All Forum Posts by: Justin Hennig

I used Listsource to pull Multi-family in my area and the list they sent me was terrible.   My criteria were pretty simple...6 zip codes, 2+ unit, high equity.   Their list has several SFRs on it, lots of condos, very few duplexes, triplexes, and 4-plexes, and lots of duplication (even though I selected to remove duplicate listings).  

Just basically wasted $150.  I'm asking some assistance to find more of these types of properties...Maybe back to square one.

Looking for Duplex, Triplex, 4-Plex (fourplex, quadplex), and 5+ unit apartment buildings.

Any condition.  My farm area is close to lake harriet, Lake Calhoun, lake nokomis, and minnehaha creek, zip codes 55406, 55408, 55409, 55410, 55417, and 55419.  Especially interested in owner financing but can buy with various forms of financing.

Looking at residential but will consider commercial financing as well.

Call me to discuss if you have something!  Justin 612-401-0007

I'm exploring some seller financing options on a 5+ unit multi-family so have a few questions I'm hoping some KIND SOUL who's been around the CFD block before can help answer...I promise to Pay it Forward!

     1) Do Services exist to administer the paperwork

a) both the transaction (real estate attorney or someone else?)

b) The payment paperwork afterward and keeping track of money paid, interest...amortization schedules, etc...in other words, does a service exist that would be able to print out the mortgage bills that follow along with the amortization schedule.  Who did you use/would you recommend?

2) The prospective sellers (husband and wife) are both elderly, so with a longer amortization schedule (targeting 25-30 years) that will outlast their lives, how do the mechanics look upon their deaths (CFD being transferred to next of kin for example). How should this be presented this to the sellers...(they haven't done a CFD in the past).

3) Do you have any other general advice regarding CFD?

Thanks!

Justin

Rates are really low right now...I'm considering refinancing out of a construction loan and pulling my initial investment out on a duplex we rehabbed.

The property will likely appraise high enough we could actually pull more money out than was initially put in.

At around 4% interest on a 30 year conventional refi, what would you do?:

1) Pull out the initial investment to capture infinite returns, but being conservative so to keep debt to income ratios lower for better ability to qualify for future conventional financing.

2) Pull out MORE than the initial investment for even better than infinite returns since that additional money could be reinvested at higher interest rates than it was borrowed at?

3) Your other suggestion

I don't believe it is, but as a side note, is money from a cash-out refinance taxable? 

Thanks BP community!

Robert,

Congrats on getting started!

Backsplashes can be used to tie colors together in a kitchen.

I like the suggestion of white subway tile for two reasons...it's really cheap (3x6 subway tiles run about 19-22 cents each) and with the white appliances and floor, it would work well.

You could also try glass tile that has whites, blacks, and orangish/reddish  colors that match your cabinets...it would ultimately tie everything together.  Glass tile is usually more expensive, especially if you go with a boutique tile company like "tile shop,"  but I've usually done pretty well finding good tile selection and much better prices at Home Depot, Lowe's, and Menards.

Here's one kitchen I was involved with where the backsplash has whites, creams, and tans, which ties the floor tile, appliances, granite, and cabinets together.As a separate thought, backsplashes are one inexpensive way to really class-up a kitchen and add value to an investment property, plus can make it nice enough to justify higher rents.  

Updated appliances (craigslist is great for this!), new cabinet hardware, updated countertops, and a paint job are other relatively inexpensive ways to add a lot of bang-for-the-buck on a kitchen refresh.

Best of luck!

Is this worth the trouble?

There is a vacant older Duplex (1920's vintage) in a terrific neighborhood with wonderful schools in Minneapolis; I'd love to buy it, fix it up, and rent it out.  I believe it would be either a good flip or good long term buy/hold. Has now been vacant about 3 years.

I have contacted the owner who is elderly and has owned it for over 50 years, but one bad tenant and a lawsuit by that tenant which cost him over $100k and the city not allowing him to renew his rental license since 3 years ago without paying a ton of fees and required repairs has ticked him off enough he said he doesn't care if it burns down.  

He's on the fence if he will sell (more about that below)...

The roof is older and needs immediate replace of some shingles and eventually complete replacement, driveway needs repair/replaced, trim needs carpentry repair and painting, Estimated Exterior roughly $25,000.  Haven't seen interior yet except peering thru windows but estimating about $35,000 to uncover and refinish hardwood floors, replace some windows, paint everything inside, lite kitchen updates, some new appliances, and light bathroom updates...budgeting to replace one boiler immediately.

It's up/down 3 bed 1 bath on each floor, would rent for about $1400 per side in as/is condition, but could fetch 1750 per side if updated.  

Has Fireplace in each living room, formal dining room w/ built-ins, hardwoods under carpet in living/dining rooms, and hardwoods in bedrooms

Here's what I see as the big kicker: There are $62,000 in back taxes from the last 3 years unpaid, which includes a host of assessments and vacant building fees. the owner is elderly and has early Alzheimer's, so I believe he has neglected these partially due to this and partially due to his being angry at the situation (lawsuit + city issues).

ARV on the house is around $425,000 and I think I could buy it for around 35% of value and would have to pay the taxes and do all repairs/updates which I estimate would be around $60,000 total. With additional miscellaneous expenses like attorney's fees, loan origination fees, real estate commissions on sell-side, I'd be into it around $300k.

Owner has not accepted my offer yet but seems leaning toward it if I get all info from the city and help him navigate what it'll take to get it salable...Left him with the idea that it's better to get him something than walk away, lose the property, and he's left with nothing.  I think he'll go for it but I need to get it for the right price.

Lots more to this picture so let me know what else you need to know to determine if this is worth the trouble, potential pitfalls, upside, risks, etc.  

Thanks!  Justin

Foreclosure Duplex, Zestimate $122k, Purchase price, $85,000. Last time it sold at this price was 1998. Needs about $15,000 in repairs and upgrades to update somewhat and add a bedroom to each. Needs a new boiler, paint, remove carpet upstairs to expose HW floors there, needs 2 refrig, 2 stove, and may add dishwasher in 1 or both. Older house (1904) with Hardwood floors, original woodwork, French doors to Sunrooms on front of each, flaking paint on outside would need new siding or scrape/paint within a few years. Currently 2 bedroom 1 bath on both sides but has room to make into two 3 bedroom, 1 bath units...each unit is 1150 finished square feet.

Prevailing rents around 900-1150 for 3 bedrooms so gross rent would be around 1900-2300 per month. I'd upgrade it enough to possibly fetch 1000-1100 each side so would meet the 2% rule.

25% down = $21,250 (seller paid CC) + 15000 repairs = $36,250 cash needed.

Taxes $2100, Approx Insurance $1800/year, estimating 10% for property management, 5% for repairs, 8% vacancy,5% capex, tenants pay all utilities.

This Up/Down duplex is in a borderline sketchy neighborhood and its 25+ minutes from my house. I'd like to manage anything within 10 minutes in nicer neighborhoods, so this one because of the neighborhood and proximity seems to make more sense under management.

I've never hired a property management company before and would love to get some advice just about that.

What do you think and what questions do you have?

thanks!

Justin

515-868-6886

Welcome to BP @Greg Braun ! I'm originally from Eau Claire myself but now live in Minneapolis and getting more and more into REI...

Use BP and its users to evaluate deals and make sure the next investment isn't a bust. I went pro and the investment calculators have been very helpful. I would recommend to learn the fundamentals so you know the "why" of a good deal and be able to eval each one without this, but its a great shortcut.

Definitely make sure to check out the podcast...53 episodes and counting...it's a wealth of information.

Best of luck Greg!

I'm thinking about making an offer on a duplex not yet on the market but it should be in the next 2-3 weeks.

This is one of 3 identical adjacent duplexes, all built late 1940s, all situated handsomely on top of a hill across from a popular city park.

It is about 1680 Square feet finished (840 per side), side x side (mirror image), 2 bed, 1 bath duplex with separate everything (Gas/Electric/entries/laundry), a 2 car garage w/ 1 extra off-street space, big back yard, great views of the park, and in a phenomenal location.

The master plan, which I'd love to get your opinion on, is to purchase the property, and immediately renovate the unfinished basement on both sides by adding a bedroom (to code w/ egress of course) and bathroom down there, as well as a finished family room, virtually doubling the square footage...it would actually be around 3100 finished square feet (1550 per side) total when complete. We would also open up the kitchen with a pass-through into the living room (currently closed off). So, the basement expansion would make it a 3 bed/2 bath on BOTH sides, dramatically increasing the rent it would fetch.

Estimated Reno is $35,000-40,000 based on preliminary estimates from 2 different contractors.

We would plan to Buy, improve, and hold the property, and in doing the renovation, would take estimated rents (based on neighborhood rent comps, craigslist, etc) from about $2400 per month (1200 per side) to around $3300 per month (1650 per month, per side), based on prevailing rents in the surrounding neighborhoods.

Estimated cash flow around $1000 per month after assuming 5% vacancy, 3% cap-ex, and 5% repairs. Tenants are accustomed to paying utilities in this area.

We think with the improvements, it would appraise around $325-350k and could possibly refi and cash out somewhat.

We see the biggest downside on the property is the fairly large amount of cash it would eat up...would need about $60k down.

Found a commercial lender willing to take 20% down, but would finance in the repairs, so assuming 240k purchase price, selling pays CC, and 40k repairs, would require 56k down +2800 in closing costs (1 point). 5 year commercial loan at 5.875% w/ 1 point up front. Cash on cash return around 20%.

Looked into conventional but can't finance the construction upgrades, and would need 25% down on non-owner occupy investment property + reno, or about $100k to pull it off. I like using OPM (other people's money) too much to want to tap myself out like that.

After seeing the first 2 go for around $250k (and they are IDENTICAL), pretty certain it will be listed for $250k and will most likely sell around $235-240k)

Sure i'm missing some stuff...what questions do you have?

I feel this would be a very solid investment based on location, condition, ability to upgrade...oh and its only a block from my house (which I'm happy with). Should I tap most of my cash for this project or is there a way to leverage it higher and get more for my money?

What do you think?

thanks! Justin