All Forum Posts by: Mike Swenson

What would be the plan to improve the 40% vacancy? What other property management opportunities would be available as I'm assuming a new buyer wouldn't want to stick with the current PM running at 40% vacancy. Does the population growth and local economy support drastically improving the vacancy? Those would be some of the questions I'd be looking to have addressed before showing significant interest before I'd put a lot of stock in the future potential growth opportunity of the property.

Hope that helps!

Depending on local guidelines, you could explore renting it out by the room, which would be the best of both worlds. By the room could provide income much higher than as one 4 BR unit. Add keypad locks on each bedroom door and market it as a bedroom in an existing property. I recently helped with a property that had 4 different 3 BR units and each was rented out by the room, which brought in a lot of income. That property had many traveling nurses, and when they weren't working they were sleeping or out exploring the city, so it didn't put a ton of strain on having cluttered common areas, etc by having separate tenants in each bedroom.

Instead of selling to get 2 properties, hold it and leverage the existing equity to get a loan to help purchase another property. If you sell you'll pay tax on the gains, so it doesn't make sense to do that. The current positive cashflow on this property gives you some great cushion to get your 2nd property up and running and stabilized vs selling and trying to take on 2 new projects at once.

3 Things You Can Do To Add Value:

- Time

- Expertise

- Money

If you have 10k and are new, focus on how you can help get a deal done utilizing your time to find a deal and trying to find a partner with money and expertise to complete the triangle. If you're willing to put your 10k into a deal and you have time to give, you could negotiate with someone who has some money and expertise to put a deal together.

Otherwise, finding a way to utilize that 10k to a house hack, find some people to live with you and pay rent, gain some sweat equity, etc, and you'll be well on your way with your 2nd property!

Best of luck! It's an exciting time!

Yes, it's a great idea to get 2 sets of eyes and opinions on the deal. The agent/broker is best suited to determine the properties' current feasibility, is active in the market and will know if it's a "good deal" based on sales price, current market trends, etc and help with the purchase. The property manager will have a better read on ability to place tenants, do tenants tend to stick around long-term in the neighborhood based on type of property it is, rents (and future projections), structuring the lease, and executing the long-term strategy of maintaining the asset, etc. So both play valuable, yet different roles. 

I agree with others. Best to have a conversation now while your roommate is still newer to living in your place. It's easy to assume the best and try and be the nice guy, yet if the relationship goes south (and even if it doesn't and they continue to stay over a lot) you need to cover your bases since this is your investment. Do you have any language spelled out in your lease with the tenant? If not, this would be a good thing to add moving forward so that you have your based covered and a good attorney can assist.

@Brady Ascheman, are you looking for Single Family comps or multi-family? I see Rochester mentioned, is that where you're looking?

I agree with a lot of what was posted - large HOA fees can eat up a lot of potential cashflow, so I'd probably look to see if I could pull off a SFH instead, or perhaps a duplex as others have said. Look for additional ways to have a positive exit strategy. You could increase your odds down the road by picking a property where you can add value, either by fixing it up (doesn't have to be a dramatic fix-up) or adding some additional square footage to it....perhaps an unfinished attic or basement. Townhouses and condos tend to tighten up more quickly in a shifting market vs. single family homes, so depending on what interest rates do between now and when you're looking to sell down the road, you may put yourself in a better position looking looking at a SFH or small multi-family market if you can make the numbers work.

@David Plaunt, looks like I'm late to the party on this one. Do you have a date picked for your next meetup?

@Andre Hollins, I think that sounds like a great plan. It's something that, looking back, I wished I would have done when I was younger. Getting in and gaining the appreciation, tax benefits, etc is a great way to get started and having renters to help pay your mortgage is amazing. It's also beneficial to gain experience as a landlord, so that lenders can use that income to qualify you in the future. I had a friend do that right out of the gate....bought a duplex in a solid neighborhood, fixed up one half, rented it out while he was fixing up the other half. Then went and did it again the following year. He ended up cashflowing $1,000/mo from each property, so that after 2+ years he had 2 awesome fixed-up duplexes building appreciation and $2,000/mo in cashflow coming in, which gave him a solid foundation to build off of. Are you looking in Minnesota?