All Forum Posts by: James Miernicki

Zach - here is how the $19,000 of annual expenses and capex reserve breaks down:

-3,000 vacancy

-1,500 maint.

- 2,000 capex reserve

- 2,000 natural gas

- 4,500 common electric, water, sewer, trash

-1,500 insurance

-4,500 taxes and rental license 

Brent - good small multi-families go for $100 per square foot or a 1% rent to value ratio. I would not consider this property quite up to that standard because of 1) condition and 2) non-traditional floor plan. I am looking at buying this for about $220k. I think it is a good deal for the area but not a great deal. Great deals are extremely hard to come by for the time being.

I am looking at buying an off market 4-Plex in a B neighborhood in South Minneapolis and in B condition. I am torn on valuation and am looking for input. I have idle cash and I have a HELOC on my home with nothing out on it. The 4plex in question was marketed on Craigslist. The owner is an old school guy who strikes me as honest. He says he wants to free up cash for another investment and says he did not want to post on the MLS because he does not want to pay realtor fees.

This area of Minneapolis is fairly popular for owner occupant multi-families. We did it for 2 years in a duplex one block over from this 4plex. The 3br in this 4plex would need $10-20k of work to become really attractive to an owner occupant in my opinion. Good quality small multi-families sell for about $100 per square foot in this area.

More info on the 4plex: 4000 finished square feet. 1 furnace; high efficiency forced air (natural gas). 1 extra large hot water heater. Tenants pay their own electric. Common electric paid by landlord. Water, sewer, and trash paid by landlord. Flooring is a mix of tile, hardwood, and carpet. 2 car garage with no electric. The building is serviceable as is but could use $10k of fixes to bring up to a better standard. I would keep the property as a long term hold. 

Unit 1: 3br/1.25ba, $1250 rent

Unit 2: 1br/Studio (Bedroom, Bathroom, Kitchen); $600 rent

Unit 3: 1br/Studio (Bedroom, Bathroom, Kitchen); $540 rent

Unit 4; 1br; vacant and advertised for $695

Gross Annual Rent before Vacancy: $38,000

Annual Expenses + Vacancy: -$19,000

Net Operating Income: $19,000

My estimate of expenses + CAPEX reserves and the 50% Rule both agree at about $19k per year.

Fire your opinions at me on what you would pay for this property!

If I forgot to provide any info please ask. 

I recently signed up new tenants on a 12-month lease, starting in June, for the upper level unit of a duplex I own.

The lease signing at a local coffee shop was the first time I had met the tenants. My wife had met them twice (during an initial showing then follow up showing of the unit). I wasn’t available because of business travel once and demands at other property the other time.

During the signing they brought up that my wife mentioned that if they were to perform some snow shoveling duties they may be able to receive a break on rent. My response was that I had always planned to include in their lease the shoveling of the sidewalk in front of the building after a snowfall. (The city mandates that the walkway is shoveled within 24hrs of snowfall). I noted that this is typical of leases on duplexes in this area as the owner is not always able to get to the building within 24hrs to shovel since, being 2-unit buildings, duplexes do not have a caretaker like an apartment building. FYI – I am still responsible for shoveling other areas and also mowing the lawn.

They were understanding and agreed to accept the front walk responsibility without any adjustment to the rent. We then signed the lease and both parties left with signed copies.

The next day they sent an email saying they were disappointed they didn’t get any break in rent and asked for an adjustment of $10 less per month (they signed the lease at the rate of $1010/mo + utilities).

What should I do? If I say no, that we need to follow the lease and I don’t want to go to the hassle of signing another one and giving them a break I feel like they will feel resentment for me every time they pick up a snow shovel. This could lead to some negative long term consequences.

If I say yes I feel like I’m just giving away money for no good reason after the deal has already been done and contract signed.

Thoughts?

Appreciate the help, especially if you have gone through a similar experience!

The property was sold to another cash buyer for $150,000. It has been pulled on and off the market and the property just closed.

Unbelevable price for a property in the hood.

I've met Derek in person and he is a solid guy. Excited about taking new projects on now that he has finished rehabbing the short sale he and his wife purchased.

I encourage you to network with him if you are a local investor!

Greetings @Derek Paige .I live in the Twin Cities as well. Based on your post and your profile it looks like you are looking to flip a couple properties first then get into a buy & hold later on. As you probably know, in this area the market for single family and multifamily has turned hot, just as in most other major metropolitan areas. St. Paul seems to be slightly less competitive than in Minneapolis (where I’m at).

For your first flip you are going to want a good margin of safety. Given the hot market I wouldn’t count on being able to find an acceptable deal on the MLS. I would suggest using a combination of the MLS and marketing strategies such as yellow letters to increase your odds of finding an acceptable deal. Even if a good deal never comes through on the MLS it will still provide a sense of the marketplace. Be sure to read some BP posts on yellow letters on other marketing techniques.

Starting out you might consider wholesaling a property as opposed to flipping one since wholesaling involves much less risk. In my real estate life I focus on finding buy & hold properties and am thus not an expert on flipping or wholesaling. However, the material here on Bigger Pockets can provide you with quite a bit of education on each of the two.

Do you have a realtor yet who you can leverage for MLS access? I know a good one who works with investors, is an investor, and is highly knowledgeable of Twin Cities neighborhoods.

If you would ever like to get together for coffee to discuss this market more just let me know.

Cheers,

James

Hi @Kabir B. - The only significant thing I did was clean up one room in the basement of the duplex that was being used for nothing but storage. I did some serious cleaning and wall/ceiling prep then borrowed a professional paint sprayer from a friend of mine and went nuts spraying the entire room ivory white! I advertised it as a private "artist's studio" to be included with the lease. For most of the people I showed the apartment to it was a significant feature. Most random 2BR units out there are not going to have a private workshop included.

Hi @Peter T. - I'm in Minneapolis, MN. The rental market is very hot, as is the market for purchasing real estate. Forget about finding any good deals on the MLS right now. I have a friend with rentals here who is offloading 2 properties right now even through they cash flow simply because people are willing to pay so much for them.

Hi @Jon Klaus - Thanks for the comment. The only reason the increase was so drastic is my previous tenants were paying rent somewhat below market. Shame on me for not increasing their rent as the rental market heated up. They were here when I purchased the duplex and have always been great tenants and I have not had to spend a dime on their unit over the past 18 months. Even still, I cheated myself a little bit by never bumping their rent.

Thank you all for taking a look at my post!

If any of you have experience with Living Trusts or Transfer Upon Death Deeds (TODDs) I would love it if you went over and took a look at my recent post on the subject...

http://www.biggerpockets.com/forums/51/topics/99342-good-use-of-a-living-trust?page=1#p625027

@Joshua Dorkin & @Brandon Turner - Thanks for the comments. You guys are kicking butt with the podcast...keep it up! And YES, I have left you a 5-star review on iTunes with a written comment also before you ask;)

@Ellis San Jose could you clarify - did you intend your first paragraph to be one single sentence? "If the title of the property is held in a trust I have a successor trustee already named so that there is no need to record a new deed."

Even if this is your statement I'm still a bit confused. Could you walk through the process you follow with your properties to help me better understand?

Hello BP Nation - I have a question about the use of a living trust from the perspective of a buy & hold investor. I am looking into setting up a living trust with an attached pour-over will for the purpose of avoiding or streamlining the probate process in the case of my unexpected death.

Props to @Joshua Dorkin , @Brandon Turner, and @Neal Frankle for BP Podcast 005: Dealing with Death. I have looked into living trusts in the past but this podcast has re-energized me.

My question concerns a property solely in my name that I plan to refinance within the next 18 months. Is it best to write that into the pour-over will then move it into the trust after refinancing is complete?

Other items of value would be placed in the trust right away: property that has financing squared away, brokerage accounts, savings accounts, and possibly vehicles.

401ks and IRAs would not as they have their own procedures for naming beneficiaries.

Another option would be to utilize TODDs (Transfer on Death Deeds) for all properties:

“A TODD is comparable to the use of pay-on-death or transfer-on-death accounts at banks or with brokerage houses in that a TODD allows the owner of real property to designate a beneficiary of the property, and, upon the death of the owner, the property passes to the beneficiary as non-probate property, without the disadvantages of using a joint tenancy or life estate deed.”

So…I guess I have two questions:

1) Is naming a property in a pour-over will then placing it in a living trust once financing is squared away the “right way” to do it?

2) Does anyone have experience with using TODDs for real property either positive or negative?

Thanks for taking a look at my post!

Happy investing,

I have a small win to report – a 21% rent increase I recently achieved in one of my duplex units.

It started by me posting the vacancy on craigslist at 12% above what my current tenants pay.

Long story short, a flurry of interest eventually turned into a bidding war among several prospective tenants who came by for showings and also met my qualifications. I’m happy with the pair of girls who won out and have my deposit money in hand!

Thank you Brandon Turner for Tenant Screening: The Ultimate Guide. I used SmartMove for final screening and was very happy with it. I also picked up a couple other good nuggets from the guide.

The rent increase isn't big in the scheme of things, but I'm happy to have this unexpected boost to my NOI for the property. In addition, this will give me 0% vacancy for the year as long as current leases are honored

Happy investing,