All Forum Posts by: Ken D.

I'm assuming there's a website with records of historical property value appreciation for each area? Is there anything similar for rent prices? As a first approximation I'd probably take records from the largest time frame available, do a linear fit to that and assume the same percentages can apply over the next 20 years. For a Monte Carlo simulation, I might apply a +/- to that and see to what extent variations in that estimate have ~non-linear effects on the final answer.

Agree that one of the biggest impacts is the current value; for two of my properties the mortgage company provides an equity estimate (which I have no idea how accurate it might be since websites like Zillow, etc typically don't handle multi-family properties very well), but here's a sampling of the estimate variations from different sources:

$252K (Appraisal for refinance 21 months ago) vs. $269,939.00 (MortgageCo) vs. $294,900/$321,230.00 (Realtor; CMA vs. Current Income)

$529,973.00 (MortgageCo) vs. $600,000/$626,207.00 (Realtor)

$312K (Appraisal for refinance 21 months ago) vs. $334,900/$391,556.00 (Realtor)

FWIW, Realtor is an investment property specialist and estimates were based on rent. (But obviously they have a motivation for me to want to sell thus hooking me with higher estimates seems likely). 

I think for current values it's safer to go with the lower end of these ranges. There's some benefit there in that I can always change my mind about selling if I'm not able to get the asking price I want, so I can retune the analysis with new data if I find bids coming in too low.

Just to clarify, but the 1031 proceeds have to be rolled into an investment property, which I can then later convert to a primary residence, right? And there's a 45-day period after the sale of the rental property for me to decide up to three properties I want to buy? The tax advantages are obviously enormous but that sounds incredibly difficult to do in the Bay area's extremely aggressive real estate market (it's common for properties to receive > dozen offers with extremely minimal marketing, maybe just one open house and then to receive offers -- not uncommonly all cash -- 20-30% over the asking price). 

TL;DR: Looking for a financial analyst/planner to help me with quantitative tradeoff analysis to help me decide whether I should sell (some subset of) my 5 rental properties so I can afford to purchase a single family home and stop "throwing away" ~4K/month on rent. I've worked with a couple financial planners in the past and neither seemed to be capable of doing more thorough analysis than I was given ~20 hours of work in Excel, so I'm looking for someone who can demonstrate to me quantitatively that their analysis is correct given whatever assumptions their modeling takes into account.

Background:

I currently own 5 properties, 14 units in Minneapolis/St. Paul, MN metro area. Total value is $1.5-2M. After subtracting loan balance and sellers fees, net for selling all would be $350K-850K (There is obviously a lot of uncertainty here, high value is based on a recent pitch from a realtor who specializes in investment property; low-range is based on skepticism of that). I currently live in one of the most expensive parts of the country, the "Bay Area" or Silicon Valley. I plan to be here for the next 20+ years. I need my kids to be in a good school district. I currently spend $4300/month on rent for a pretty decent place (3Br/2.5Ba, ~1600SQFT). The house I'm renting is valued at $1.2M. Rent has been going up ~10%/year for the last 5+ years but some commentary says it's finally hitting a peak. Home values have gone up similarly enormous amounts. California has a wacky law where assessed value for property taxes can only increase at a very limited rate (~1%) so most people are locked into property tax rates much lower than their current home values, so this favors purchasing rather than waiting.

$4300/month is at the high-end of affordability for me, so seems like the only way I'll be able to purchase a home of the quality/location I want is to liquidate (at least some portion of) my real estate portfolio. In general my investment properties are in an early stage where the total equity (ie. + cash flow) appreciation each year is >10% (ie. better than could be expected from the stock market), so selling seems like a bad idea. OTOH, "throwing away" ~48K/year of post-tax income on rental for the next 20 years also seems like a terrible idea. Thus, I need someone competent to do a thorough financial analysis to help me understand where the swing points are in the tradeoff where one option would make more sense vs. the other one.

Something along the lines of:

https://www.nytimes.com/interactive/2014/upshot/bu...

but which also incorporated my current investment property holdings. And, I would need someone who could do the necessary background research to find reasonable estimate ranges for what property and rent appreciations are for both Minneapolis/St.Paul areas and Silicon Valley; and _ideally_ do the analysis across a range of values for each of the inputs. 

I'm uncertain whether such an analyst exists and whether it's worth spending whatever it would cost to have this analysis done. As I said, I can go pretty far with some massively complex spreadsheets but I'm still fundamentally uncertain of the soundness of some of my analysis, and within the context of Excel it's pretty hard to do across a range of inputs. OTOH, it would be very disappointing to spend $5K only to have someone provide me with an analysis that still doesn't do much better (or as good) as what I can do on my own if/when I'm able to find the time.

Thanks,

-Ken

Does anyone have positive experience with any of the property management companies in Minneapolis, MN?

I've been looking at several so far, but most of them have very negative reviews on one site or another, and the ones that have positive reviews its so hard to know whether to trust them....

I've gotten burned by bad management before, so I'm really concerned now.

I'm currently looking at:

EIG

33rd

Real Property Management (RPM)

REI Property Management

Urban Enterprises

Trikin Properties

Thanks for any advice / experience,

-Ken

Nope. All tenants were moved out by 3/31/14 as their lease required.

We only received 2/3 of the last month's rent because 1 tenant said we should take it from her security deposit. We told her we couldn't do that because the security deposit was for damages not rent, she didn't care and refused to pay. Now, perhaps we could have evicted them in the middle of March once we realized she wasn't going to pay March rent, but that seems like a huge hassle.

Basically we wanted to punish the one tenant who refused to pay her portion of the last month's rent and flag her as a BAD TENANT so that other landlords will know to avoid her. That was our understanding of a UD. (Sorry for always speaking in plural, but we're a husband and wife team).

Sorry I wasn't clearer.

Yes, all three tenants have moved out on-time.

Yes, all three tenants are named jointly and severally liable on the single lease.

I'm apparently very confused about unlawful detainer (UD), but from talking to other tenants who have applied to us who have UDs on their records I had gotten the impression that a UD was a "really bad mark" a landlord put on a Tenant's record for misbehavior, but mostly related to not paying rent. We had one applicant say a UD was placed on her record for failing to pay $80.

1 tenant out of a group of 3 refused to pay her last portion of the last month's rent. I tried explaining to her why this wasn't acceptable and she still refused. Her roomates weren't willing to cover her portion of the rent. Ultimately, I'll end up taking the rent + late fee out of the security deposit, but I also wanted to place an unlawful detainer on the 1 tenant who refused to pay her portion -- I was wondering whether the cost of the unlawful detainer can also be deduced from the security deposit?

Our lease has language such as:

"Resident agrees that any payment received will first be applied to any fees owed under this lease, including but not limited to, late, legal, court, unlawful detainer and/or damage, prior to paying rent for any month."

"When Resident moves out, the Deposit will be returned by Owner with interest as specified by Minnesota statutes provided Resident has: A.) Given proper written notice and has performed all the terms of this Lease G.) Paid all outstanding amounts due to Owner and utility companies"

"If Owner brings any legal action against the Reisdent, Resident must pay Owner's actual attorneys' fees, court costs, and related expenses even if rent is paid after a legal action is started"

I would think that last paragraph is explicit enough to allow security deposit to be used for unlawful detainer, but I wanted to check.

Thanks,

-Christina

Does anyone have a list of questions to ask a potential tenant's previous landlord during tenant screening? When I've called previous landlord, many of them have required me to have a written list of questions and are unwilling to provide a "general assessment."

1.) Was the rent paid on time? Late how many times?

2.) Was the apartment left in good condition?

Any others? I'm just hoping for an existing list so I can get good information from the previous landlord.

Thanks,

Tenant laundry is in the basement as well as unsecured storage and circuit breaker access. The basement is unlocked (there's not even a door, actually) - but the building exterior doors automatically lock and have door closers on them, so visitors or random people can't generally get into the common areas and wander around (unless the door was blocked open).

We have tenants sign a waiver saying we're not responsible for damage or theft to anything stored in the basement and stress to them that storage is at their own risk, but we've never had a problem with that occurring.

A new tenant asked me if she could have an extra set of keys to give to a friend so that when she leaves town someone can come in her apartment and take care of her cat. On the lease it says, "Resident shall not provide keys to any non-Resident without express permission of the Owner". A part of me feels like this is a building security risk- am I being too strict? This building is a tri-plex and all the tenants are or seem like quality people- the basement is filled with unlocked storage for all the tenants living in the building (a total of 5 tenants). I want to keep my building smart and safe- what should I do? Should I have her pay a deposit on the keys? Or should I just not do it?