All Forum Posts by: Matt Higgins

Ms.  Harrison.  My wife and I have a property management business and over 120 units of our own.  Some in Minneapolis.  I was doing great in the metro when I first started out, but it was getting harder and harder to find cash flowing properties.  I had a mentor tell me, "when the market is hot you just buy farther out".  Tomorrow we are closing on a 15 unit about an hour out from the cities, built in the 1990s, that should be a home run.  I wish I wasn't as diversified as I am at times, but at least they all make money!  I don't know about Minneapolis being able to push through rent control, but what I do worry about is regulation in general.  Minneapolis is a city that can decide that they no longer wish to do business with you.  I've seen at least a few landlords drug through the paper, taken to court, and had their properties taken.  I would like to think that they were all slumlords that deserved it, but who knows.  Maybe some were just over their head or didn't have the financial wherewithal to handle such a serious commitment.  Managing another persons living situation is a serious commitment.  I know this.  Minneapolis has a lot of units for 1500$ a month, but finding an affordable place with in an hour of the metro is much harder to come by, as far as a suggestion.......you should have coffee with my wife.  Karen Higgins.  She's the best!

Love to have my flips hit the market the week of the Super Bowl.  I've found Late Feb Early March to be great.  In my mind the winter is October, November, December, and January.  Not surprisingly, those are my favorite months to buy. This is the first winter in years I don't have any flips going on and it sucks!  I will be missing out on that money this spring.  I thought we were at the end of the end.  I was wrong.  As long as the interest rates stay low I think flipping is working in Minnesota IF you can find a deal.  Best of luck to you!   It's still a really tight market for move in ready supply.  I would hold off until the February instead of putting the house on the market during Christmas/New Years

Good for you!  I’ve been self employed so I’ve always had some control over my time.  Really is the only way to live.  Let me know how full time real estate career is going a year from now. 

I run with a lot of people working at start ups and they’re all worried about their job and company.  Seems like a lot of time worrying about nothing.  I say don’t worry about it, if you’re young and talented their will always be a job for you.  It’s the unskilled work force that will fare far worst IMO in the next recession.

KEY TAKEAWAYS

• Interest rates almost never rise during an economic slowdown, as it would deter capital from making its way back into the economy.
• Money is more tightly held during a slow economy, so interest rate controllers like the Federal Reserve make rates low as an incentive to reinvest in loans and purchases.
• It is possible to lower interest rates to negative, but that can do damage

(What happens to interest rates during a recession)-investopedia 

Jay I love your podcast and find you extremely interesting.  I know a few months ago you were thinking interest rates and cap rates were going up.  I’m just on the opposite side of the argument. I don’t see a scenario where the government raises rates if the economy goes south.  Also, I don’t think other countries will abandon the dollar or us bonds.  Still the best available in a basket of goods.  

Lowering rates, printing more money, and today even a rumor of additional tax cuts by cutting payroll taxes to avoid a potential recession.  All of this sounds positive for real estate to me.  Like you said, real estate often does ok in a recession, and no recessions are the same.    

This is how the economic “meltdown” (dow still over 25k, a record not long ago) is shaking out at the moment 

Interest rates are going down because world governments are just printing money to pay their bills.  This is making safe havens like gold, bonds and real estate more valuable.  It will take more of the governments worthless dollars to buy hard assets like real estate.  Also, they are lowering interest rates to spur investments.  This should make the cost of borrowing lower and further pushing up the cost of real estate.

Robert kiyosaki says that if his clients can’t pay rent at his apartments the next stop is the street.  Most of my portfolio falls in that category.  There just isn’t a cheaper place to live and there is no new supply in the pipeline

That being said we have only seen rents go one direction for a decade.  I have my biggest deal to date under contract now.  I’m falling back on the fact that I can add value and it’s so much cheaper than what the cost to build would be.  80k a door stuff renting at 700 (I think 900 is market rent).  So ya, I’m still buying-but getting nervous and typing “recession” into search tools 

I was reading an article in the Washington post this morning (I think) that went like this.  When interest rates start to fall, and will most likely fall below zero, the price of assets go up.  In turn, shell companies will start up that just by assets, hold and sell them.  The problem will be that these shell companies will not have consequences when they go out of business and the bubble will pop.  If you believe that interest rates are going lower (like I do) you really have to wonder how the value of income producing real estate could go down in a world that is on the hunt for yield of some kind  

Ya not sure.  I purchased the two properties last year from an investor.  It wasn’t from one of the guys routinely drug through the paper and court (another reason to be a little cautious).  Im sure the change in ownership triggered the inspections on both unit.  The other inspection required the electrical to be updated.  So, at least that added some value but It was another high cost item to fix.  If I really don’t need to do another inspection for 8 years that would drastically change my opinion of what they’re doing.  Thanks for the head up.  I’ll look into that.

I have a couple in n Minneapolis and I am thinking about maybe selling over this.  If anyone is interested in section 8 approved property with a current rental license.........It really is a lot of hoops to jump to make a dollar in n Minneapolis.

I had a property that had been a rental for years.  This year a new inspector comes and “thinks” that there might not be enough beams in the basement.  He orders that I get a structural engineering report done.  1500$ later the engineer thinks it’s fine, but in his report it recommended that  the beam could be replaced because the paint was cracking.  If you want to do that you have to get a permit and go through that process.  All said in done over 3k worth of unnecessary work that added no value to my property.  This is only one of the 10 things he flagged.

Section 8 annual inspection, city annual inspection, and now I can’t screen my tenants?  It’s too much. 

 They say that they want to create more affordable housing and apparently their strategy is to raise the cost of providing housing?   

Renting to felons and people that don’t pay rent is yet another cost to the landlord.

I wish I had the courage to do it, but I love my job.  Wouldn’t you miss the people?  The paycheck?  The routine?

I’m over a 100 units and I have hired people to run my real estate, but that day job is who I am.  Real estate has changed how I operate in that day job, but it’s hard to imagine life without it.  Pretty sure if I didn’t have the day job I would start a new business and not quit until I made the same $ that I am now 

Vacancy rate 

Rent growth 

Jobs 

New untis coming to market 

No mention of cost per unit, cap rates, etc.  It is from Marcus & Millichap though 

I wonder if oversupply in Rochester isnt a real thing.  It’s pretty much the only town in Mn with deals on loopnet.  It’s the C class, cash flowing, working class, affordable stuff that would sell in a minute up in the cities.  Also, some sfh under 100k that should cash flow.  Cranes in the air beware, but that new A class stuff pry wouldn’t hurt the lower end stuff I would be buying.

I grew up and went to HS in Rochester.  Huge fan of mr pizza, Victoria’s, and the olmstead county fair.   It’s hard to recognize that town these days let alone find a parking spot downtown. 

I would try to pick up some of the affordable plexes that are out there.   I would think the closer to the hospital the better.  If anybody needs help feel free to reach out.  I have an uncle that is a realtor in town who has rentals of his own.  Also, I know a guy who does a meetup down there, and I’ve been thinking about trying that market out myself.