All Forum Posts by: David Moore

In Minnesota, we cannot legally discriminate against a tenant who has a felony on their record.  Still, look at the facts.  Solid income, 690 credit rating.  What you didn't mention was his rental history.  That is a major consideration.  Call previous landlords...was there police calls, missed rent payments, parties, complaints, etc.  We rent to felons, especially when their convictions were more than 10 years ago...great tenants.  

Finally, I would avoid Property Management Companies.  Here you are doing the due dilligence that they are supposed to do.   The rental vacancy rate in Decatur is barely over 4%...not a bad number.  We self manage all of our properties...really not tough.  We've never had one PM company that we made a profit with.  

Investment Info:

Single-family residence buy & hold investment.

Purchase price: $61,000
Cash invested: $17,000

This is my steal of the year...got this in a sleepy summer market. 3 bed/2 bath in really nice neighborhood. Seller had started for sale at $89K. House has a couple oddities...upstairs bathroom barely 6 feet 6 inches height. No garage, but off street parking. We are putting about 2K into it, and locked a renter in for 18 months at $1100.00 a month. Just loving this one. My banker was thrilled...they said their appraisal came in at $106K, meaning I have over 50% equity day one. Wow, just wow! We will add central air and new furnace, and electrical panel in 2024 or 2025...so some upgrades needed, none urgent.

What made you interested in investing in this type of deal?

We had been monitoring this property, negoatiating with the seller over a period of weeks.

How did you find this deal and how did you negotiate it?

Our MLS Agent, and on realtor.com. This property had a couple small oddities about it, and I was quite surprised it sat on the market. We held firm at 61K, and even were told our bid was outdone by another buyer. That buyer cancelled contract on the inspection report. Asbestos fear can be a great friend. The inspection report, which our agent got us, said ceiling tile could be asbestos. We have an asbestos contact, who told me what to look for in tiles. We learned they had zero asbestos

How did you finance this deal?

Our local lender, MBT bank. We had to put 25% down, but the lender included the closing costs.

How did you add value to the deal?

We repaired from step and rail, and replaced downstairs toilet and shower. We also repaired some gas lines. We will be adding upgraded electric, and heath/central air in the future, but no need to now.

What was the outcome?

We got a great renter, thank you Lord, for $1100.00 a month for 18 months

Lessons learned? Challenges?

If you have a crappy acquisition, the next one can be a gold mine....keep looking, keep praying, keep trusting.

Investment Info:

Single-family residence buy & hold investment.

Purchase price: $40,900
Cash invested: $2,500

Right now, I'm calling this buy a dud...bought this at $40,900.00 in tight market...my lender came back with higher valuation, and financed nearly entire purchase price. This is my most expensive rehab, now, at 28K plus. This is 2 bed/1 bath house...we put on new roof, pipes for boiler, new heat vents throughout, dual zone heat, laminate on main floor, etc. Was hoping for rental, but got nothing but a string of lousy rental hits, nothing solid. Neighborhood outside my normal zone, and feedback was house is small. Decided to put on market to sell...many upgrades, so hoping for good sale price.

What made you interested in investing in this type of deal?

We'd been looking for a while, and came across this bank owned property. We looked at it and liked it...got it for about 10K under asking.

How did you find this deal and how did you negotiate it?

MLS....we offered 1K over a recently reduced price

How did you finance this deal?

Local lender with whom we finance all our deals. Appraisal came in higher than loan, so our lender financed 95%.

How did you add value to the deal?

Pipes were stripped out, carpet had water damage...we removed super heavy old radiators and had our plumber put in modern fin based hot water heat registers. We painted entire interior, some exterior front (mostly vinyl siding). Had roof tearoff and replace. We also found old pipes that went from basement boiler to heat registered were covered with asbestos. Asbestos removal mean pipe removal, meaning pipe replacement. Also redid bathroom with new toilet, vanity, light, paint, and shower

What was the outcome?

We wanted it for a rental, but the rental market was terrible for a 2 bedroom in this location. We decided to sell it...still prepping for sale

Lessons learned? Challenges?

If I see radiators in a house again, I'm either severly cutting my offer, or walking away. Airflow in radiator heated homes is negligible.
There was a lot of unseen damage. Definitely wish I had not bought this one.

Did you work with any real estate professionals (agents, lenders, etc.) that you'd recommend to others?

Matt Johnson Leland Realty is our agent...he is outstanding on every level. Jim and Dudes plumbing and heating prioritized my project due to long term relationship. Their work is fantastic. Thompson electric outstanding work. My handyman Tim is top notch. I have a great team.

Investment Info:

Small multi-family (2-4 units) buy & hold investment in Crystal.

Purchase price: $295,000
Cash invested: $85,000
Sale price: $454,900

rehabbed all four units, added vinyl windows....$30K invested in early 2017.

Sold right at start of pandemic

What made you interested in investing in this type of deal?

I always wanted to own a four plex

How did you find this deal and how did you negotiate it?

I sent out mailers and got a couple hits back...this one from a seller who wanted out

How did you finance this deal?

A local bank that specializes in real estate loans

How did you add value to the deal?

We upgraded all the units bathrooms, windows, painted exterior, new laundry...really worked hard to make nice for tenants. Fresh pain, countertops and carpeting, and laminate in all four apartments as well. Upgraded electric to panel from fuses.

What was the outcome?

We made very little month to month....tenant class was more difficult to manage. Property Management companies were useless.
We made a bundle on the sale, though.

Lessons learned? Challenges?

Don't buy properties too close to where I live...drove myself nuts trying to keep tenants in line

I have one tenant who now owes April and May rent.  Not my problem for long, though, as my 4 plex is closing at the end of the month  The buyer is getting a great building, and when Minnesota allows evictions again, he will do quite well.  

All my Single Family Rental paid in full.  I have two our of four in my fourplex that have not paid.  What a pain.  Selling the four plex has been in the works or months, though, so pain not much longer. 

I do my own taxes on Turbo Tax.  A bit of work, but I also have a database I built in Access that tracks all my rents and expenses, so that makes it a lot easier.  Turbo tax is pretty good, IMO.  

Long time no post, all.  I'm wondering if anyone has noticed the market for multi-units seems to  be really hot right now.  I recently considered listing my four plex, only to reconsider when I saw a decent amount of duplexes now selling between $150K and $200K per unit, and four plexes fetching at least $440K, and going for as high as $900K (in Uptown, of course).  I'm concerned at selling too quick, into what appears to be a high demand wave.  

I remember a podcast on BP once about a Portland, OR investor who sold his SFDU for $89K, only to learn some years later, the buyer resold for $950K.  He said that was painful.  Would like to avoid that same fate.  Any thoughts?

@Amber Gonion

I think you'll find this a pretty common theme on Bigger Pockets.  We have to manage the property manager, now.  Many don't like added cost.  The PM we had in Albert Lea was let go, because turnovers were not adhered to as far as contract language stipulated, and due to inconsistencies with what they said and what they do.  I've learned you have to know the  contract, and know where PM companies tend to waste your money.  Even the one we hired, we are cherrypicking away from certain suggestions, knowing how expensive they are.  You want your PM to look out for your costs.  

Managing the PM, though, is easier, if they understand you and you understand them.  I've got a good fit now....pretty happy with the arrangement.

Just wanted to post that I hired a property manager for my four plex.  I've been quite critical of Property Management companies, stating they are a waste of cash.  We had experienced high cost on turnovers in both PM companies we had.  But over time, I started to notice things about the PM companies that were ingenious.  First was the PM company I had in Albert Lea only switched out deadbolts on turnover.  Small matter, sure, but really smart.  Why put the turning knob through the added wear and tear?  I also missed our PM in the Twin Cities as my leases started to get dated, and I missed having the team readily available.  With a good PM with references, I have a property manager, a leasing company, an accountant, a maintenance manager, a lawyer, and the best thing is, they are a team and coordinate themselves.  

I'm enjoying life more, and budgeting for expenses from my PM.  Setting aside a larger monthly amount that may or may not be spent, but planning for it.  I think it is going to go better this time around.  And now I can finally add another four plex, Lord willing.