All Forum Posts by: John Woodington

@Steve Kim I say go for it. Your Capex and vacancy numbers are pretty conservative for a new property, so your cash flow will probably be better than your projection. And if it truly is only three years old, you really shouldn't have any maintenance issues for quite some time. As long as you get the right tenants in there, that sounds like a pretty stress-free investment to me.

@Steven Birch I wouldn't totally discount the townhomes myself. We have a townhouse rental and it has been great. Appreciation may be slightly less than a SFH, but the argument that the dues eat into profits hasn't proven true for us. The association covers exterior structure insurance, lawn care and snow removal - all things I don't have to worry about for the property, or pay for. If the numbers work, a townhouse can be a great investment that doesn't take up much of your time if you get good renters in there. Good luck!

@Casey Tyler did you ever find the answer to this question? I’ve been wondering the same thing lately and I can’t find the answer anywhere.

@Karl Butenhoff Thanks for the info!  I don't think I've ever seen irrigation on the land, and you're right, the farmer alternates each year between corn and soybeans.  But in theory we should be able to get about $8000 per year in rental income, which still isn't life changing, but is better than where we're at now.

I can say the soil does not seem sandy to me at all.  I walked it a couple days ago while deer hunting and it looks very dense and dark, even muddy in spots.  That said, I'm not an expert, so it could be that it isn't the best soil in the world.

If the land rents for $8000/year at market rates, is there some standard multiplier I could run that would determine potential overall value?  Or does that go out the door once the 38 wooded acres come into play?

Thanks for the valuable insights!

@Zach Westerfield Thanks for all of this valuable information.  Very helpful.

The thing that I think may cause strife in the future is getting everyone to agree on a fair value for the land, so that any buyouts can occur equitably.  I wouldn't value the land as high as the tax record is assessing it, but if I were selling rather than buying, I'd want the highest price possible.  I'll have to think on that one for a while.

As far as the landlocked issue goes, the property does not touch an access road anymore, though it used to.  That's where I don't have clarity on how to proceed.  It was not intended to be landlocked, and my family used to drive in there for years until the neighbor dug up the access road.  It feels crappy to have to go to the guy who illegally wrecked our access and ask him if I can now pay him to access our land through his property.

I appreciate the insights!

My family owns a parcel of land about an hour west of Minneapolis.  It's 78 acres, 40 of which are farmland that they rent out.  The other 38 acres are woods and a river that we use for duck and deer hunting.  Rental income each year is $3000, while the annual taxes are $2360.  The estimated market value on this property is $226,700, per the county record.  The property is jointly owned by my mother and her two brothers.  In theory, I and my siblings/cousins would someday inherit this land, but in reality only two (out of eight) of us would have any real interest in owning this in the future.

As an investor, I have a couple questions:

1. As a pure investment, the numbers here are terrible.  What I don't know is if we are getting a fair market rent price, or if we are giving a discount to a farmer friend.  Where would I go to get a good sense of what tillable land rents for in a given area?
2. A couple decades ago, the neighbor abutting this property dug up the gravel access road to the property, so it is technically now landlocked.  Legality of this action aside, I would assume this impacts the value of the land.  Any ideas how to calculate the accurate value of landlocked land?  Any ideas on the steps I'd need to take to rebuild the access road and what that might cost?
3. If I and my cousin wanted to "buy out" my disinterested cousins/siblings, is that something we could do now, or is it something we'd have to do later, since our parents are the true owners right now.  What initial steps would my cousin and I take to being that kind of discussion, both from a legal and price standpoint?

My goal in all this is to keep the property in the family, while still making a smart investment decision.  I apologize for the various facets of this question, and I appreciate any advice the BP community might have.  Thanks!

@Johnny Chen I've been watching the market out there, thinking that the pandemic would depress prices as the hotels were shutdown for a while.  Apparently I was quite wrong, as sales out there have been booming, and prices seem to be up 5% or more this year.  I'm still on the sidelines of this type of deal, just because I'm priced out at the moment.

@Marty G. I’d say manage it yourself. I use Cozy and really like it. Super easy to use. It will be less stress on you to do it yourself, and the time commitment will be minimal as long as you have good renters.

@Sean Tippens Just curious, if its only 750 sq ft, why not take an afternoon and paint it yourself? The paint and supplies won’t run more than a couple hundred bucks.

I wanted to post a quick message to this whole community to say Thank You for all of your insights and wisdom.  I've been a member for over three years now, and finally have my first rental property up and running.  We signed the lease last night, and so far everything I've learned from this site, from its members, and from the podcast, has helped to make this a very smooth process.  Every question that potential tenants proposed to me was something I had already read about or heard on the podcast, and was able to answer.  Each question I had about financing (and refinancing!) and cashflow and equity was answered from multiple perspectives, all of which helped me determine the way I wanted to move forward.  Now my wife and I have a townhouse rented out that is cash flowing at ~$570 month.  Thank you again to everyone for all of the questions and all of the answers, for imparting knowledge and wisdom, and for being honest.  And thank you to @Brandon Turner and @David Greene and everyone involved with the podcast.  Listening in each week has kept me motivated, and without that constant motivation, I don't know that we would've gotten to this point.  Hearing so many people discuss their real estate investment paths and strategies kept me in the mindset of an investor, and that not investing was not an option.  Great work all of you.  You all have my sincere gratitude.