All Forum Posts by: Joe Schmitt

Evictions are halted across the country to the best of my knowledge. 

Our approach has been to keep rents relatively low and be very picky on tenant selection. The right kinds of tenants see owner-occupied as a value-add, so people who are throwing parties every Saturday night tend not to apply if they know the landlord lives next door. We consider our tenants our neighbors and we have been intentional about building a community in our little place. Another key for us was making sure that our leases expire in the summer because the people looking for homes in the winter tend to be pretty rough around the edges. If you're moving in Duluth in the middle of the winter, there's often not so great reason for it.

In general, property values don't appreciate significantly in the Northland. That may change as more people begin working remote and leaving the city. It's not something we really consider as this is a buy and hold investment for us. It's icing on the cake if it does. Our main tool for making a purchase decision was a good pro-forma to estimate rents and expenses to make sure that we would get all or most of our monthly expenses paid and essentially live for free.

I agree with @James Hamling's comments above. If you are selecting a long term residence for retirement, is also quite important to consider the amenities that are important to you. If you attend a lot of performances, sporting events, or other things in the Cities, consider the travel time from your new home to the Cities. Weekend traffic is significant during the tourist season on 35 and 61. Also consider access to amenities like shopping, dining, medical care, and air travel. The further up the shore you get, the sparser these amenities become, and some are almost non-existent in the off-season. 

If you are considering the Twin Ports, you should also be aware of the differences between Duluth and Superior from the standpoint of culture, cost, and laws for short-term rentals. While Superior is not quite as culturally "Hip" as Duluth, it's a friendlier business climate and has its own charm. An unoccupied short-term rental in Duluth is pretty much impossible at the present time.

I would also be very conservative in your occupancy estimates. Depending on the location from November to March or April, occupancy is almost non-existent in some areas.
 
When my wife and I were on this journey (we split time between the cities and Duluth) we chose to go the route of an owner-occupied quadplex in Duluth. We knew we wanted to be in the city, close to amenities, and be within walking distance of the Lake. We have been able to get good tenants year-round, get all of the bills paid and have the added benefit of depreciation. No matter how much or how little we are there, we never have to worry about scheduling a place to live or worry about variable income. We come and go as we please, and the money just shows up on the first. No furniture, advertising, or any other cash outlays to worry about beyond the down payment.

Now, it did take us a year to stabilize the tenant-base and get everything figured out. It's a 1 bedroom apartment with no garage, so it's not the ritz. But we have been able to self-manage and it has worked out very well for us. If we were farther away, or there less frequently, I would not hesitate to have @Michael Schraepfer and the team at Heirloom manage it. 

Good luck in your endeavor. The Northland is an amazing place to live and play. Feel free to PM me with any questions.

@Nicole Oka

Create a Note at 10% interest and seller finance it to them over the next 3 years with a contingency that they have to buy you out before making major improvements on the property. They would then just roll the cost of your payoff balance into the construction loan.

@James Hamling interesting perspective. For the record, I am an active investor in raw land. I have done over 30 deals this year.

My point, probably not well-articulated, was that holding down a full time job AND starting a side hustle doing renovations would be extremely challenging. It would be especially difficult with very little experience.

For Whatever reason, people seem to fall in love with houses and renovations and see it as the main way to make money in real estate. From my perspective, that is simply not the case. I explored that path and my personal conclusion was that there are better routes to prosperity than learning renovations from the bottom up.

But hey, if you want to tell me otherwise or talk shop, I’ll buy you a beer some time. I’ll buy @Ryan Bratsch a beer too for letting us hijack his thread.  

That sounds awful. Working on houses sucks. You can hire handymen for $20 an hour. You don’t want to do $20 an hour work. You want to do $200+ per hour work. 

Put your energy into learning how to find DEALS. Make your money when you buy and let someone else swing a hammer. 

@Ronald Cahill

Instead of doing what @Henry Clark discusses, I would either flip it quickly for cash or sell it on terms to someone who will probably pay you for a long time and never use the property.

@Barry Stegall

I sold 4 lots this week. Two were sold on terms. I will make my cash back in a year and make a 300% return on my cash in the next 5 years. On the other 2, I will make an immediate 200% return on my acquisition price.

Run some rental numbers and see how they compare.

@Matt Jennissen

This deal does not scream “Run to the bank” to me. You better REALLY like this neighborhood and REALLY like being the cheapest home on a nice block. I hope it’s your absolute dream come true.

I would not take on $600,000 in debt and move to get $1,300 a month and hope the property appreciates. You are buying at a peak, and you will not stay there for 30 years. You are not guaranteed that rent when things tank.

Moving sucks. Selling a house sucks. Rehabs suck. All are expensive and time consuming and need to be considerations. I would personally put my time into finding better deals as opposed to uprooting my family for a “house hack deal”.

@Matt Jennissen

Good to see that you’re getting more doors in the Zenith City. Our paths are bound to cross for a beer or a coffee there some time soon. Your post is proof positive that networking works. Congrats Matt!

@Tom Bunton

I’m a bigger fan of recreational acreage 2-4 hours from major metros. Infill lots are something of a gamble with a lot more moving parts for due diligence.