All Forum Posts by: Jeff Schemmel

@Adam Tafel is a great guy to call about this.  DM and I can connect you if you'd like.

I recognize this one!  I have a few people to talk to about it.  Thanks for posting.

@Tucker Mortier also a fan of Cory Inspects, and congrats on the first of many great deals that i am confident you'll put together.  You are tenacious, my friend :)

@Jesi Young I am looking forward to your blog!

@Tony Schmucker happy to weigh in on Saint Paul!  I live here and househack as well - can provide a first hand perspective.

@Matthew Posteraro I'm a big fan of starting with the 5% options. I see little benefit in the FHA as an option as long as the 5% conventional loans are available now. The only real advantage to using an FHA loan is to offer only 3.5% down payment, which in my opinion is barely justified as an advantage. There are quite a number of things that can make utilizing an FHA loan more difficult such as more barriers during appraisal, appearance of low qualification/little cash, typically longer closing period, likely higher interest rate, and PMI cannot be dropped without a refinance if 3.5% down.

That said, just chain 5% down conventional loans, and make sure your duplexes pay for themselves.  Keep in touch with your lending partners for each one so you can understand whether you need departure residence income to qualify for the next or not.

Finally, if you're investing with a Significant other, I recommend considering a "leapfrog" strategy where you buy one, then your partner buys the next, and so on.  Ideally you would put only one persons name on the mortgage unless you absolutely had to have both to qualify.  Just some basic stuff you should try to follow if able.

@Heather Bailey they will ask you what style of renting you plan to do. To the insurance company they will view an STR differently than a LTR. I am not privy to the details of that from their perspective, but I would hesitate to assume the policies are the same; I don't believe they are.

@Heather Bailey while I live in my duplex, I have a standard Hazard insurance policy and I also carry an additional 500k umbrella policy (optional); both policies cover the entire building, but there's no separating it.  I started planning to move to my next property and my company decided they wouldn't cover me anymore once I left.  as a result I switched to a new company, and I will have to adjust it again to a landlord policy that comes with a slightly higher price tag when I move out.  The biggest factors, from what I can tell, are age and rebuild cost.  It's worth mentioning I also require tenants to have their own renters insurance policy with at least 100k minimum liability.

@Tenzin Lhanzey a duplex is a solid place to start; there are dozens on/off market in minneapolis.  Look at a few each day online, or catch up with an agent who knows their stuff and househacked to give you some pointers.  Analyze the property's income potential and expenses and see how it shakes out while you live there and when you eventually move out.  Stick to areas you're comfortable with, and try to steer away from other people's "deal calculators"; you'll overwhelm yourself.  Just keep it simple with this... "What's coming in, what's going out, what's left?"  Take it one question at a time and build out your analysis in a spreadsheet of your own.

While you're doing this, speak with a mortgage lender or two who know investing.  The right lender will be able to advise you on what options you have after getting some info from you and taking an application.  This costs you nothing, and it will be your first real action step in the process.  Once you know you can get a loan, then it's time to start hitting the streets and making it real.  Partner with an agent, who hopefully you've found by this point, and get into some duplexes for real.  This part will really make it real for you, and you will pretty quickly have an idea whether this is right for you.  Have a good dialogue with your agent, ask all the questions, and make sure you're transparent about what you're liking/not liking about the properties.  Take great notes, and bring those back to your analysis.

When you are getting closer to the right property, get informed about what an "offer" looks like, so when the right one is there in front of you you are ready to take action.  From there, your agent should advise you through the rest of it.

if you haven't already, do a Capital Expense/Deferred Maintenance analysis of all six properties.  This will help you understand if you've weathered the storm, or if it's just starting.

Walk the properties, and look at all the major stuff... here's a quick list, below, to get you started.  From there, form an estimated replacement cost, and write down the estimated remaining life left.  Then, separate that list into urgent (need to replace now), 3-5 years life left, and 10+ years remaining.  From there, it's already too late for the urgent stuff, and you'll need to chalk that up to a hard lesson learned about due diligence up front; trying to sell a property with urgent deferred maintenance is most likely going to punish you.  the property with the most 3-5 year stuff should be on your short list to sell now if you're cash-strapped and you can at least cut your loss without having to inject more cash.  Anything with mostly 10+ years of life remaining you can probably feel good about.  

Of course, you can't protect yourself completely, but this will also help you prepare for buying the next properties a little better, and it's an exercise I generally do when I'm on a showing for a property I'm serious about so that I'm factoring this into my analysis to some degree in a "capex" reserve.