All Forum Posts by: James W.

@Nikayla Snyder Just take your time, understand the numbers, and meet some people to get their advice before making a buying decision.  You need to pull the trigger quick in our market to get a deal, but it is better to not pull it fast enough, than to pull the trigger on something you will regret for years.  

I recommend running numbers on deals you wouldn't even be interested in to get an idea how it works so you are more knowledgeable when the time comes.  When looking at rentals, make sure you take into consideration the following:

1. How are currents in line with market, or what can you get in rent?

2. What is the supply of housing like in the area, and is this an area likely to see an increase in supply (new construction)?

3. When it comes to utilities (gas, electric, water/sewer, trash, snow/lawn) make sure you understand what you might need to pay for as the landlord and what you can pass to the tenants.  This can be overlooked and impact your return.

4. What are your goals (long term rental vs short term rent/sell)?

5. How will the property perform in a stressed environment (lower rents/higher vacancy)?

6. What is your exit strategy if things don't work out as planned?

Real estate investing was easy when I started in 2007.  I could buy single family homes for cheap and get a 15% return in a decent neighborhood without factoring appreciation and using conservative numbers.  It is a different market now that the homes I was buying back then doubled in value in our market...  

Real estate investing sounds sexy, but isn't what it was when prices were down and deals could be had every day.  It takes more work now and deals are tighter, so make sure understand the market before diving in.  

Some of us on BP are more than willing to give you free advice on a deal if you post up the details.  Just don't post the address :).

Welcome @Nikayla Snyder!  There is a lot of good info on here, and some I don't necessarily agree with..., but I think you will find it a good place to use as a free resource.  In addition to the resources on here, I think you should connect with some of the local groups to learn more about the local market as well.  I cannot speak to them from experience since I travel a lot for work, but many people are willing to share their experiences, what works for them, and give you advice.  Take advantage of that and make sure you really understand the numbers before diving in.

As you may already be aware, the twin cities market is tight from an investment standpoint at this time.  Good connections and understanding the market are important in ensuring you make a good investment so leverage the resources you have available.  

Good luck!

@Kayla Wagenmann Personally, I would look at MLS regularly for the areas you are interested in (pending and recent sales) to get a feel for what things are selling for and a better feel for the housing in those areas. You can go to any of the larger companies to search on their web page. I usually use Edina Realty but have used others before as the search options will change and some might have better search functions. As stated earlier, any agent can set you up with a MLS search as well.

It might not be a bad idea to connect with some realtors or investors in the area you plan to buy who can help you as well.  

@Kayla Wagenmann I'm not sure if being an agent will really help you in learning the local market.  You can probably learn it on your own and I'm not sure how being an agent would help.

I think starting out as an agent with no experience in selling or even owning real estate would be a difficult endeavor.  It might be hard to get someone to pick you over others with a lot of experience.  If you search on here, you will find other threads about people looking to start out or their struggle.  Seems like being a good agent is really a relationships game and it might take a while to build up that base.  Just about everyone I know is related to or knows someone that is a realtor.

@Matthew Smith I am assuming you are speaking 1-4 family where the sales comparison approach matters most correct?

I think this would be somewhat mitigated in appraisals of 5+ as they wouldn't appraise in that situation.  

In your reports, are you documenting that the income approach does not support the value?  I would think it would be good for a lender to know this but am curious if you state it in your appraisals or if it even can be stated in the appraisals.

It is simple.  If you spend money like most people and want to get something for free out of it, put everything on a card and pay it off each month.  

Some will play all kinds of games for points, but at the end of the day, it is points to use for other things that have $0 cost if done right.  

I do not have experience as an agent, but you need to figure out what your goals are in RE.  Do you want to be an agent to help others buy/sell homes, or are you looking at this as an option to purchase something and be able to open your own doors?

If you do not have a lot of connections-specifically people who may be looking to buy and sell, you will need to figure out how you are going to get work.  Without good relationships, it might be hard to make it worth the time.  

That is fine if it is just to estimate the land value. 

If he is only using the appraisal for the value of the land portion, that is probably fine.  If your basis is $300k and the land value is $100k (per appraisal), you would be able to depreciate $200k.  

You need some sort of way to determine the land value so the appraisal would work. In a situation where you don't have an appraisal, you will need to determine the value using other means.  

I was initially thinking the appraised value of the property was being used, but using value of the land should be fine to determine what you are not able to depreciate.

The appraisal has nothing to do with depreciation.  It is (Basis-land value)/27.5 as @Wayne Brooks stated.