All Forum Posts by: Jason Clemens

@Keith Linne yeah I've been learning the same things this week on the decorating/furniture costs.  As much if not more than a down payment potentially.  It is a different world for sure.  

We are leaning strongly into keeping our Minneapolis Rental house and finally raising our rents (while we can in Minneaplis still) to get them up to what current Market rates are and then looking to get 1 STR to start and if we can get a second at some point in the first year or two even better.

 Thanks @Adam Tafel for the info. Yeah I've definitely learned the last few months that it's a different world for Management for STR's (25-30%) vs LTR's (6-10%). It doesn't seem smart at to have a PM for STR if our goal is to build wealth. If it works out that they we can use the property for a few days each year that's an added bonus. We've been sitting on the fence wondering about getting more properties for far too long and finally want to commit to making it happen, now it's just about collecting info to make the best decisions. I appreciate the info a ton!

Yeah this is a SF home that is 1 unit so 75% would work. We also have a HELOC on our current house with plenty of money as well that we could pull from as well.

Thanks!

@Kurt Pauley my wife is pushing the Duluth or Stillwater markets but I'm thinking out of state for first due to the seasonality of our state.  I'm for sure open to in state or Brainerd eventually but would prefer to do a Fort Myers, North/South Carolina etc, even the over-saturated Orlando/Kissimmee market, more of a vacation destination for our first one.  

Everything I've read is about diversifying your portfolio so to me the "safer" route is a place that has a little less seasonality than the 3 awesome months we have here.  

Trying to decide if doing a cash out refi (where you get up to 75% LTV) taking out let's say $45-50k to buy 1 STR place with it and giving up $200 a month on cash flow for the property but keeping the asset in the portfolio is a better option or selling the house and pulling out $100k and getting 2 STR's but losing the asset is better long term? I've always been of the belief that you just keep collecting assets but I also see what the market is for selling right now and who knows, maybe it's listed for a lot more than I think and a bidding war and I walk with $130k to re-invest into other properties.

@Greg R. I appreciate the info. Are your STR's local to where you live (San Diego?) I can totally see how that's a lot easier for managing 100% yourself if they are local to you. Living in MN, a STR will not be something I look at short term, but more further down the line in a few years (so seasonal here).

A friend of mine that has a STR in CO does the same (manages it completely himself). I know it's possible remotely but you just have to have a good team (cleaning crew, maintenence/handymen, etc) to keep an eye on things for you. We manage our LTR ourselves and have done all of the above jobs since buying the house. My plan was to do all the PM myself for STR, but it's a whole new world so trying to pick up as much info as I can. I'm in this for the long haul and honestly had never looked at selling that house but thought it was worth looking into if we could sell and change our portfolio to 2 STR's instead. But maybe a cash out refi is a better option.

Thanks for your help Greg!

Investment Info:

Single-family residence fix & flip investment.

Purchase price: $104,500
Cash invested: $30,000
Sale price: $188,500

Foreclosed fix and flip. 4BR, 2BA 2400 sq ft. Replaced kitchen, main floors, doors, trim and carpet throughout house.

Investment Info:

Single-family residence buy & hold investment.

Purchase price: $262,000
Cash invested: $120,000

Foreclosed home that the bank forgot to shut the water off in the dead of winter in MN. Rained in the house for 3 weeks. Listing also had the wrong sq ft. listed of only 50% of the square footage for the house. I knew from the second I saw the listing it was our forever home and we had to move fast. The house had sat empty for 2 years prior to us seeing it on the market. We had been talking of building for the past year or so, but this was the one and only "already built" home we looked at

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

It was such a steal. It was gutted completely down to the studs from the remediation company and we paid $262,000 for a 4,800 sq. ft. home that had sold for $949,000 2 years prior (fraud between the builders and buyers) but in a neighborhood in 2006 before the market crash that was a $750,000 neighborhood.

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

Found on the MLS from our realtor

How did you finance this deal?

At first with family Life Insurance money after my dad had passed away a few months prior. Then conventional mortgage after moving in and making it our primary residence.

How did you add value to the deal?

After re-wiring the house the way I wanted in the house and Re-Sheetrocking and trimming the house it's been our family home for the last 12 years and have upgraded and added so much more to it since including a huge wrap around deck across the back, screened in porch, hot tub, solar panels etc. Been a lot of hard sweat equity but worth every second of time and energy put into it.

The value of this house has tripled compared to our initial investment.

Investment Info:

Single-family residence buy & hold investment.

Purchase price: $167,000
Cash invested: $25,000

Single Family 1957 1 1/2 story home was Primary Residence, remodeled room by room. Converted to a rental property when our family upgraded to a bigger home. Renting for $1675/month and pulling a $600 net profit a month. Been renting it for the past 11+ years.

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

Very first house I ever bought. Had bought it with friends and bought them out when my wife and I got married. 4 years later we upgraded houses and converted this into a rental the last 11+ years

How did you add value to the deal?

Fully finished the basement adding a full bath in the basement, fully remodeled kitchen as well as re-insulating the attic and replacing windows.

New to the forums thanks for the input everyone...

I've had a long term rental in Minneapolis the last 11 years that we do good on (make roughly $600/month) but always seem to struggle with renters. We have well over $100k in equity in the house. We've talked about wanting to get into STR's and other rental properties ever since we started renting that house but have let other factors (kids, work, etc) stop us from getting more properties but am serious and ambitious to want to start down the road.

Does it make sense to keep that house and potentially tap into the equity of it to get down payment money for STR's that can make "potentially" a lot more on an annual basis while also building equity in multiple places or does it make sense to sell and cash out and go all in on STR's?  Our renters lease is up end of May so it's a perfect time for us to be exploring what to do with the house. 

Still trying to teach myself on so many sides of the industry that I haven't ventured into much. I had used hard money loans when I flipped a different house about 6 years ago but I'm assuming that you aren't doing that as much for STR's because you aren't increasing your value that much to do the "No Money Down" BRRR type approach deals. Correct me if I'm wrong.

Thanks for the input!