All Forum Posts by: Jeff Schemmel

@Zach Adams the MN bar has one online.  Homeline also has one posted.

@Corby Goade actually, below is true according to HUD. While I don't necessarily agree with it, and I think as a landlord you should try to manage your property the way you would if you weren't there, technically you can be more picky as an owner occupant.

What Types of Housing Are Covered?

The Fair Housing Act covers most housing. In very limited circumstances, the Act exempts owner-occupied buildings with no more than four units, single-family houses sold or rented by the owner without the use of an agent, and housing operated by religious organizations and private clubs that limit occupancy to members.

@John Woodrich

I recommend just using the standard residential lease agreement, as stated above it offers the most reliable protection.  There are some things I add in an addendum.... house rules and such, or details about where to park, and since I have electronic locks a quick note about those.  Otherwise, that standard res lease should be just fine in my experience.

I'd worry less about the 3% cap.  there are multiple ways to raise it more than 3% if you read deeper into the rules and allowances around the rent stabilization policy.

Focus on making sure your criteria are met, and that's a pretty steep discount.  In my opinion, it's not a great precedent to set out of the gate that you're willing to concede to what they want; that can create a situation where they continually take advantage of you while locked into a lease.  the rent is the rent, and it's due on the 1st :)  I get $1,500/m for my 2 bed in saint paul and I purposefully chose to be patient and passed on quite a few people before I chose the right one - definitely dodged some bullets in the process.  I just renewed their lease for another year.

Noise is inevitable, and any tenant you have will be annoying at some point... whether it's little feet running across the room, a treadmill, a rolling desk chair, or exercising.  We have long winters stuck inside in Minnesota and you're bound to be annoyed at some point so try not to judge up front who's quieter than who, it's just an impossible assumption to make in my experience - This is one of the things I've been most surprised about as a landlord.

hope this helps!

@Cameron Wutzke it can be impactful, but it depends on your rental model, location (rental values), and how much property taxes are for that area and that property before enrolling and when considering purchasing a property that IS already enrolled.  It's worth recognizing the rental rate caps aren't bad!, I don't enroll in 4D, and I get 1500/m for one of my units which is a 2 bed, which I believe is a pretty fair market rate, but my tenants definitely make more than the AMI requirement; which I think is the largest consideration when considering the 4D program.  I wouldn't let it scare you away, but just make sure you call them and really understand it first and factor it into your long-term deal analysis.  There is a N. Minneapolis duplex listed that's enrolled in 4D that's on market right now and reasonably priced at 300k for it being a mid-century side-by-side build; it could be a 1% property even while participating in 4D.  My guess is that it still goes in multiple offers this weekend - but we'll see!

Also:

What if I want to withdraw from the program?
For owners who want to reduce their level of participation in the program, the City offers an option after five years to approve a reduction in the
number of units per building participating in the program. However, at least 20% of the building must maintain participation in the program in order
to meet the conditions of the program.


Here's some detail:

Affordable housing criteria

Rent is affordable to households making less than 60% of Area Median Income (AMI). Maximum rents for 2022-2023 are as follows:

• Studio/Efficiency $1,233
• 1 Bedroom $1,320
• 2 Bedrooms $1,584
• 3 Bedrooms $1,830
• 4 Bedrooms $2,041
• 5 Bedrooms $2,253
• 6 Bedrooms $2,463
• Single room occupancy (SRO) housing, $739 per bedroom. This includes single room occupancy housing, rooming houses and group homes.

As units turn over, affordable units are rented to households making less than 60% of AMI. In 2022-2023, this means that units must be rented to households making less than the following amounts:

• $49,320 for one person
• $56,340 for two people
• $63,360 for three people
• $70,380 for four people
• $76,020 for five people

@John Woodrich (CPA) and @Scott Jensen (Financial Advisor) are the two local professionals and investors I know who are best equipped to properly answer this question and give you advice.  Both are local, people I personally work with, and have extensive tax expertise.

@Ashley K. Butler Nice update, and glad to see you're excited to house hack.  Give Craig Curelop's "The Househacking Strategy" a read.  I found his perspective healthy and energizing.  I like to "double-dip" by househacking and forcing equity, similar to what @Jordan Moorhead did when he was in Minneapolis; his network has really enabled me to be successful in a big way.  You can learn to own a property, manage tenants, make repairs, choose the right contractors for the job, what improvements make sense for the area/rental strategy, etc while househacking.  Good luck, you're so close!

I would also add, i'm not against non-owner occupants, and I tend to feel that a DOM threshold could be implemented such that 30 DOM is required for any corporate entity (like the one they're targeting with this) just has to wait 30 days for an owner-occupant to have a chance at winning the property.  That would still allow distressed properties that are typically not doable for a financed buyer to still be purchased and rehabbed by investors with the capital to do so.

Hey @Amarion Carter you are in the right place!  I recommend househacking as well.  Educating yourself on the local market, styles of homes, house hacking strategies, and lending options to buy your first place are some of the things you can do now that cost nothing.

Check our Craig curelops book called the househacking strategy and Brandon and heather turners book on the managing rental property.

I Househack here with my wife, our second, and we try to double dip by also making improvements within our capability to the property while we live there.  Reach out anytime, man!  Always happy to help.