All Forum Posts by: Jeff Schemmel

@Nicole Murray I'm really glad to hear about your approach  Your tenants are staying for 4+ years... you're doing something right :).  being a landlord means providing a service and being in touch with your tenants and your property.

We have a duplex.  2/1 upstairs, 1/1 downstairs (we live downstairs).  We inherited tenants upstairs who were paying $1095 pre-pandemic.  Over the pandemic, we just made sure they had what they needed and were safe and happy.  post moratoriums for non-renewal and evictions, we decided to make an increase to $1,250.  I spoke to my tenants in person about this with examples and factored in property tax increases and such.  I also weighed that their unit had old carpet into the increase I proposed.  They took it well, but ultimately opted to move out of state.  When they left we gave their whole deposit back (my wife still digs at me about that).  We renovated and re-listed at $1,500/m pre RC and got great tenants upstairs; just renewed them for a new year with no increase.  

The toughest decision we made was whether to just non-renew the tenants we inherited or just make an increase to what was fair before rent control took effect.  I feel I am a bit more empathetic than most, but I also undervalued the rent we could get for the unit if it was improved... I thought at most I'd get $1,350...maybeee 1400.  I had some friends nudge me a bit and we easily got $1,500.  I was initially a little surprised, but after the work and money we put in I feel it's more fair now, and I also really don't feel the need to make an increase for the next few years, even after a 38% tax increase from last year.

@Ryan Pearsn chat with @Bryon Andrews.  He’s done a few off market with creative lending.  Non QM lending is an option, and there are a few routes to take that you mentioned little about the property in regards to the seller and market status.  Is it on market?  Is that appraised value real or theoretical?  If off market, what’s your relationship to the seller?  Do you have a direct line to the seller or are you using agents or lawyers?  If you have a line to the seller, contract for deed terms may be a decent option.  

@Alec Barnes Exterior: siding material, grading, roof material, tree canopy (root systems), 360 street view for condition and to gauge traffic.  I look for low spots in the yard and around the house, the condition of the neighbor's homes relative to the subject, the condition of windows, and the material used to trim them.  I look for meters (gas, electric), low-hanging wires, what type of landscaping may or may not be used (maintenance), and the condition of any walkways, concrete steps, etc.  The main things are water drainage and long-term damage caused by water.

Interior, it's usually pretty obvious how well a property is cared for by an owner when observing the common areas and basement (if you have a basement).  unit condition is a crapshoot based on the tenant.  I'm looking for evidence that HVAC systems are cleaned/maintained, and plumbing systems were updated to more modern piping like PEX, or at least copper lines instead of galvanized.  I'm looking for proper support of the main load-bearing beam, and any joists that have been notched improperly or are not in good condition.  I'm looking for insulation, water intrusion (after having already looked for clues outside), and systems like a sump pump and drain tile in the Midwest.  I'm looking for old electrical (Knob & tube) if I'm in an older building.  I'll keep a flashlight, measuring tape, and occasionally an outlet tester on me to check for grounding, reversed polarity, and the tape for measuring room sizes to ensure conformity to bedroom standards (height, fsqft).  I'll pay attention to the layout and any pass-through style bedrooms, and while I'm walking through if there are tenants there I'll talk with them just to learn what I can.  Usually, tenants are quite willing to talk openly about the landlord, building, etc.  They don't have a lot to lose by being honest.  Lastly, I will assess the age of capex items like roofs, mechanicals, appliances, flooring, windows, etc to get a feel for what items are more urgent vs. those that may not be needed in the next decade.

not an exhaustive list, but these are the things on my mind during a showing as an agent who's been in a lot of rental properties and thinks like an investor.

@Jason Chmel I think you can do this, but in my experience, you can't pick this return off a shelf.  Rather, you need to create this level of return yourself and set it up to be taken over by a PM, perhaps during your final year or so working.  For example, you could target mixed-use property owners with old leases in place and low rents and value-add by bumping rents and lowering expenses.  Perhaps getting better commercial tenants and leases in place for that portion of the buildings and billing back utilities for the tenants.  A couple of these will set you straight, and you can be diversified by holding a building that has both commercial and residential tenants.  @Bryon Andrews knows more about this than I do, but adding value to mixed-use to improve rents could allow you the cash flow you need if you're willing to work a bit for it.

As a local landlord, I'd love to hear from other landlords in Saint Paul who've been in for at least a few years now, specifically how are your rentals doing post rent control?  What's your bed/bath combination and what rent are you charging pre-RC, vs. post-RC?  What's your general attitude about it?

If you're willing to share....

1.) Did you bump rents up prior to rent control
2.) Did you change your lease ahead of, or following rent control?
3.) how have your tenant relationships been altered as a result?
4.) Have you changed your fees, or done the self-certification increase process?
5.) If you had a bumpy ride, what's the story?

@Lisa Bain MSP has a lot to offer in the MTR arena. There are restrictions that keep you from scaling SHORT-term rentals, but 30+ day leases are not nearly as regulated. You could set your sights on a small SFH on the west side that is in close proximity to the Xcel center, W7th corridor, children's and regions hospitals, etc. I do a lot of work in these areas, owning rental property in Saint Paul, myself. My wife works at regions, and when we move out of our current 1 bed unit in our duplex we will be going that MTR route as well given our proximity to these places I mentioned as well as the state fair grounds.

@Daniel Adebanjo First, if you haven't learned about FIRPTA, you should take a look at that.  Second, 50k down payment for a non owner-occupant is going to narrow your criteria down quite a bit.  The midwest is a good place to start, but most non owner-occupant loans require 25% down.  It's possible to get a 4/2 single family on the east side of saint paul for that, but that's more likely to be a long-term rental play or inclusive of a strategy that includes some kind of rental assistance model.  occasionally, you can find something in the west side or w 7th area of saint paul matching that criteria, but almost everything here in the twin cities is going to need some extra capital improvements to be rent-ready at 200k.

hope this helps, always happy to chat or extend my network.

@Tim Swierczek probably has some advice here.

@Heather S. I feel like there's a story behind this request.  Please tell us more about why you want someone who's worked with shady folks?

@Kristen Peka welcome :). I don't know that I have the time to mentor, or that I'm necessarily qualified to do that, but I am more than happy to grab a coffee and share what I know and my experiences househacking.  My wife and I househack in saint paul and double-dip by making some improvements to the property and we have been through a few tenant cycles and ups/downs; much more ups than downs!  If you think that'd be helpful you can reach out anytime.  If you'd like to make certain connections, I'm happy to help.  THere's a sphere of wonderfully helpful people here ready to answer, share, and help.