All Forum Posts by: David Moore

First of all, apples and oranges.  We're talking about a duplex in a faily small town, versus the issue you bring up, involving a multi unit development worth a lot more.  Second, who said anything about selling utilities?  This thing that your reporting on...it sounds like a 2nd hand story...are you sure you have all the facts straight?  Did you persoanlly get sued by a public utility commission?  Unless your property is worth millions, you are not a big enough fish to fry.  Utilities Commissions don't sick their high priced lawyers on owners of duplexes.   Some cities have ridiculous levels of bureaucracy.  Just because Washington, DC has rent controls doesn't mean that policy affects how we do things in Minnesota. 

Those records are not always accurate.  Last year I purchased a fixer upper, and had the appraiser come out,  and they found a huge error in their assessment documentation.  Besides, consider that little nugget a gift.  Could be a good point in negotiating with the seller.

I found out about a great property listed for sale on Craigslist in my investing area in Southern Minnesota.  I made an offer through my buying agent about a week ago, and while the seller has probate issues, we have not heard back yet on whether they are accepting. 

Should I put a deadline on my offer to help them decide, or should I wait patiently and assume the delay is due to difficulties in probate, and be considerate of their whole situation.  What has been your experiences?

At a minimum of $200.00 an hour, the last person you should call is your RE attorney.    Consider the context here, everyone.  Small towns in the Midwest are far from stringent.  Most don't even know their own ordinances.  Call the City of Sioux Falls, and ask the city clerk what their ordinances are on who pays the water bill.  In Minnesota, the bill stays with the property by practice, but the City bills my tenants directly.  Why?  Because while the bill stays with the property, the City is fine with sending a duplicate bill to the renter.  That is their policy.  The city knows if the tenant doesn't pay, they will assess the unpaid bill to property taxes....to you.  Simple.

And by they way, calculating your last year of utility bills and then adding the average and including it in your rent is not something you will get in trouble for.  You as a business person are calculating your costs, and setting your rent.  You decide if you pay that utility or not.  It does not make you a utility provider.  I worked for 7 years in a water utility, and while I'm not an expert, I can tell you the utility doesn't care who pays the bill, as long as it gets paid. 

You as owner set your rents.  If the bills last year averaged 50.00, and you decide you'll offset that with $100.00, it is your decision...however, the market will determine what the best rent is.

@Account Closed 

Greetings from a fellow Minnesota investor.  You said a lot of interesting things.  First, as others have said, don't put too much weight in one person's opinion.  I've gone to friends and asked if they wanted to invest with me in properties.  I've shown them the returns, and their fear is so great, they are turning down 25% cash on cash returns from pure fear and mistrust, and these are my friends.  95% of the people you meet will talk all day long, read books, and make plans, plans, plans, and never invest in real estate.  Sounds like this guy is one of them.  My former real estate attorney was very much like this...filled with fear.  Now one year later, I'm acquiring my fourth property. 

I suggest you join the Minnesota REIA. You will find the type of investors you are looking for. I will say expecting a private money lender to only take 15% is not going to cut it in Minnesota, unless the 15% is to scale. At the MN REIA meeting in January, a guy stood up in front of 200 investors, and asked point blank for $800,000.00 to finish the purchase of a large multi unit apartment building. He said the investor will get the money back in one year, with $100,000 profit, and would give a $1,000.00 referral to anyone who referred the investor to him. I thought, "no way anyone goes for it". Three minutes later, a guy stands up, saying to the rest of us he has $2 million dollars to invest, and is looking for partners to do deals. And he says to the guy wanting $800,000.00, give me a call tomorrow.

I would suggest that when you meet private investors, sell yourself, keep it simple, and if necessary, find another investor locally and offer your services to help them with their deals, in exchange for knowledge, and help getting your first few deals done.

The solution to your problem is in the very words of your post.  Who is required in this process to add her husband to the lease?  Sounds like you, the owner.  And if you do not do this, she loses her section 8 voucher, and goes back to the bottom of the 3 year waiting list to get back on section 8.  She knows this.  Go to the tenant, tell her you are not going to change the lease to allow the husband.   Tell her you will notify Section  8 of this the next business day.  If she loses her voucher, start the eviction immediately.  If you need to, do a cash for keys.  Move this tenant on down the road.  And screen all applicants, especially section 8 tenants.  Call previous landlords. 

@Mark Bosworth 

You left out some key data points.  Are you a realtor submitted a contract offer to Chase?  I bought one from Chase through a very experienced realtor who knew how Chase conducted themselves, so I fully expected them to tilt all the fees my way.  If your realtor submitted the contract putting fees on their side of the ledger, it could have made the process more difficult for the lender.  Consider that the contract you sent goes to the company negotiating for the lender, and then must get lender approval.  Having that contract right is key to a successful process. 

The purchase I did with Chase went nearly seamless after they accepted our bid...I think it was 45 days from acceptance to close, and they closed perfectly on time. 

@Account Closed 

Look up the MN Real Estate Investment Association. Each month I'm at a meeting, a CPA tells us he is looking for properties, or has properties. He is an investor himself, and he looks for clients at the REIA meetings. I would contact them and ash for a CPA memeber who has real estate investing experience. Sorry, I cannot remember his name.

@Account Closed 

Greetings. i am an investor who lives in the Twin Cities. I am in the research phase looking into multi-family in St. Paul and first ring suburbs, and as of today, I now own 4 RE properties. I am a member of the Minnesota REIA. I am curious as to why you want to start only on one type of housing. A lot of what RE investing really is is building a team and managing your time. Know what you are getting into in advance. For instance, who is your competition when trying to acquire a 4 plex, tri plex or duplex. In turn, what is your exit strategy?

I started with buying SFDU for the simple reason that when it is time to sell, the market for SFDU includes the biggest possible market of buyers.  In the market I invest, and all locations are different, multi units can sit on the market for a long time.  That may or may not be the case throughout the metro.  It is something to consider.  Right now the metro market is hot for MF, and the prices are also high, is what I've been finding.

I recommend the J Scott book on Flipping Houses.  Now, I know you have not indicated any interest in flipping.  But that book is a gold mine.  I refer back to it quite frequenlty, because whatever you want to invest in, J Scott has done it.  And for the record, I've not yet done a flip. 

BTW, I am an MN Reia member.  Perhaps I will see you at the Feb 3rd meeting. 

Hello Caleb,

Though I am not an accountant, I have done quite a bit of research on this. The LLC is a pass through entity in regards to taxation. It exists as a legal entity to separate your business activities and funds from your personal funds and activities. Tax wise, it is immaterial if your LLC owns it or not. There is no tax advantage, because the IRS considers the LLC a pass through entity. You are the one earning the money...the car is yours.

I keep a mile booklet and have found, since I invest in southern MN, that the miles rack up to a very nice sized write off for the LLC. I do know other RE investors who have formed S Corporations, and their S-Corporation buys the vehicle and then all expenses, including acquisition, can be written off. The trouble is, there are added issues with an S Corp. I plan to avoid one unless I've got a big portfolio of properties.