All Forum Posts by: Noah Chappell

@Adam Tafel right on, couldn't have said it better. 

@Macayla Fryc I think it really depends on your goals. As Adam said, (everything else being equal) higher DP more cash flow but worse return on your money, & conversely higher DP better return but lower cash flow. Are you looking to spread your capital out as thinly as possible while ramping up your portfolio? Do you want to have 5 well chosen free & clear properties with high cash flow & then retire? Neither is wrong but depends on your objectives. Your answers will help inform your path going forward. 

@Mamadou Ngom Welcome man! You're smart in choosing to house hack. I house hacked a 4 plex in Minneapolis, and my twin bro is on his 2nd house hack in St Paul. There's great opportunity in the twin cities, you're lucky to be here. House hacking is a great way to take control of of your financial future, especially in this world where things are feeling more and more out of our control.. 

I'd focus on getting a great cosmetic value add deal (only cosmetic so it will pass conventional lending standards) on a small multi family in a good neighborhood, which shouldn't be hard around here. You could use a MN Housing loan, or FHA, or check with local credit unions for other ideas. I remember last year MN Housing was offering a down payment grant for SFH to duplex I believe in Hennepin County that would have covered the entire DP - you'd be in a property for 0 down! You just need to look and you'll find opportunities.

@Nathan Christensen This is really personal preference, so I'll give mine.. don't mean to offend anyone!! 

I lived briefly in Payne-Phalen & my brother owns property there, & it seems like an "up & coming" neighborhood thats still somewhat early in this process.. there's still some problems with crime and riff- raff, etc. 

North End neighborhood is where I own property and my brother lives, stable and blue collar, can get a great property at a good price, about 1mile straight down to Downtown & the river area, close to light rail. I like the area but you have to be comfortable with a somewhat "transitional" area, some patchy areas with crime, etc, but confined to certain blocks - check Trulia heat map. 

Frog Town just NW of & very similar to North End. I know ppl who love it there, but it can be patchy too. 

West 7th would be my choice, great feel & still accessible prices. 

Macalester Groveland very nice but really really expensive. 

Don't know much about W St Paul.. 

I personally prefer Minneapolis > St Paul, send me a DM & we can discuss those neighborhoods further! 

Best of luck. 

@Tom Wagner not too much to be said that hasn't already.. great ideas. 

To meet 1% rule with a 4 plex you'd need $2,500/unit/month.. admittedly not an easy feat. 

One idea is student housing, around the U of M in Minneapolis individual rooms rent ~$600 each, you could get a 4 plex w/ 4 4br units or duplex w/ 2 8br units and get $9,600/month. A property like that would likely be around $1,000,000. 

Otherwise, you can get duplex/tri/4 plex in Minneapolis that produces decent rent/price, but definitely not for 1m. 

@Andrew Hogan few ideas... 

First, given the profound effect of the crisis on retail, I personally wouldn't touch a NNN at this time.. at the 300k price point a NNN commercial property would likely be in a strip mall district, etc, with pure non paying tenants.

Some parts of the country have remained remarkably stable in prices, like where I am in Hennepin County, but others such as parts of NJ have suffered. Even if you're in a stable area, you could probably take advantage of fear of unknown & obtain a low market or below price before we find out what really will transpire. 

As always & especially now, key is to buy 20% or more below market & choose a "recession resistant" asset class. Anything commercial or A class I'd avoid. Under market c+/b- in a good, stable market are likely to do very well. 

Paul Moore wrote a recent article describing some recession resistant assets & areas: 

https://www.biggerpockets.com/...

Good luck. 

@Daniel Anshus you're right, inventory's down & demand remains strong so looks like its still a hot market, looks like there's a few tri & 4 plex at <&100k/door, possibly due to condition, or maybe less buyers for the larger residential multi family, just something to think about.. 

@Puja Shah A great way to think about it is return on equity, which for MPLS is very low right now at 4.5-5.5% as you've said. In this market you should be able to make a 15% cash on cash. 

With the chunk of $ you have, you'd be able to start an incredible portfolio right off the bat. 

What I'd do is sell, making several assumptions I imagine you'd have a 15% long term capital gains rate & would finishing with ~$230k (for a new investor I'd avoid 1031, complicated with short deadlines to find properties, etc.) Then I would buy 4 solid duplexes with 30yr conventional investment loans for $200k each putting down $50k down payment each. With the remaining $30k I would house hack a 5th solid duplex in a nice area with a 3.5% down FHA you feel comfortable living in (think Powderhorn Park area, NE, etc) - just make sure you're living for free here.

You could do above in 6-8 months & have a portfolio cash flowing $1,300-1,600/month while living for free, not to mention the 3 other wealth generators appreciation/loan pay down/tax benefits!!  

@Ilya Plugovoy great question! My opinion is go for the investment property here first all day. This will benefit you in multiple ways. 

First, here you're physically in the market which will make obtaining finance & setting up a team with a great property manager, etc much much easier. 

Second, speaking of your $150k, you could put 25% down on a $150k rental property here, then use the rest for an house hack in CA, or buy the investment property here outright & obtain a secured loan against that for your CA home - my point being the HELOC idea could be used either way.

Third, in investing time is one of your greatest & most undervalued allies - if you wait 2yrs to invest you're missing out on the likely 10% appreciation, loan pay down, cash flow, & tax benefits you'd benefit from otherwise, this is a huge profit you'd forgo. 

@Kalvin Seidl welcome! Just reading your post I can tell you have a good & realistic outlook when it comes to investing, cautious & measured.

I'd start by evaluating your resources in terms of cash, connections & prior experience/knowledge. I'd then try to make a clear, realistic & measurable tentative goal, & don't be afraid to be ambitious. You could specify number of units acquired/yr, etc, & what strategies you'll use to get them - make a rough road map. 

At this point I would AGGRESSIVELY dive into the info - all car rides should be podcast time, no more net flicks - this is reading/BP time, only take time for your job, relationships & fitness, etc, otherwise its ALL real estate. 

Now its time to jump in, stick to your criteria & only compromise if it makes sense - never let emotion allow you to buy a bad deal, there will ALWAYS be another. Remember, you'll need to live with whatever deal you buy for years to come (assuming you're buy and hold which you seem to be). 

A note on the pandemic - I'd say go for it now, make offers, talk to ppl, (safely) look at a house every wk, I promise something will come up that meets your criteria. If you can be an investor forged during a downturn, you'll be bulletproof & have an education no $50k boot camp could provide. Good luck! 

@Puja Shah Welcome Puja. Contrary to what some have said, this may be a good time to buy when sellers may be spooked & interest rates are low. 

Where are you living? You could consider housing hacking a SFH & renting rooms, or duplex.

Seems like you're familiar with Minneapolis, so I'd choose some neighborhoods you like & have properties at a price point that makes sense for rentals (read: <300k, not Lowry Hill, NE, Uptown, etc), then I'd create searches on Redfin, Zillow, & Trulia for the type of property you'd like. You can list by lowest price, time on market, etc. You can take 15min every morning to review & reach out to an agent when you see something you like. 

Echoing above, I'd start with a SFH or duplex needing a little cosmetic repair - "paint & carpet", updating kitchen & bathroom. Relatively cheap, check Pinterest for ideas.

Good luck!