All Forum Posts by: Daniel Kurkowski

I'll weigh in with another agent's perspective on this.

The first thing is that I think you should cut this person based on their unprofessionalism when chastising you and providing you with poor information.

That said he does have a point.  It is very common for new investors to think that market conditions are static and similar to what they have seen in the past.  For example if you have seen on TV or had a family member get a large discount on a property you may assume that this is something that is always possible.

In reality this year homes in my area have been selling for 99.5% of list price and have been selling extremely quickly.  The price of multifamily has gone up ~20% in some places during the last year here.  If you wanted to offer on 5 homes at 90% of the asking price, I wouldn't be OK with it either.

The distinction between your agent and myself is I would have taken the time up front to thoroughly educate you about the market, shown you some data to support it and agreed on a strategy together before we looked at any properties.  A new investor is often an frustrating client for agents, but I think that is their own fault for not providing the context the investor needs at the beginning.

To be honest, I would have moved on from the property at "really bad shape".  In my experience with residential, the more work that is needed beyond cosmetic the lower the profit at the end, which when coupled with the time required, ends up being a much worse hourly return on your time and money.

With the added difficulty of the heirs not being in communication with each other and the rest of the hair on the deal, I would move on.

When you first get started, I think most people don't respect the value of their time enough and haven't seen how high a percentage of deals apart.  I think you would be much better served trying to find another property unless you're going to make a million bucks here.

Reverse mortgages have some pretty strict regulations that will be complicated for the average person to understand (like the heirs) so there is a lot going against you.  There are also requirements for what the home can be sold for providing the heirs don't have the capital to pay off the balance so your discount may not exist.

Live to fight another day.

It's such a complicated issue when you look at socioeconomic factors associated with the proposal.  One the one hand the cities will of course prefer the ability to generate additional tax revenue by imposing higher fees and lodging tax to those operating their properties to this capacity.  On the other hand this taxation creates inefficiencies in the economic ecosystem that is affecting many middle class people's ability to generate additional income, which is local and would be taxed anyway.

The hotel lobbyists and smaller traditional bed and breakfast owners are of course opposed to the democratization of the hospitality business and they do have a valid point that if these vacation rentals don't have the same costs associated with them, they will have a very hard time competing due the one-sidedness of the inherent inefficiencies any sort of taxation creates in a market.

That said, hotel lobbyists are representing the interests of hotels much the same way lobbyists for the taxi industry are rallying against Lyft and Uber.  It is a pointless battle against their own obsolescence.  The existence of and profitability of these companies is enough to prove there is plenty of demand for these platforms.

The main difference with Amazon is that it appears to be much more centralized than Air BNB and ride-sharing platforms which incentivized them to build up their own force of lobbyists to represent their interests in Washington.  It may be wise to get out ahead of this and form advocacy groups etc. because the hotels are spending so much money to bury this thing and it would seem no one is fighting back.

A specific issue with getting support in Minneapolis and St. Paul, is that they tend to cater so heavily to the lower rungs of the economic ladder.  Many of these people don't own real estate and therefore cannot readily benefit from the additional income stream Air BNB creates.  From the perspective of the proletariat, any increased tax revenue can only serve to aid them so they will have a tendency to support more regulation without a sophisticated understanding of the true deadweight loss this will create from ordinary taxation etc.

I think I want to write an article about this and try and get it out there in the Twin Cities.  Does anyone have any contacts?  I think this needs to be addressed.

In my opinion the value of a mobile home park for an investor is the high monthly amount you can charge residents for using the land/utilities.  This is something that a buyer/tenant can afford in their monthly payment due to the low cost of a trailer ($40k) seems pretty typical out here for a double wide of roughly 1600 square feet.  

I would be curious to see what a more expensive and more permanent home does for the ability to lease that land back to occupants.

Would you be building the tiny homes and selling them or keeping them as a rental?

In my market I thought the code (and for FHA) was that if it was cracked it needed to be replaced, but otherwise it is fine. I have since helped clients acquire multiple properties with an FHA loan that had broken shakes and had multiple rental inspections with whole and broken shakes and had no issues. You'll likely want to consult the regulations at your municipality.

@Andy O'Neal as a landlord I love the idea and would let you do our entire portfolio of $12mm and offer it to all of our 3rd party portfolio which is ten times larger.  A good master lease agreement would be a win win.

If you want to come to Minneapolis, I'll get you the properties. ;)

 Thanks for the shout out @David Barnett!  When putting a team together I think it is best to meet with different people and see who you fit best with.  I personally believe that when you are just starting out, you want to work with someone who will provide you with detailed education about the markets in which you hope to invest and give you some more insight on the differences between what is taught in seminars and where the rubber meets the road.

@todd dexheimer is a great resource as well and very knowledgeable guy.

In Minneapolis/St. Paul I just put together an 11 cap on industrial space with a 5 year NNN guaranteed by a $20mm organization.

I have another building under contract that will end up being around an 18% cap rate if I can get the proper city approvals.  It depends on how creatively you can put the deal together, who you know and what kind of risks and education you are willing to take on.

Echoing what those above me said, that is kind of how it is supposed to work.  An agent will never be able to pour over the list of potential properties for you to find that one nugget simply due to time constraints.  If they have 10 clients, their time will be divided among the ten but yours isn't.

I just locked in a deal for an investor client today.  They found it from the sources I sent to them and I negotiated them a 12% discount off purchase price.  I think I earned my $295 broker admin fee on this one.

If you agent doesn't own or understand investment properties you have another problem on your hands IMO.

Fastest way for someone to start ignoring your emails is to send them the same property as someone else.