Herb Strather: Detroit Real Estate: The Best Opportunities in the World

Wednesday, August 5, 2009

Detroit Real Estate: The Best Opportunities in the World

Detroit Real Estate: The Best Opportunities in the World

First, I'd like to admit that I am an Optimist. In fact I’m an Optimist Club builder having built more than 130 Optimists Clubs around the world. If you live in another city, please do not hold it against me when I say that the best real estate deals in the world are in abundance in Detroit, Michigan. Detroit real estate is being purchased at 5%-40% of its value two years ago, albeit with risk if not done properly. Some homes in challenged areas are going for a mere $2,500 or less per house. These are homes that will one day appreciate back to their normal values of say $50,000 to $125,000. I look at this as great news for investors around the world.

In the real estate world, these are the worst of times and the best of times. In the current real estate market, banks and municipalities have too many houses which have been reverted to them from foreclosures of mortgages and property taxes. If you are an investor or if you can put together deals and investors, this can be the best of times. Finding money is tough but the deals today are great. I have been in the real estate business for more than 40 years, purchasing my first house at the age of 18. After more than 500 transactions and over $2 billion in real estate deals, I have never, ever seen a real estate market such as this, it is unbelievable. For the savvy real estate entrepreneur, you can make the greatest deals ever!

Let’s consider the people who have been devastated by the present market, people who have lost their jobs, cannot afford their mortgage payments and are delinquent for 90 days or more. They can possibility get the best deals of all including a short sale on their existing mortgage, possibly lopping off as much as 30-60% off their balance. The same principle applies to credit cards. Jobs may be scare but individuals will eventually get other jobs and the values of property will rise again. As a bonus, they will not have to pay taxes on the new found equity.

The scenario just presented is being played out in communities all across America and around the world. As easy as this sounds, it is not as easy to accomplish. These are great times for potential investors if you are associated with the right real estate agents, have a game plan and have access to capital.

Because the market has so many properties at a discount, many investors in their zest, purchase too many houses. You can create mega headaches if too many properties are purchased at once, especially if you cannot attend to all of your properties. There are plenty of thieves waiting to steal from you and your properties, thieves who will happily strip you of everything in the house including your piping and copper wiring. To avoid problems, you might want to consider a partner or at least a bonafide real estate property management firm that knows the lay of the land and can either rent or 'flip' the houses at attractive terms for today’s market.

Herb Strather
“The Master”

About Herb Strather.

Herbert (Herb) J. Strather, author of Getting Rich Is Easy and How to Survive and Thrive in a Recession, is a real estate expert who has purchased, brokered and developed more than 3 million square feet of real estate in Detroit, totaling more than $2 billion in real estate deals. A few of Strather's developments include Woodbridge Estates, a 46 acre, $100 million mixed use residential community, and the elegantly appointed, Hotel St. Regis in Detroit. Strather is one of the originators of the casino industry in Detroit and is the former Chairman of Atwater Entertainment which developed and sold Motor City Casino at an 1100% return to investors.

A philanthropist and member of several boards and organizations, Herb Strather is on the international board of Optimist International, an association of more than 3,000 Optimist Clubs worldwide dedicated to “Bringing out the Best in Kids”. Strather is a lecturer at the Summer Leadership Institute at Harvard Divinity School in Boston Massachusetts where he teaches Faith and Finance and is also a regular lecturer at the University of Michigan's Stephen Ross School of Business. Strather has also taught more than 2,000 students at Marygrove College and Wayne County Community College in Detroit. Strather is currently focusing his attention on helping students, homeowners and investors to 'survive and thrive' during the current real estate and financial crisis through his articles, books, CD’s DVD’s, seminars commercial tours and lecturers. Herb Strather is the proprietor of the Strather Academy which the fundamentals of locating, underwriting, structuring, acquiring, developing, managing, trading, and selling real estate, especially in urban areas. (www.stratheracademy.com). His firm Strather & Associates is located at 300 River Place Suite 6600, Detroit, Michigan 48207 313.446.6900.

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Everything you need to know from negotiating debt relief to making money on real estate acquisitions today!

The Great Metamorphosis of 2009

In 1969 at the age of 18, I purchased my first house for my mom through FHA. Because I was a minor, my mom was my guardian. My second real estate deal was a two-family flat for which I borrowed $2,500 from a bank for the down payment. I was able to assume a $10,000 mortgage, put $1,000 down and put the remaining $1,500 in my pocket. I was hooked on leveraging real estate.

Ten years later, I had acquired more than $25 million in real estate without investing any of my own money with all of the deals 100% leveraged. Then came the great recession of 1980. Interest rates went from 8% to 20% almost overnight. I was in big-time trouble. I farmed out my property management operations and decided to concentrate on troubled real estate deals. Within two years, I had closed more than $125 million in complicated transactions with big players like E.F. Hutton/Related, Bank of America, American INVESCO and Continental Bank. I made a few million and got back in the acquisition business. One of my sweetest deals was in 1982, a 453-unit condo conversion in Michigan. The conversion was appraised as apartments for $30 million but $43 million was owed on it. It had 150 vacancies and only 34 of the units were sold. I sold the development in one week for $45 million. All the local developers wanted to know how I did it. Because of this deal, I began speaking at professional association meetings and soon became well known in the real estate business.

Over the next 20 years, I bought, sold, traded and developed more than $2 billion in real estate deals and was inspired to write my first book in 2006, “Getting Rich is Easy.” In 2007, I had millions of dollars in my stock portfolio and tens of millions of dollars in equity in real estate developments. Today, like everyone including real estate developers, my stock portfolio has been significantly diminished and the debts on my real estate developments are greater than its current market values. In other words, I owe the banks more money than the projects are worth. I am what is known in the industry as 'upside down,' or at least I appear to be upside down. To some folk this may seem to be a tragedy, but because I have seen this movie before, I know this is a golden opportunity. I made many of my greatest deals during difficult times. Between 2009 and 2012, great profits will be made in real estate, especially in deals that involve adjusting mortgage balances with current real estate valuations and outright purchases of depressed real estate. This book is designed to show you strategies on everything from negotiating lower mortgage balances to making money on real estate, everything to create a substantial estate for yourself--even if you have no money!

You may not be working out a problem on a $10 million mortgage. Your problems (opportunities) may be just trying to lower the mortgage balance and payments on your home. Perhaps you are looking to purchase some real estate at great prices and need to understand the best way to do it. No matter what your objective, many of the underlying strategies are similar. These are incredible strategies that money cannot buy and which are not taught at institutes of higher learning. They come only through experience. Most developers will not share with you how they structure or restructure their deals. I am a developer, author and teacher, and very excited about teaching young developers (no matter what age) the real estate game so that our communities can be improved.

Ironically, it was exactly 80 years ago that the Great Depression started. The cause was pretty much what we have today, rampant appreciation of assets and a mountain of debt. In 1929 it was the stock market; and in 2009 it is the housing market. The results are the same–difficult financial times. The good news is that the greatest wealth in the world was created during these turbulent financial periods and over the next few years, the market is set to become a replay of gigantic financial gains. Many of you might say you need money to make money which is true to a degree. However, you also need good deals to make money. If you find the deals and the investors with money, guess what, everybody wins! This book will show you how to do both.

What’s happening now is like a great metamorphosis, a once-in-a-lifetime chance for great wealth accumulation by shedding debt and accumulating deals for pennies. The best of both worlds is to shed the debt and keep the asset(s), just like General Motors and other firms. You might say this is a 'reshuffling of the deck.' Everyone is impacted in some manner, you have no choice. Whether it is your retirement account, the equity in your home or a job, you are or will be impacted. If you are without a job and have limited resources, or if your real estate is upside down, you can actually use your weak situation to strengthen your negotiations. The world is upside down and you can turn a negative into a positive provided you are equipped with the right negotiating skills and you know the lay-of-the-land. Assets that you accumulate now will double and quadruple in the near future. My book is your guide to winning. It gives you the answers you have been looking for and some you may not have thought of. The question is, do you plan to benefit in this economic tsunami and if so, how?

To my readers, colleagues, partners, children, godchildren, students and friends, when you read my book, please sit down and buckle up as you may never read another book like this. I am giving you the best and I expect you to win with it.

One last thought. In times like these you've 'gotta’ believe in you. No matter how tough it is, you can see it through. You have the next 12-24 months to get it right and the rest of your life to enjoy it. Check book out http://www.herbstrather.com

Herb Strather