All Forum Posts by: Noah Chappell

@Benaiah Savage Great job for taking the first step and asking about what to do first - it's hard to get your head around all the info out there. Real estate is definitely a long game, but once you build up momentum you'd be surprised at how fast things go. I'd focus on a few things for the next year or two. First, get a W2 job with a decent salary, doesn't need to be crazy high, even 40-60k a year would do. Then really focus on your saving habits, make a budget and stick to it, try to put aside 50-60% of your monthly after tax pay. Then really really make your credit pretty, aim for a credit score >720. If you do all that in 1-2 years you will be an unstoppable force. 

@Forrest Faulconer I think depends on how much you want to invest your time and energy in your real estates, Brandon's "scale of comfortability". If you're b***s to the wall you might use a 203k loan to buy a distressed 4 plex in a borderline area while using the other half to BRRR another 4 plex with hard money. In a year you'd have a stabilized 8 unit portfolio likely cash flowing well and furthermore have your money back after a refinance, in order to rinse and repeat. The down side is you suffer quite a lot, though learn immensely, in the process. You could also just hand the money off to a syndicator, but probably learn little to nothing about the nitty gritty of investing.

@Jacob Kizewski @Max T. I agree. What I do is open up a separate account for each property. For ex through ally bank you can open up a checking account in 5min without speaking to anyone and be ready to go. Then I open up a new credit card that I link through auto pay to each account to take advantage of benefits from ongoing expenses. I keep a credit card for each property in my wallet, and write the address in sharpie on each card to not get confused. I also have a spreadsheet for each property listing each associated account, to annotate purchases that aren't super clear from the bank statements. That simple system has seemed to work fine. 

Another quick note. Some property managers will offer to take on utilities, subtracting what you pay before depositing your monthly net profit. I'd err on the side of managing this myself, just setting up auto pay for the bills, but still having an account in my name so I can make sure the utilities aren't crazy & track expenses. 

@Andrew Mowe wow if you can find a house hack deal that lets you live for free in Boston I take my hat off to you.. let me know the neighborhood! I recently moved from Boston to the mid west to start investing, since I couldn't find anything in Boston that even close to made sense. 

@Bryan Malone "Where can I find a property I can afford, in a good area, that cashflows nicely, and hopefully will appreciate in the next few years?" When you figure that one out, definitely let me know - I think we're all searching for that answer! In all seriousness, listen to BP podcast #373, another California investor walks us through her trials and tribulations in investing out of state in Kansas City. Best of luck. 

@Dustin Peterson welcome! I think you'll find we have a pretty supportive and fun investor community here in MSP. This is a hot market, and if you can be successful here you'll really have the tools to build a great portfolio and career. Let me know if you have any questions. 

@John Hanson good job in jumping in. I think you can find 1.4 properties in tolerable areas of Minneapolis and St Paul that have good bones but need some paint/carpet/light fixtures and will meet your cash flow goal of >$200/unit/month, possibly even on the MLS. Don't think you'll walk into a hot area and find this, not gonna happen. Just dedicate 30min daily to reviewing the MLS sites and broadening your deal flow. I'm way novice compared to those guys above, but I still got a near 2% deal off market this year. Just keep grinding and learning, and you'll find what you're looking for.

@Walter PapeTo add to above, I personally think the best metric is the rent to price ratio, the proverbial "1% rule". As stated, cap rate breaks down when used for 4 unit or smaller properties, as it isn't a reliable way to value the asset, given appraisers will use the comparative sales approach, of course this will work for a triple net commercial property, etc. Additionally, the cap rate is kinda trash if you're buying an type of distressed asset, unless you're using it purely for projections. Of course the the COC & cash flow are purely subjective metrics that depend on you financing, ability to minimize expenses, etc, & aren't objective metrics to compare properties. If you had to force a cap rate onto a small multi in Minneapolis or St Paul it might be 5.0ish or less in the nice A class areas, & 7.5 or greater in the C areas or worse. Hope that's helpful.

@Ian Ashcroft hey just be sure to throw a @ in front of the name, that way we'll know when you mention us.. just seeing this now. I mean yeah you can definitely find a PM for <10% gross rents monthly. If you are at a distance & want to be quite hands off I'd look into VSM real estate. They're a slightly pricier option at around $200 monthly for a duplex, but a real first class operation. I actually don't use them personally - I'm local & have been able to be more hands on, but I've met & corresponded with Andre several times, & they're legit. 

I think after handing the thing off to a good PM, having their attorneys strategies the best eviction plan, putting good tenants in, & ultimately not having to think about it for a few months, you'll come back energized & ready to stick with this property. 

@Ian Ashcroft to play contrarian, I'm not convinced you should sell. It sounds like the difficulties you've experienced are typical of real estate, and probably the same as you'd experience in any C class area when going through a rough patch. I don't necessarily see you getting a huge appreciation bump from the cap ex you just completed, so I'd ride it out. You probably could have payed slightly less, but not by much. Don't forget, this is a great appreciating market. If I were you I'd approach this property like you're looking at it for the first time as a buyer, and have the task of repositioning it. Research and put in a great property manager, you'll pay <$200/mon for sure. Evict when you can, then rely on your PM's experience to screen and put in great tenants. Consider section 8. Sounds like the place is in decent shape, surely you could get $2400 gross rents. In a few years refinance and lower monthly payments for better cash flow. The way I see it, if you walk away from this property, you walk away from real estate as a whole. Otherwise, take this as a learning opportunity and move forward.