All Forum Posts by: Nathan Christensen

Hi Bigger Pockets St. Paul,

I’m looking to invest in the St. Paul market next year. Older properties fit my budget best. However, I’m wondering how cautious I’ll need to be with buying homes 100+ years old, or if I should avoid them entirely.
The issues I’m most concerned about addressing are:

-Knob and tube wiring

-Foundation issues

-Plumbing, cast iron pipes, galvanized piped

-Lead based paint

-Asbestos

-Old single pane/drafty windows

-Old HVAC systems

-Roof

-Historical preservation rules

I intend to leave the work of fixing most these issues to electricians, plumbers, roofers, etc. But is there anything I should entirely avoid as a new investor, or any big issues that I’m leaving out?

Thank you for any advice.

@Corey Hawkinson @Tim Swierczek @Adam Tafel @Bryan Tinajero Thank you all for your input I definitely have West 7th at the top of my list. It's encouraging to hear that there are still deals to be had there. Have you found that you need to find "off market" deals in order to find something that cash flows or have you still been successful with the MLS? I hope to do some very basic value add cosmetics but I also plan to buy something livable.

@Noah Chappell I would love to talk more about Minneapolis neighborhoods with you, I have looked much less over there so I have a lot to learn for sure.

@Alyssa Strom I have heard from a couple investors now that they liked Capitol, I will definitely keep my eye out for that neighborhood as well.

@James Hamling You're totally right, the markets could change a lot in the next year, I won't set in stone the neighborhood I want to be in but it's good to hear that the research I've been doing does seem to line up with what investors think of the areas. I'll keep myself updated as I get closer to making my move. 

Thank you everyone for your advice and input, it helps a lot!

Hello Biggerpockets,

My girlfriend and I are planning a move to the Twin Cities in early 2021 (possibly later depending on the pandemic) and we will be looking to house hack. I have been collecting rent information off of Zillow for duplexes in Payne-Phalen, Dayton's Bluff, North end, Frogtown, and West 7th for almost a year now and I just added West St. Paul to the list. I just wanted to get some investor/resident perspective on these neighborhoods. West 7th seems to be the investor hotspot in St. Paul and I'm afraid it might be nearly tapped out by early 2021 given that it isn't the biggest neighborhood. Crime statistics also point to West 7th and West St. Paul being better neighborhoods with stronger rent. Please let me know what you think of these neighborhoods and their housing stock as I hope to call one of them home soon!

I am also open to moving to areas around Minneapolis as well, initially I thought we would struggle to save up enough for a down payment in those neighborhoods but we have been fortunate enough to land good jobs out of college and we have enough to put at least 10% down (with 6mo cash reserves) in almost any neighborhood and we will save some more before we move.

Thanks in advance!

@Eric Schmid  Congratulations Eric that's an awesome deal, would you mind sharing what neighborhood your in with this property? I hope to be house hacking in about a year and I'm still researching neighborhoods.

@Aaron Montague @Todd Dexheimer I purposefully estimated my property management low because I plan to manage my own properties as long as I can. I don't want to miss out on a deal because of this metric but I do hear what you're saying. 10% is the traditional estimate and that would probably be more accurate, I was just trying to hedge a bit.

@Tim Swierczek @Bruce Runn I totally agree about percentages being inaccurate when it comes to maintenance and cap ex. I would much prefer to use age, condition, number of units and square footage as a basis for those estimates. Without any experience I'm not quite sure where to start building out that formula. Every time I try to search for more concrete numbers I just get people throwing out percentages. Which I think is probably about as accurate as any rule of thumb but that's all it is; a rule of thumb. As much as I'm like any newbie afraid of buying a bad deal I think it is far more likely I'll be sidelining myself with conservative numbers. How would you suggest I start building a better estimate system for cap ex and maintenance? My first thought is spread sheet every possible expense and divide each upgrade by lifespan but that hardly seems repeatable.

@Bruce Runn How extensively to you renovate each property? Are you gutting each property or do you just look for future problems and try to fix whats needed on a deal by deal basis?

@Ryan Schroeder Thank you so much for sharing your rent analysis model. It seems like rent is highly influential and dependent on so many things like size, finish and neighborhood. Which as I write it seems like a pretty "duh" statement but it makes it much harder to predict.

Thank you all for your input. I want to keep whittling away at the numbers until I have some formulas where I can be competitive in this hot market while minimizing risk of buying a bad deal due to negligence. I will definitely start looking into replacing my maintenance and cap ex with hard numbers. I will start tracking rents by neighborhood as well and start taking note of size, finish and amenities.

Thank you all so much, every piece of information goes a long way for me!

@Bryan Tinajero I appreciate the encouragement, thankfully I’ve never been much of a victim of analysis paralysis. Working with the numbers tends to drive me forward rather than hold me back.

I think what I’m getting from both of you is that I should look more into the differences in rent between neighborhoods. I can’t be pricing rents the same in Dayton’s bluff and Summit Hill.

Thank you both for your advice! @Ryan Schroeder

@Ryan Schroeder I probably should have been more specific about what I was looking at. I’m hoping to buy for 180-260k so I assume I’ll probably be in Dayton’s Bluff, Phalen, North End, Frogtown or West 7th (if I’m lucky).

I definitely had trouble finding info on studios and 3/2 (that were not SFH). However it's unlikely this is the type of unit I will own anyway. I'd love to get a triplex and live in a studio unit but that seems like a needle in the haystack.

I’ll try looking at units from a per square foot perspective now. Do you find this to have a bigger impact on rents than unit quality?

Hi everyone,

My girlfriend and I are planning to move to the Saint Paul, MN area in about a year and we, like many others, are hoping to house hack a duplex. However I want to analyze properties as if I was buying them as a purely passive income property. After a few hours of scouring the forums and reading the county websites I came up with these numbers. I was hoping I could get some local input on how close I am to accurate numbers.

I went with a conservative $100 cashflow per door, mostly because my down payment will likely be less than 20% so I will have mortgage insurance. For rent I just poked around Zillow and other rental sites and looked specifically at small multifamily for comps. Maintenance, Cap Ex, Property Management and Vacancy loss I really just scoured the forums for what everyone else said they used in the region and this is sort of the conservative average I came up with for each. I did the same thing for water/Sewer. For Garbage I went to the Saint Paul city website and saw that fee was 102.44 per quarter per unit plus a 24.60 annual fee. That broke down to 70 per month. Honestly for snow and lawn care I kinda just read some forums and made my best guess. For the rental license fee I took the total cost of the Tier 2 rental licensee fee for a duplex ($305) and divided it by the term (60 months). This came out to 5.08 a month but I made it 10 for possible violations/fines. For mortgage, insurance, and property taxes I have simply been looking at what Zillow and Redfin estimate. I trust their mortgage numbers are pretty close (when adjusted) and I can double check the tax number through the county website but I am skeptical of the insurance numbers. Please tell me if Zillow and Redfin are way off on this.

I'm sure I have a long way to go and missed some things so any and all input is great!

St Paul, MN Duplexes

Rent:

• 3/2: $1300-1600?
• 3/1: $1200-1400
• 2/1: $900-1150
• 1/1: $750-900
• 0/1: $550-700?

Expenses:

• Maintenance - 9%
• Cap Ex - 9%
• Vacancy loss - 6%
• Property Management - 8%
• Water & sewer - 80/month
• Garbage - 70/month
• Snow Removal & yard Service - 60/month
• Rental License fees/fine - 15/month
• Insurance - PITI
• Property taxes -PITI
• Mortgage -PITI
• Profit - 200 minimum

My tentative equation:

(Rent x .68) - 425 > PITI = Deal

Hello BiggerPockets,

I was hoping to get some opinions on my current plan to get started in real estate.

To give you some background information, my girlfriend (25) and I (23) currently live in Honolulu where we make around 90-100k a year combined. We're both originally from the east coast. Our plan is to move to Indianapolis and find a house cheap enough to buy cash that we can fix up. We will have about 40-45k to put into a property (not including renovation costs) when we make the move.

I have some experience in carpentry and finish carpentry. We're willing to do floors, drywall, cabinets, counters, windows, fixtures, and insulation if necessary. Essentially we want to avoid plumbing, electrical, and structural issues.

What neighborhoods would suit our goals? I’ve been reading @Sterling White's guide and I’m interested in Beechgrove, Garfield Park, and Christian Park. However I have no idea what a reasonable price point is for what I’m looking for. Could anyone suggest a good way of finding heavily distressed properties? I am ideally looking for a small 2-3 bedroom home so I don't bite off more than I can chew on the first home. Is there a ball park number of what I should expect to pay for a single family home under 1500 square feet? I know there is lots more research I’ll need to do; I’m looking for more of a starting point than an all inclusive answer. 

The long term plan is to HELOC the property when we are finished and use that as a fund to BRRRR other properties. I want to know if our 40-45k budget is enough to get into a home or if we should change our strategy entirely and plan on using financing.

Thank you in advance!

@Aladdin M. How did you get comfortable buying properties on auction.com? Did you have someone look at them before buying? I would be so worried about foundational or plumbing issues.