses his goals for scaling his business and the unique opportunities in the Detroit market.
Resources and Links from this show:
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- Investor Fuel Real Estate Mastermind
- Investor Machine Real Estate Lead Generation
- Mike on Facebook
- Mike on Instagram
- Mike on LinkedIn
- Michael Evans’ Website
- Michael Evans on Instagram
- Michael Evans on LinkedIn
- Michael Evans’s Phone Number: (661)524-6674
- Michael Evans’s Email: [email protected]
Listen to the Audio Version of this Episode
Investor Fuel Show Transcript:
Michael Evans (00:00)
I told my client at that time there was a 10 % chance that things would go as planned. And there’s a 90 % chance that we’re gonna have to wind up evicting this tenant. You’re gonna wind up rehabbing it and you’re gonna wind up spending around 50, $55,000. And unfortunately, everything that could go wrong did go wrong.But we had the process and procedures in place to manage those risks. And we wound up spending $53,000. And then we wound up renting the property via Section 8, initially for, I think it was $870 per month, which still gave us the $7,500 a year in that operating income.
Leo Wehdeking (02:23)
everyone, welcome to the Investor Fuel Podcast. I am your host, Leo Wehdeking, and today I am joined by someone I’ve been looking forward to chatting with, Michael Evans, who’s been making serious moves in the real estate industry. Michael, glad to have you here,Michael Evans (02:38)
⁓ I’m glad to be here.Leo Wehdeking (02:39)
Perfect, perfect. Michael, I think that our listeners are really going to take something away from how you’ve been approaching the real estate business these days. So let’s dive in and for people who may not be familiar with your world, can you tell us what is your main focus these days?Michael Evans (02:56)
Sure. So our main focus is that we manage real estate deals on behalf of investors. But we only do it for properties in the city of Detroit. And so what we do is we manage the entire real estate transaction from finding the property, walking the client through the purchasing process. And then once the property is purchased, thenoverseeing the rehab, the placement of the tenant, and turning the asset into a performing asset. And it takes about a three-month process.
Leo Wehdeking (03:32)
And Michael, what markets are you operating in?Michael Evans (03:36)
Yeah, so right now we operate exclusively within the city of Detroit.Leo Wehdeking (03:40)
Perfect, perfect. Now, Michael, one thing that actually caught my attention about you is how you’ve been able to help your investors to get the real, you know, the perfect business. All right. So can you explain us a little bit how you’ve been able to achieve all of that through the years?Michael Evans (03:58)
Sure. So a little bit of history about my real estate experience. I was an active real estate investor from 1997 to 2005, in which I actually was paid $15,000 to buy my first house. And then I actually helped two of my friendsgenerate 400 % returns over four to six months by buying houses in California. This was in 2005 before the 2008 recession. And so I consider myself ⁓ a risk manager. And so what I did is I developed a real estate deal management system.
that looks at data throughout the entire country to identify those markets that are the best cash flowing markets and have the best appreciation potential. And Detroit came up on that list starting back in 2021. And so I spent two years during the pandemic assembling a local team in Detroit.
and wound up partnering with a company called Great Lakes Property Management. They’ve got more than 20 years experience of managing real estate dealers on behalf of out-of-state investors. And they have mastered the concept of creating turnkey rental properties. And so I took my risk management platform and put it on top of their
platform for creating these turnkey rental properties and have been marketing it toward people in Southern California where you can get about a cap rate of 5 % if you’re lucky in Southern California and we target a cap rates of 15 % in Detroit.
Leo Wehdeking (06:40)
Alright, alright, that’s actually not easy. Now, Michael, I know that every operator has a moment where things got real, alright? Maybe a deal that went sideways or a time that, you know, they had to pivot real fast. Do you mind sharing one of those moments?Michael Evans (06:57)
Well, sure. So we did our proof of concept about two and a half years ago. We helped a client from Southern California, a woman who had never invested in real estate, who had never been to ⁓ Detroit. And so she trusted us. And we had a real estate deal where we were buyingwhat we thought was a turnkey rental property that didn’t need any rehab, came with a tenant already. And the risk management system that I developed is more than just software. It’s also processes and procedures. And so we entered into this contract with this wholesaler. And as I started pulling back the layers of the onion, we ran into problems.
and we actually had ⁓ canceled their deal. I told her to walk away from it. And the wholesaler came back a couple of weeks later and made a proposal significantly lowering the cost as well as getting the seller and the tenant to sign an agreement stating that what they were going to do upon the closing
of the purchase of the property.
I told my client at that time there was a 10 % chance that things would go as planned. And there’s a 90 % chance that we’re gonna have to wind up evicting this tenant. You’re gonna wind up rehabbing it and you’re gonna wind up spending around 50, $55,000. And unfortunately, everything that could go wrong did go wrong.
But we had the process and procedures in place to manage those risks. And we wound up spending $53,000. And then we wound up renting the property via Section 8, initially for, I think it was $870 per month, which still gave us the $7,500 a year in that operating income.
Leo Wehdeking (09:37)
All right, all right. That’s actually the kind of stuff that people don’t like to talk about too much. But you know, I think, you know, talking about it, that’s what separates people who just dabble from the ones who actually stay in the game long term. So good for you. Now, let me ask you this, Michael, what are you most focused on solving or scaling next? Like, what is your real next goal?Michael Evans (10:02)
Yeah, so our next goal is to start scaling. And so we have the capacity through our partner in Detroit to actually do about 10 homes per month, 10 housing starts per month. And so it’s really about getting additional clients. The market in Detroit has ⁓ softened.So what we do is we focus on very specific zip codes and the prices in those zip codes have come down. They were appreciating at double digit annual rates over the last couple of years. Now we’ve actually seen a decrease in the price, which gives us the opportunity to come in and get properties at a lower price, but the rents.
are still holding. And so that’s our biggest challenge now is to get more clients to basically trust us and to trust the method and the process that we’ve developed.
Leo Wehdeking (11:00)
Alright, alright, that’s actually good man. Now, I know that a lot of people listening are either earlier in their journey or they might, you know, just looking to level up like people like you and I think they will benefit from hearing this. Now, when it comes about building relationships and growing your network, what’s made the biggest difference for you?Michael Evans (11:21)
Yeah, so it’s the personal relationships that I’ve developed. And so it took me two years to get the right relationships in Detroit, especially during COVID where I couldn’t travel to Detroit. And so, and from being from California, there were people in Detroit that wanted to take advantageof me because they just saw dollars, right? And so because of the experience that I have in real estate, I knew the ins and outs. I knew what was reasonable, what was not reasonable, but every market is unique. so with our data analysis, we could only go as far as down to the zip code.
but by partnering with the local real estate company, they knew their market block by block. And in Detroit, you can have a great block and then the next block could be horrible that you don’t wanna buy on. And you’re not gonna have that type of insight unless your boots on the ground and you have the experience. And the way that I…
that most of my real estate relationships were through local REIA meetings. I belong to a couple of REIAs here in Southern California, connected to a REIA in Detroit. And it’s just having those personal relationships. I can’t overstate the importance of personal relationships.
Leo Wehdeking (12:52)
Yeah, they’re actually very good, not only in the real estate area, but in every aspect of life. You never know who you’re gonna know.So, all right. Michael, before we wrap up, if someone wanted to reach out to you, connect with you, maybe collaborate or even learn more about what you do, what’s the best way for them to reach you?
Michael Evans (13:00)
Exactly.⁓ sure. So you can either go to our website, which is www.thebnicre.com or you can shoot me an email at michael.evans at thebnic.com or
You can text me or call me at 661-524-6674.
Leo Wehdeking (14:19)
Alright, alright, perfect. Listen, Michael, I really appreciate your time, your story, and also your perspective. We need more people like you in this space. We’re actually doing it right. So thanks again for being on the show, man. -
