All Forum Posts by: Daniel Kurkowski

Who are you currently speaking to in the twin cities about this?  You have to be creative in this market to find something that works, but there are tons of deals to be had.  If you are just looking for something from an agent who works with first time homebuyers you will have a hard time to be sure.

I think that you have a specific competitive advantage over casual investors in that you work full time in the field and can create opportunities based on your knowledge disparity vs the general public and should be looking to capitalize on that especially if you don't have millions in the bank.

I took a similar path and it has been extremely beneficial for both facets of my business.  If you'd ever like to discuss, feel free to reach out.

I think one of the important considerations is to assess if the tenant is being purposely fraudulent.  It really looks like that is the case, but having dealt with a lot of a tenants, it is possible to believe that this person may have a very low IQ and almost no education about their situation regarding ownership/tenancy.  (Again almost certainly as described, but we are interpreting over the internet so I am adding this consideration).

If this is as described, I think it may be worth considering pursuing this to the fullest extent of the law both criminally and civilly (civil side with a good attorney on contingency).  We as a community tend to let things go because it "isn't worth the hassle" but this attitude is often responsible for the continuation of this kind of behavior and you would be providing a valuable community service.  Just my two cents.

However you go, I would be mindful of working with a retail agent.  I am amazed at the numbers of deals right now that are cash flow negative that get sold on bad advice.

I typically focus on larger commercial properties, but would be happy to chat with you and see if we'd be a good fit.  It's a pretty tight market so I'd be curious to hear what kind of strategy you're looking to deploy.  I'll send a PM.

@Andrew Johnson I absolutely agree in cases where you are the person being represented, because you are clearly a very sophisticated investor and likely did your homework ahead of time.  However there is a culture that exists within our industry that is predicated on the path of least resistance in order to get a commission from a new investor trying to get into their first property.  This is bad for the public and bad for realtors.

From a game theory perspective we need to disincentive this behavior somehow or do a better job rewarding good behavior in more sophisticated agents who are competently taking on the role of adviser to their clients, beyond the cycle of market corrections over time.  The bad agents dropping out over time isn't necessarily a solution because of how readily they are replaced by another able to get past the low barrier of entry.

I don't like regulation and I would think that there is a private solution to make better recommendations to clients for deciding who to work with.  Hmmmm.

Hello everyone,

As the multifamily values in my market continue their radical ascent I am starting to think more about some of the consequences for real estate agents and their investor clients.

I focus primarily on commercial real estate in MN, but still am still involved in the occasional duplex-quad type deal and have been helping friends who are looking to sell their home and owner occupy a duplex somewhere, which was the impetus for this post.  

Our strategy is simple.  Because they want a place that they would consider "livable" by their standards, we are looking looking for a property in a location of average prestige that is able to remain cash flow neutral when they move out and rent both units.  We are budgeting conservatively on our pro formas, but to their benefit, they will be self managing which saves a considerable amount as a line item.

The reason we are comfortable taking these terms is they will be making a very small down payment (FHA or 5% conv) so we are not overly-worried about having to liquidate the capital in a down market. Our market values are still low enough relative to replacement cost that there is still room to appreciate in terms of both rents and property value on these properties. This is an application of some of the commercial concepts used by large apartment investors, in that it is about controlling a finite supply that is currently priced inefficiently.

When I am looking at the mainstream deal sources (MLS, Zillow) I am consistently finding that properties that are cashflow negative are being fought over in multiple offers. Curious about this, I spoke to a few buyer's agents I know who work in those small multi-families and they told me that this is simply the market.

These agents did not have any idea what their client's long term investment strategy was and were not able to put together any kind of pro forma of substance.  In fact, having sold many multi family properties myself, I was always amazed at the number of buyer's agents who had never asked me for any financials or wanted to know what utilities the tenant/landlord was responsible for.

I think it is our responsibility to be informed and to inform our clients.  If you don't know anything about investment real estate it is a violation of your fiduciary responsibility to represent someone in that arena.  We are tasked with reasonable care and skill and if you are careless providing advice, you are in doing everyone a disservice.

It is also our responsibility to be honest with all of our clients and give them good information about the market even if it isn't in our best interest.  We can't rush clients into bad deals that don't make sense because we want to be sure they close something quickly, instead of closing something that fits their objectives.

Are you guys seeing something similar happening in your part of the country as well?

I did this starting out investing in the Twin Cities and encourage all of my agents to do so as well.  You will likely have a hard time finding something that meets your metrics in our current multifamily climate in MN, but if you find the right people to work with, it is possible!  Good luck!

If someone else wants to improve your property, you should let them.  I think you choose the contractor then get an idea of what the tenants wants and select a few options of flooring for the tenants to choose from.

Win /win for everyone!