All Forum Posts by: Justin Hertzog

I'm analyzing an apartment to purchase and there are some deferred maintenance items that will likely be pretty spendy in a few years. At least $40,000+. Does anybody have any advice on structuring deals to get these taken care of at the time of purchase or good ways to plan for them? Right now I'm using my own funds for down payments and have not used outside investors yet. I'm just curious if there are any strategies that I might not know or be thinking of.

I have 2 scenarios coming up where I will need to do a commercial appraisal on some of my properties to utilize the equity that I've created. I need the appraisal to come in at a certain number or it won't be worth it for me to do it right now. I'm looking for suggestions on what to do prior to actually hiring an appraiser to figure out their worth? I'm fluent in residential real estate and doing ARV's, but I haven't gone through many commercial appraisals. Any thoughts? I'm thinking I would maybe just call a commercial agent and ask them for a market analysis?

Originally posted by @Austin Hendrickson:

Welcome, it sounds like you are well on your way to financial freedom! Are you doing most of your investing in the Twin Cities or in rural areas? I grew up about 20 minutes NW of Winsted so am familiar with the area. 

 Hello Austin.  Right now I am trying to focus more on the rural areas, but I'm also taking it deal by deal.  I don't want to miss out on something either.  I would travel away from here for self storage more than an apartment, but like I said, it's sort of case by case.  Glad to know somebody who is familiar with where I am on here!

Originally posted by @Ivan Vargas:

Welcome Justin!

It's awesome that you already have experience in investing. That will boost your credibility here on BP. This is a great community, everyday there's something new to learn. 

Are you only in one market? 

 Hello Ivan.  Thanks for the kind words!  I haven't really ventured out of state or anything like that and I'm sure if I would yet.  Being a rural area my market is pretty spread out.  I wouldn't say I'm stuck in just one, but I do try to be particular of where I buy for now.

Originally posted by @Nathan Platter:

Hey @Justin Hertzog , welcome to the forums! Glad to see your excitement!

It's great your spouse is on board and pulling in the same direction, the Significant Other can enhance or detour REI timelines.

How are you currently finding your deals? MLS?

Would love to hear how you discovered and acquired that 8-unit!

So far we have been mostly searching the MLS. We are sort of working on some strategies now to dig up some off market deals. We're going to test a few different things and see if what works. The 8 unit was off market though. I know the owner really well and he was working on liquidating his portfolio. I just so happen to be emailing him about something else and then this came up so we struck a deal before he put it on the MLS. I also helped another one of my investor clients buy something from him at the same time. Really just the right place at the right time.

Thank you both.  That definitely does give me something to think about in terms of reserves and such.  I was going to keep 5% of rents for capex and improvements also.  I think the biggest part for me right now is grasping to actually use the rental income as a means to live since that isn't what I've been doing for the last 3+ years.  I work with some investors whose goal is to pay the buildings off as fast as possible and maybe some of that just rubbed off on me too, but now I'm looking at the long term.  Enjoying the cashflow now and letting it pay itself off over time.

I was more or less just curious how many others were doing it either way.

Since I've started investing in properties I have never used the cashflow to pay myself for anything.  This is mainly since investing isn't my full time job and I don't need that income to survive.  I would just let the property build up a little bit of reserves and then also put more towards possibly paying it off faster.

However, I'm switching gears and trying to become more of an investor full time, gain financial freedom, and start using that income to live.  Do a lot of you do this?  Obviously when we buy deals we analyze the cashflows based on everything we can think of.  I'm just curious for those of you that are living off of your rental income, what type of things I should be thinking about before switching over to this.  For example, how much do you typically save for reserves, any rules of thumb you consider for how much to take from the property?  I know this may seem like some dumb questions since we all buy and hold properties to have that financial freedom at some point, but it's a total change up from what I've been doing, so I'm just trying to wrap my mind around it.

My name is Justin Hertzog.  I am from a rural area in MN about an hour outside of the Twin Cities.  I have about 10 years of experience being a real estate agent, rental agent for a large property management company, and now owning my own small brokerage.  I have always had a passion for the investments side and have tried to make that my focus along the way.  I went through Fortune Builders Mastery class about 6 years ago and also dove into real estate full time at the same time.

Since then, my wife has joined me so we both do this full time.  We have slowly acquired a small self storage facility, an 8 unit apartment, completed a large rehab project, and turned our previous personal house into a rental after moving into the rehab project.  We've also done some private lending to larger self storage developers as well as secured a nice sized HELOC on our property in hopes of using it on our next project.

Our goal now is to build out our rental portfolio faster than we have been to try and gain financial freedom within the next 5 years or sooner.  I'm very excited to be more active on Bigger Pockets.  I've been listening to their podcasts, watching the YouTube videos, and reading a lot of the articles on here already.  There is such a wealth of knowledge and opportunity here and I'm excited to tap into it as well as contribute as much as I can.

I look forward to chatting more with everybody or possibly even working together!