All Forum Posts by: Collin Lee Johnson

Hey everyone!

So I've gone through, and taken notes on Brandon Turners, 'The Book on Managing Rental Properties', which is phenomenally helpful to get a lot of groundwork, and structure towards building a business for real estate, tons of info, forms, links, and general best practices, I love it, this post isn't just to gush about that however. My Question is this; What forms and packets do you use when going through and getting a property rented out to a tenant.

I've heard of a welcome packet, seen utility explanations, and read about the checklists for move in, out, condition, etc., but I want to know what you are using, and why, and what advice you would have for a newb going through and setting up their systems before they buy (obviously some advice may be 'don't put the cart before the horse', I get it, but say you could start where I'm at, what do you wish you had implemented early on)?

Thanks for the advice!

@Ryan DiCanio, I think your numbers for repair and Capex are good, but ultimately they are a little under conservative for me, I typically run my Vacancy at 8% to account for about a month absence, worst case scenario. Repairs I do 10% and Capex I also do 10%, it ultimately boils down to the risk levels that you are comfortable with. For instance I am a little bit more fickle with my finances and as a result I sleep more soundly at night knowing that there is a bigger cushion to protect me, but if you have a nicer property with newer appliances I would say that maybe you don't need to budget quite so much for repairs or capex, but again it's your comfort level. Overall I would say 10% is good just because it is such an extreme that it's a good ceiling value to use on a property, and it's nice because on the flip side many properties won't really be needing repairs or small maintenance that often so you could still run that and then have a nice budget put away to deal with those things so it's like you have just given yourself free money in some sense after you have dealt with minor issues by taking from such a large reserve.

Ultimately what makes numbers 'good' is very subjective but you should budget and plan for what you're comfortable with, even when you're house hacking your vacancy may not be 4% just because you are renting out half the place, it may well be 8% heck it could be 16% but you should try to plan to get an average that is reflective of the year in a bad year just to be very safe. But again, I am fickle with my finances haha. 

@ Ryan DiCanio A D class property truly varies based on where you live, your market, and a litany of other factors but it mostly boils down to the idea of grades like in school. You have A, B, C, D and F. An 'A' property is one that is in either a nicer, or a newer neighborhood, probably near a nice school, has clean roads, and nice amenities that serve the public nearby. For instance if you were to look say in Iowa, specifically in Altoona Iowa, if you were to look in the south eastern region of that town, that's where all the newer construction, or relatively new construction is, the people are nice enough they have stable jobs and the lawns look nice and manicured. However those criteria of what define an A in Altoona will vary from what defines an A in say... Tallahassee, or New York City.

B class generally going to be the set of suburbs or properties that came before the A, might be a bit lower income, may or may not be smaller lot sizes, but either way they are generally older properties with a slightly lower income bracket, and this trend will continue on down to C, and D. So to answer your question and applying it to Iowa, D class properties may be ones that are 'on the wrong side of the tracks' so to speak, there may be more obvious flaws that are immediate upon seeing the property such as drive way issues, roofing issues or potentially some sort of water damage. Whatever the case may be, a D class property is not always in the best of shape and may or may not be in a tougher part of town more often than not.

Hope this helps!

@J.R. Crowell, I appreciate the insight, but the object of this post is that it is open ended, I am trying to spark conversation about how you or someone else would consider using this property to get the numbers to work. Not trying to buy, or do anything with this property, I simply choose a property of my county assessors site that fits my criteria for a dwelling while I house hack, and analyze it.

The reason this got posted in particular was because with the market being a little hot right now due to rates being so low this house seems just a bit pricey for me, and I was curious how others would maybe leverage these numbers, or this property into something that actually makes sense. Thanks for the advice though, I also thought to lower the price as that would dramatically help.

Alright so doing the daily deal analysis and found this property, 230 Belle ave randomly on the tax assessors site, and was playing around with it, it seems like a nearly impossible place to pull off in my circumstances, so I am curious, how would you guys make this work, and I am curious under what outcomes do you define 'work'. For me, this place doesn't even want to break even, or go positive so I would love to hear how anyone makes a profit on this place, this isn't for sale, just hypothetical and practice analysis

Here as owner occupancy

here as non owner occupancy

my general analysis is the following:

House Number / Address: 230 Belle Ave Mankato MN 56001

Description: a nice little single family that doesn't need much work in the fringe of the suburbs of mankato

How are the numbers run:

• How much down 3%
• Interest 3.076%
• PMI? $90/mo
• Taxes, High, low, etc: Overall relatively low for the city, I believe I ran them at 1800 a year, which is assuming a small increase, maybe a bit too small given the relative annual upticks over the past years. In general though not as expensive as downtown
• What makes it work, (not) feasible: So as a househack, the only way this makes sense (lowering my rental outflow) is if I don't budget for repairs, vacancy, maintenance, or property management, which saves me roughly 323 a month, which puts me at a loss of 500 a month, which is an awful thing to not account for so I would prefer not to have that be the only way this property works out. When running at non owner occupancy with the same down, interest, and PMI, taxes (expenses) This baby has to be pumping at $1980 a month in income, which no it would never ever do, the neighbor just doesn't support it. So it's safe to say that in this market with my circumstances this particular property just doesn't cut it for me

Location: Southern Middle of Mankato off of Madison tucked away on a side street before victory

Marks in its’ favor It’s a nice house outside of the immediate downtown / heart of Mankato area, which makes it great for avoiding noise and other people in general, central air, appliances, it’s had some improvements done to it fairly recently which makes it a nicer place, newer furnace, AC, roof, windows, I mean it’s really been fixed up and I imagine it won’t have much work at all if any needed to it. Basement could potentially see an increase in use if it were furnished which could be good for using as an additional room, but it may be better served as storage

Marks against it Well this isn’t necessarily bad but it’s a bit disadvantageous, but it’s not a duplex in the sense that it has split up units, it’s all one big house which is fine, but it makes it a bit tricky when parcing out utilities and other time with appliances such as the washer and dryer, dishwasher, bathroom space. The bathroom are also not two full, there is a ¾ and a ½ and a full, so there’s only one shower.

• Potential repairs
• 1 nothing really foreseeable
• 2
• 3

Thoughts: This is a great property that is in really really really good condition, but with Mankato and everything in general how it is now the price that I would likely get something like this at, coupled with the rent that I could get for it just don’t make sense to do right now.

So yeah, if you want to look this over, check out the Mankato MN Realtor or any of those other MLS portals and look at it yourself, I'm thinking rent out two of the bedrooms probably to a couple, probably not month to month, maybe fix the basement up to make it livable and try to air bnb, there is a lot that could happen, but regardless of what I think I am curious what some of you more creative real estate folks might try to do. Again this is a purely hypothetical property as they all have been if you keep track of anything I do, so please let me know, thanks gang!

Hey guys, day three of whatever this is, once again I recognize most of you aren't from my area, but any eyes or ears on this would be appreciated, and you never know where things like this will lead you. At any rate, in the usual form:

Here is number one, the owner occupany

And here is number two, post occupancy

House Number / Address: 423 Byron Street

Description: Absolutely stunning property that is in that nook of the sorority and fraternity housing market of MSU with plenty of rooms and a fully finished basement.

How are the numbers run:

• How much down 3%
• Interest 3.076%
• PMI? $90/mo
• Taxes, High, low, etc: low for the city, seemingly average for the area overall, I ran them at 1650 a year, a slight step up from 1600 of 2020, and historically they are at highs based on these trends
• What makes it work, (not) feasible: honestly as a house hack, it is something that makes sense, not a lot of bathroom stuff, but the numbers are great for owner occupancy, it doesn’t actually cash flow as non owner occupancy, and in this current market for a newb the leverage just isn’t there for me yet, so for me a partner would make this work to shoulder the burden and eventually turn this into a better place, and potentially get more rent out of it.

Location: MSU Sorority / fraternity areas

Marks in its’ favor tons of work done to it, furnace, a/c, roof, misc and windows. So there is a lot that wouldn’t need done, plenty of rooms to either do rent by the room, air bnb, steady tenants, etc, lot of options but with that comes a lot of headaches. And overall it’s a cute little house, nice appliances, good walls, it’s nice

Marks against it a bit small, a ton of rooms which gives a ton to think about and screen and manage, but that is rife with opportunity so maybe scary is a better way to say that than bad.

• Potential repairs
• 1 none, I mean whatever misc housework comes up but honestly none that I can SEE key word, SEE as this is purely speculative based off internet pics and documentation
• 2
• 3

Thoughts: it’s a gorgeous house in a great area that would more than likely get rented out fairly quickly, that said with those quick rentals you never know who you are going to get, and this house is clearly not for many people kind of coalescing, it would be pretty tight, and a little weird having numerous people living in that place, but it could work. More than likely a nice regular couple or something to take on some space and air bnb out some of the rest. Overall it helps my bottom line and it’s possible to get more out of it I feel, but I like to run lean.

I think that I am being a bit light with the rental numbers for post occupancy, but then again with vacancy built into that as I feel it would be harder to get a lot of tenants to fill those beds, and any potential incurred damage based on the audience's age, these numbers seem balanced to me. Looking forward to hearing back, thanks as always community!

Hello bigger pockets community, as implicit in any title that says 'First of many' there will be a second, and third, and fourth, etc, etc. So, here I am, day two, with a property pulled from my county property comp search list that was pulled on a whim, this isn't for sale, but that doesn't interfere with a good practice, so...

Here is a link for typical owner occupancy

And of course, by popular demand the link for non owner occupancy

House Number / Address: 231 Bradley St, Mankato MN

Description: A well kept nice little property in the south part of Kato off Lincoln park, close to the fraternity and sorority houses, sadly it’s only listed for residential housing and thus isn’t rental licensed out just yet. But it’s in a great area to do that

How are the numbers run:

• How much down 3%
• Interest 3.076%
• PMI? $90/mo
• Taxes, High, low, etc: low overall for the town, and in the market it seems that they are low for this neighborhood, they also haven’t been steadily going up as is often a theme with more central downtown kato by Washington park
• What makes it work, (not) feasible: It’s honestly a pretty darn good little property as it is, and in terms of rent replacement this is miraculously lower, than most others that I see. This place actually almost cash flows, and does in fact cashflow based on non owner occupancy for a rental of 1750, which given the location, and condition of the place is maybe a bit off base.

Location: By the frats and sorotities of MSU by Lincoln park

Marks in its’ favor great area for college rentals with a lot of walkability still to other areas for potential tenants. Hookups and space for appliances like a washer and drier. Newer kitchen, walls and floors look to be well taken care of, nice garage area or at the very least a drive way to work out of / park in. Spacious kitchen and living room, recently redone siding with a nice outdoor porch

Marks against it everything I just said because I am an adult and like peace and quiet. , ¾” bath is definitely a strike against it, I know 0 people who bathe, not an actual duplex, so some people may be annoyed by having to share a fridge, appliances, etc, living space in general.

• Potential repairs
• 1 General housework and maintenance, very hard to gauge from photos alone but the home appears to be in wonderful condition, there may be heat loss from the fireplace going on, the bathtub upstairs may be lending itself to some leaking and therefore flooring issues / water issues
• 2
• 3

Thoughts: This is a wonderful home that I wouldn’t mind picking up if it weren’t already sold and off market. Great first place to stay and get some experience in and would more than likely attract a lot of tenants given its proximity to a lot of the Mankato college region, it has everything I am looking for in a house honestly, I wish I could get better eyes on it given how nicely it helps me out to even start with, and considering how nice of a condition it is in to boot.

Thanks in advance for any feedback you kind people have to shell out, looking forward to hearing from everyone! Have a great day!

@Dillon Dale thank you for the advice, helpful and to the point, one small thing: five unrelated, two unrelated. What do you mean by That? Does this have to do with 5 unrelated occupants? Maybe it seems trivial but I just wanted to ask, thanks for the reply!

@Tyler Stindtman yeah absolutely so the utilities are populated because I am trying to get a good picture of a house hack while I'm living there, so I am building in my expenses for half of the duplex and overall throughout the year I felt those number were good averages, if not a bit over conservative. Which brings me to your second point, i keep those expenses high because I don't know when something will strike that's bad, no one does, and just want to make sure that I have enough built up to tackle any issues as they happen. To your point they are high, and could be mitigated by doing due diligence and finding a place in good shape, but I felt like these were nice ceiling numbers.

Hey everyone, I have been doing deal analyses with the help of BP for a little bit now, always saving the reports, tweaking and researching and messing with them to see what seems reasonable, but it dawned on me that as much as this is useful for me, it is also a detriment to not be sharing this and learning from people both in my area and from the community. As a result, I have decided to begin posting the analyses that I do on a daily basis get feedback from the community to better my understanding and expedite my growth, and who knows maybe make a friend or two on the way. So one shameless plug, if you are in the Minnesota area, southern, around the twin cities, or more specifically near mankato, check out the Mankato MN Area REI meetup group on facebook to meet more of the great people in Mankato MN. Anyway enough of that....

Here's the link, to give 'er a gander

House Number / Address: 265 Weaver Street, Mankato MN 56001

Description: 265 Weaver St, Mankato, MN 56001 is a single family home built in 1906. This property was last sold for $40,000 in 1998 and currently has an estimated value of $185,000.

According to the Mankato public records, the property at 265 Weaver St, Mankato, MN 56001 has approximately 1,667 square feet, 3 beds and 1 bath with a lot size of 7,314 square feet. Nearby schools include Rosa Parks Elementary School, Mankato East Jr. School and Mankato East Senior High School.

How are the numbers run:

• How much down 3%
• Interest 3.076%
• PMI? $90/month
• Taxes, High, low, etc: $1,800/ yr
• What makes it work, (not) feasible:

Location: South of the heart of Mankato, more suburban sprawl, tucked in that area off the university, I honestly have never been by it as far as I know. I think it’s on top of the hill in that region.

Marks in its’ favor, New siding, 2011. More quiet area, lower taxes, not too far away from a university (it’s a college town for goodness sake)

Marks against it bit removed from the nightlife scene of Mankato, but as has been mentioned in my previous posts this isn’t necessarily a bad thing, it just affects some of the market that has a large influence on this town. Can’t really see inside so that slows down things and makes it harder to judge, but looking at the outside that AC likely needs a face lift, which leads me to believe there are other minor things inside wrong with it

• Potential repairs
• 1 AC
• 2 other minor things, potentially cleaning the exterior based off pics
• 3

Thoughts: I like the place, and it actually doesn’t cashflow super duper uber negative in terms of lowering my rent. Granted it isn’t as good as or -5 but I haven’t found those places yet, and may need to refine my analysis, which is why I post these ha, but I digress Overall it’s in a great neighborhood which works to its favor and detriment and the property is nicely placed within that neighborhood to attract likely quite tenants.

Obviously most, if not all of you won't be from Mankato, or potentially Minnesota, but if you have the time to spare to give me some feedback, I am all ears and open arms. Looking forward to the chats, thanks everyone!