New member from Minnesota

[Kyle Kipka]

Hello, my name is Kyle and I'm from the St. Paul area in Minnesota. I have been interested in real estate for several years now (currently 27 years of age) and have been trying to learn as much as possible and gain some experience along the way. My full-time job is working as a design consultant/salesman for a home remodeling company.

About 2 years ago I purchased my first property, a foreclosed condo on St. Paul's east side. This was a cash purchase since I was unable to obtain financing at that time (not enough credit history, 100% commission job, etc). The place was in terrible shape but I managed to complete a full interior remodel while living there with some help from friends, youtube videos and some paid help. It took me about 1 year to do that as I had to complete the work as I could afford to and had the time but I'm now satisfied with the way it turned out. I've learned a lot from that one and and made a couple good connections for future work. 

Late fall of last year I purchased my 2nd property (1970's built, split-level home) in my hometown of Cottage Grove, MN. This was also a foreclosure but was much more expensive then the first so I was able to purchase it with an FHA loan on a 30 yr mortgage.

I now need to decide where I go from here which is the main reason for joining the forum at this time. I'm hoping to gain some additional advice moving forward on what decisions make the most sense for me personally and to figure out the path I want to go (flip the properties, convert into rental(s), etc). 

So far I've really enjoyed learning about the world of real estate investing and I'm looking forward to learning from more experienced investors. 

Thanks

~Kyle      

[Marc Jolicoeur]

@Kyle Kipka I would look at both properties as rentals and do the numbers.   Do they both cashflow at least $300 after ALL expenses, maintenance, and projected vacancy rate?   If you think you can keep them long term (10 years) and cashflow without any major repairs like roofs, furnace, windows, etc.. then keep them long term.   

If keeping, refinance the condo now that you have built up good equity and while rates are low.   Use the cash out money from the refi as downpayment for your next deal or to buy a home to live in.

On the other hand if you feel they will not really cash flow that much, or you don't think you will want to keep them for 10+ years, or if they have big upcoming issues, then I would actually consider selling both of them now.  The markets are very good this year to sell and you may be able to get a premium that you might not be able to get in 2, 3 or 4 years.

If you sell, use the proceeds to buy more distressed property at least 20% of discount to current value minus repair estimate.   Living in one unit of a duplex or quad is a great idea to be able to get in with a low down payment.  These deals are hard to find so you will need to be resourceful.  Networking with wholesalers and multiple RE agents will help.

When running the rental numbers assume 10% for property management fees even if you plan to manage them yourself.  You should cashflow $300 per unit after the PM fee is counted.   If you need help calculating cashflow you can use the tools on BP or I can share with you a spreadsheet that I use.

To estimate rents I use www.rentometer.com median price and the Zillow rental zestimate.  I have found that using these two disparate sources to be very accurate in our market.  Double check this number by looking at active listings on craigslist.

Good luck and let me know how I can help.