All Forum Posts by: Tony Otis

I've already updated my Craigslist ad and raised the posted rent, although I'm not 100% sure there will be interested tenants at that rent.  I'm more wondering if it's acceptable or legal to tell tenants that saw the old ad that I'm giving preference to those who offer more rent.

I'm looking for advice on the best way to proceed when multiple tenants are interested.  My rental is in Minneapolis, MN.  If I have a lot of people interested, could I ask the interested parties if they're willing to pay more rent to set their application apart?

I believe that I am priced near market rent, there are definitely cheaper, similar alternatives on Craigslist.  I think the reason my listing has so much attention is it is one of the few 4BR apartments in the area.  On the other hand, because the 4BR units are rare, perhaps it is worth it to one my prospective groups to pay more.

The other alternative is to do first come first served, and forego the potential extra rent.

Thanks,

Tony

I'm looking for some insight into how an appraisal will be conducted on a side by side duplex when I refinance after I renovate it. I'm purchasing it with a loan from my parents and I'm building the renovations into the loan from my parents. I'll live in one half and rent the other. I'd like to refinance with an 80% LTV loan after its fixed up, and ideally, I can pay off the loan from my parents (purchase price + rehab) with the new mortgage.

The biggest unknown at this point is what the appraisal will be.  And because of that, I'm having trouble deciding what extent I should go to on the rehab if I want my dollars to go as far as possible to both increase the appraisal and increase rents.

Basic numbers and facts:

Side by side duplex built in the late 1800s

4 bed / 1 bath per unit

High rent neighborhood 

~3000 square feet

Purchase price: $318,000

Bare minimum cosmetic updates and required electrical work: $60k

It'll appraise in the neighborhood of 440k-500+ after renovations depending on the types of upgrades I put in.  This window is far too large and I'm interested in optimizing so each dollar will increase the appraised value and rents as much as possible.
The duplex next door was flipped for 485k and has 3 bedroom 3 bathroom units.  This is my best comp to go off of.  There aren't many duplexes in the area with this many bedrooms.

Rents are $2200-2750 per unit depending on the upgrades I put in.  There's a lack of rental comps with this many bedrooms and $2200 is a conservative estimate.

I could sink an additional 50k to bring the total budget to $110k to increase rents toward $2750 a unit.  Its a lot harder to determine what it would appraise for though.

While I could list all the optional upgrades I could make, maybe it's more worth while to ask how the appraisal is going to work.  Will they just attempt to find comparable properties (which is near impossible for a side by side with this many bedrooms in this area), and adjust the price from there based on difference in number of bedrooms and bathrooms, square footage, etc?  Or will they appraise based on what rent I can get from the one unit and assume the other unit that I'm living in would rent for the same?

Appreciate any input,

Tony

@David Moore

Could you share your electrical and plumbing contractors? I'd really appreciate it, I'm considering doing a gut renovation for a rental.

Does anyone have any recommendations for a loan officer that does 203k loans in the twin cities area?

keywords: Minneapolis, St Paul, Minnesota

I used Security Fence and Construction for a chain link fence on my rental last month.  They did a really nice job.

It seemed a little pricey for what they did but I got two quotes and they were a little cheaper than the other quote I got.

How were you able to get 3% down with no PMI? Is there a higher interest rate as a trade off?

If you could refer me to your lender that'd be great, thanks. 

If I were to form a multi-member LLC as a partnership, with a 50/50 stake in the LLC, it should be regarded as a pass through entity.

Does this mean that buying House A in this LLC is equivalent to buying House B on my own, as far as taxes go? Are there any pros or cons between these two scenarios?

Thanks!

House A

Purchase price: $100,000

Income: $24,000

Deductible expenses: $12,000

House B

Purchase price: $50,000

Income: $12,000

Deductible expenses: $6,000

What neighborhoods are you looking in? This looks pretty typical of something in the Uptown area. The prices just aren't what they need to be in that area to make a good investment property. 

Also, when making a 3.5% down payment, you'll be very leveraged, which will typically make a mediocre deal even worse. I bet if you plug in a 20% down payment and get rid of the PMI, you'll start to see a lot more positive cash flows on the same properties. But still poor cash on cash return.

Does anyone have any recommendations for investor friendly realtors in the Twin Cities?  I'm looking for someone who owns several rentals themselves.

Thanks!