All Forum Posts by: Dominic Scheck

Congratulations, Steven! I second Jordan--Robbinsdale and Crystal would be good targets for you. I'd also look at New Hope, Golden Valley, St. Louis Park, and Hopkins. Multifamily properties are rarer in the suburbs, but there are some in these areas. You'll find a lot more options if you house hack a single family, but I'd go with a 2-4 unit if you can. Maybe check out the Near North neighborhood of Minneapolis too--plenty of duplexes and low cost. It's been one of the highest-appreciating areas in the Twin Cities and still has plenty of room to grow to the Minneapolis-area median (though higher risk of snap-back when a recession eventually hits, of course). For handy reference on the areas mentioned in this discussion:

Price and appreciation data from the 2019 Minneapolis Area Realtors Report
Good luck!

Hi, Roman. Thanks for posting. We need more data, more data sharing, and more automation like this. So first, kudos. 
Now, a math check might involve validating (1) your assumed values, (2) that you're focusing on the evaluation metrics that matter to you, and (3) the calculation method for going from assumption inputs to your evaluations outputs.

1. Assumptions

• What is Home Price? It looks like Market Value is the list price on Zillow. But for example, on 1108 45th Ave, you have $143,018 for a house price when it's listed for $200,000. If you can buy a house for 143 and sell it for 200 without doing any work, then you've got yourself a deal already.
• Many lenders want a 25% down payment if you aren't living in the house. Maybe you have an exceptional one.
• $100/month might not be enough for maintenance, especially for older houses. I plan for $200/unit in multifamily, and I'd probably budget more for these single-family homes.
• Maybe double-check your property tax amount. If possible, pull directly from the county records.
• Looks like you're planning $0 for utilities and snow/lawn. Cool for single-family.

2. Evaluation metrics

• Cashflow: awesome. 
• Looks like C19 is cash-on-cash return. Cool.
• How are you thinking about Deal? C20 looks like a calculation as if you were going to wholesale it or flip it with no rehab. That brings me to the big question.
• How do you want to invest? That will determine what evaluation metrics matter to you and what makes "a good deal." If you want to buy-and-hold-and-never-sell while maximizing the % return on your money, then you should prioritize the CoC return. If you're busy outside of real estate, maybe deal capacity is a constrained resource; then the cashflow per deal might matter more than the CoC return (e.g., if you can only buy 1 deal/year, then a $400 cashflow/9% return deal might be better than a $100 cashflow/15% return deal). If you plan on renting a place for 5 years and then selling, I'd add neighborhood-specific appreciation assumptions and assess deals on internal rate of return (IRR). If you're planning to wholesale, then you have a tougher job of estimating the measures that matter to your end buyers (likely likely ARV and repair costs in addition to the ones above). Accurate repair costs are probably tough to automate, but if you build an app that does it, you'll be able to retire on any beach without buying a single house.

3. Calculation Methods

Look good to me.

Thanks, Scott. That's a great tip. Glad to hear you've had success with it too.

Hi, friends. Does anyone run vacation rentals in Stillwater? I'd love to learn about your experience, occupancy rates, whether you like to rent by the room or the entire house, your view on the licensing process, and any other wisdom you want to share. 

Whatever you're willing to type is much appreciated, and dinner or coffee is on me if you have time to meet.

Nothing fancy. I made a Word version of the PDF, tinkered to get the formatting right, inserted mail-merge fields, made a spreadsheet with a row for each tenant and a column for each piece of info in the CRP, did the mail merge in Word (generating a CRP for each tenant), and then saved the CRPs as PDFs. It required upfront work, but now I can do all my CRPs every year in under 15 minutes. The ROI on that initial time investment will be huge.

Thanks, Tim! I did mine this weekend and got sick of manually filling out the PDF form. I set up a nearly-automatic process to generate them. If anyone else is in that boat and wants help, you can send me a note.

These guys have much more expertise, but I can offer one data point. I did Airbnb in one of my Northeast Minneapolis units for January and February last year. It was a three-bedroom unit in a duplex, and at about $90/night + a $30 cleaning fee, it was occupied every weekend plus enough weekdays to reach an overall 65% occupancy, a bit higher than I expected.

I only did it for two months to bridge a gap between long-term leases, and the Super Bowl made it worthwhile, but I'll be trying another STR scenario again soon.

Good luck, Corey!

Mike, it sounds like you're willing to do what it takes. Good job pursuing a few different avenues. Getting a duplex now is better than maybe getting a four-plex in a year or two or whenever this market insanity ends. I'd encourage your openness to take on any solid 2–4 unit deal, and like Jordan said, the odds are much better with a duplex. Keep up your motivation, land your first property, build experience, and then nab that bigger deal when the cards come down. Good luck!

Hi, BP friends.

Does anyone in or around Minneapolis have contractors they recommend? I need to remodel a rental--new cabinets, countertops, appliances, flooring, bathroom updates, some minor electrical and plumbing, etc. I'm getting responses that contractors want higher-end jobs in primary residences, not rentals. Who out there are you working with?

Thanks!

Thanks, @Andy Schornack, @Carl Schmitt, @Kevin Powell, and @Jassem A. It sounds like options are out there.