All Forum Posts by: David Barnett

Boston landlords might be in big trouble if the universities don't open up in the Fall.  Just think about all of the apartments and multifamilies that are around the universities.  Brighton, Cambridge, Allston, and other parts of Boston might all have big vacancies if the schools don't open up in the Fall.  It could get very interesting, and it might impact the value.  Landlords that are not well capitalized might have a real problem as we go into the summer.  Very interesting to see if other schools follow BU's lead.

I would personally take your higher than average income (since LA is a high cost of living area) and plop it into a more reasonably cost area.  For example, I'm from the Boston area and use my income (that is higher here due to the cost of living, etc.) and purchase properties in the Twin Cities where prices are a bit more reasonable.  

I would get the savings rate up and then start identifying markets that are more reasonably priced.  Good luck!

To be blunt, you're not going to be able to cash flow on Summit Ave in Saint Paul (especially a property on the MLS) on long term rentals. I believe on Summit, a lot of operators rent out by the room due to the local universities and the demand for student housing. I personally do not like the economics of Summit Ave...

@Nick B. The 1% rule is not really applicable in the Twin Cities, especially in multifamily.  If you're lucky at this point, you'd be at .9% price to rent ratio.  

My rental portfolio is my side gig!

I would say this, sure we don't want to improve it to marble in the hood like @Aaron K. mentioned.  If the property shows well and is not over the top, a well showing property actually gives you more options in who will want to rent the property.  In other words, you'll have a fair share of applicants and can pick the very best.  With proper screening and a diverse pool of applicants, you'll likely have the ability to pick the very best that won't tear up the property.

My educated guess is that this won't be covered by insurance.  My interpretation of loss of use is that if the property is inhabitable, which is not the case with COVID-19.  I would talk to your insurance agent about this before filing a claim.  A good insurance agent would be able to talk to corporate about this without filing a claim, or talk to the insurer (if it is an independent insurance agent).  As @John Underwood mentioned, if you are claim happy, you'll either get dropped by the insurer or they will jack your rate for the foreseeable future, as you are a risk for claims.  

I will preface my response with this, I've never used hard money on any of my investments.  However, I did loan a small amount to an investor in the Boston area and was only able to get paid back (in full, less legal fees) after engaging counsel.  It was quite a learning experience, and would do things very different if I decide to do it again.

The main reason why I wanted to respond to this thread is that given everything that's going on, I'd be very careful in using private/hard money right now.  Lending might tighten up (especially commercial/portfolio loans, i.e. if you are buying the properties in an entity), and might need to sell it at a loss if you can't refinance the hard money loan after rehab and tenanting.  Good luck!

How does the budget of the association look? How much is in their bank accounts (operating and reserves)? How often have they special assessed units over the past say 5-10 years? How old are the major systems (roof, furnance, water heaters, boilers, etc.)? How big is the complex? Numbers are a bit slim, and might work if the HOA is in a strong financial position. Otherwise, you're going to lose money on special assessments.

The first thing that I should mention is that I don't invest turnkey out of state.  However, I do invest out of state, and wanted to mention a few things that I've found helpful to avoid biggish mistakes.

(1) Always look at the numbers.  Even after a purchase, you should be getting statements on a monthly (ideally) not less than quarterly basis.  Review the reports when they come out, and question anything that looks out of place.

(2) I like to be more hands-on in bigger capital projects.  I've flown into the market that I invest in to be actively involved in the bidding process for capital projects.  Otherwise, you might not get the best deal, or the best contractor for the job.  On one job in particular, I met the contractors and handled the bidding process directly.  It also made quite an impression with the tenants, as they knew that I was out of state and made a trip in specifically to deal with the major issue.

(3) Ask for pictures of repairs being done, especially early on in the relationship.  It provides a level of accountability, and provides a bit of security to ensure you're paying for repairs that were done.  Otherwise, tenants might think you aren't addressing any maintenance issues and can lead to higher turnover.

@Amber Gonion I was wondering what you're seeing in the Twin Cities with STR's, and if they are being transitioned over to LTR's? I know that pre-COVID19, inventory for solid rental units were in short supply. It's likely that recent buyers on properties that they were using for STR's are going to be taking a bath (bought with underwriting for STR rents and not LTR rents). Curious your perspective and thoughts on if those STR's that don't cash flow as LTR will be hitting the market for sale?