All Forum Posts by: Brandon Heimsoth

@David Avetisyan, they are in 63033.  Florissant, MO

Just last month, I purchased 2 single family rentals.  This was my second deal.  My first was in 2016 for a turnkey 4-plex with a property manager in place.  This time, I decided to go the single family home route and will be managing them myself as they are a little closer to home.

This was an off-market deal made through networking. As much as I hate hearing all the networking guidance from Brandon and David (I'm an introvert), you have to listen. Just mentioning that I had a rental to a colleague got me referred to commercial banker. That commercial banker convinced me to try property management. I originally wanted nothing to do with tenants. But, he owned and managed 10 properties himself and made it sound so easy. I started to look on the MLS and auction sites but after a couple months, I received a call from the banker saying he had a deal from a guy that wanted out of the landlord business. He lived about an hour away and had some family medical issues going on.

Where are the properties?  North St. Louis County.  One 3 bedroom 1.5 bath and the other 3 bedroom 2 bath. I used to live in that area and they're 15 minutes away so that makes management a little easier.

We settled on $70k per property. Both properties already had tenants. Rent is $920 and $950. Both tenants are Section 8 and 100% is paid by HUD. Looking at comps, I feel that if I put $10k (doing work myself) in each, they would easily appraise for $100k. There are rehabbed homes going for $120k in the area but I'm being conservative in my estimate as they are on a busier road. If rehabbed and in open market (not Section 8), rent would be $1200-1300. But, I'll probably stick with HUD for now, especially with the Coronavirus going on. The previous owner had not raised rent for 4 years so I will inch that up as their leases expire. During due diligence phase, I found out that landlord filled out HUD paperwork wrong and stated that tenant was paying sewer but he actually was (because it is required to be in owners name). That being said, I should easily be able to fix that during renewal time and get the extra income from HUD.

As far as funding, I stuck with the commercial lender that brought me the deal.  5 year term with 20 year amortization at 4.95%.  I was able to close in 15 days and it was so much easier than a conventional loan.  And, I was able to bulk both of them in the same loan.

I'm still in the honeymoon phase and only one minor maintenance request.  But, I've just delegated that to the same handyman that had been servicing the unit with the previous landlord.  We'll see how this goes!

Awesome and inspiring.  I love these posts with real life examples, specifics, and pictures!

I'm looking at buying a property that is already rented to a Section 8 tenant. In talking with the owner, HUD pays 100% but it sound like he hasn't requested a raise in rents for 4 years. I'm wondering if I can request a raise but I'm not sure I fully understand yet how HUD determines acceptable rent.

I went to https://www.huduser.gov/portal/datasets/fmr.html#2020_query and queried for St. Louis County, MO Fair Market Rent (FMR) of a 3 bedroom. For 2020, the number is $1185. I'm wondering what this FMR number really means. Is it a ballpark figure? A maximum allowed? Market rent for the house I'm looking at is probably $1150 so it's close. But when you talk St. Louis County as a whole, it's a very broad market.

From what I read, it sounds like the FMR includes estimated utilities (gas, electric, water, sewer). The current owner pays water/sewer and tenant pays gas/electric. So, let's say the estimated gas/electric bill is $150. Does that mean I could set rent at $1185-$150 = $1035?

Thanks in advance for any advice you can give.

I'm looking for any recommendations for property managers in the Florissant and Hazelwood areas in north St. Louis county, Missouri.

If you’re talking St. Louis City (not St. Louis county), stay away from north city (north of Delmar is the line) and go from there. There are posts that detail different areas of south city but there are some areas that are different block to block. 

When you're looking at the crime map, make sure you look to see what is around the darker area.  In some instances, you'll find a shopping area that is skewing the results.  I would be less worried about shoplifting and similar crimes.  I thought trulia mapped out the actual crimes (burglary, assault, shoplifting, etc) in an area but it looks like interface changed and I can't remember how I looked at that before.  Not sure if I answered your question but just thought I'd pass that on.  If you give a specific cross-section of St. Louis, I'm sure people on here who are familiar with the area will chime in.

Bridgeton is a nice area. I live in a neighboring city. It is near airport and Boeing (jobs). The only thing I would worry about is the Bridgeton landfill. It contains illegally dumped radioactive waste but they are working on extracting it soon. You can google for location. I’m not too worried about it...otherwise i wouldn’t live where I do. Just make sure you don’t buy something backing up to it. 

You can’t expect to get a loan if all your money comes from the government. Why else would the rest of us work if we could just get everything for nothing?

I hate to read through these Morris Invest reviews because Clayton is the one who convinced me to get into real estate with his podcast. And, I found my way to BiggerPockets through him. I found out about him on a Twit podcast, started listening to his podcasts, and then found his BiggerPockets podcast. I talked with him over the phone when he was still doing that himself. But I was leery of investing out of state on my first house so I never pulled the trigger. I still listen to his podcasts because there still is some good information on there. It’s not as good as the BiggerPockets podcasts but it fills some gaps. But, you can tell they are also learning as they go too.