All Forum Posts by: Ulrich Faircloth

@Roy N.

Thanks for the input. The marriage was always stagnant; it's just at the point where it's time to move shop and for him to actually pursue his ambitions (his wife has no ambition). The credit can be worked on if the former house situation can be fixed, although that will take a long time. By "bidding" I meant putting in an offer; no auctions. My business partner (who is also my best friend and partner in our main business) and I would be living in the same unit while renting out the other. We both would be half and half on all the expenses. The house has a third level we could work on as well, which is one reason why its too good to pass up. 

Well...the only other option is to rent with him. We could cut our costs and save money. That would give him time to cut his wife out of the equation and build up his credit. Would be locked into a lease for a year, of course, so no home searches until that's up. 

Would be an LLC.

That is really the only option right now. But the problem is that I can only qualify for a certain amount...need $30K more for the property. After paying off a loan I would still need $10K more to get it. I just don't make enough on my income. 

This guy and I are practically blood brothers, without the bloodline. We can absolutely make it work...just need the money and a work-around. But I definitely understand what you're saying as an objective outsider. 

Hi Everyone,

So...my business partner and I are in a jam. I decided to partner with my buddy. He and I went to go check out properties yesterday. We found one that immediately caught our eyes. 

Here are the issues... 

1) my buddy/partner has good income, but poor credit. He and his wife got screwed on a house a few years back and the mortgage company REFUSED to foreclose even though my buddy and his wife kept telling them to. His credit has been hammered since that time. I was hoping that my good credit would help even things out. I need his help in order for us to get qualified for the $30K more in financing we need to bid on the duplex we want. 

2) This is probably the worst...one reason my buddy is getting a duplex with me is that he is planning on moving out of the apartment that he and his wife currently live in. He wants to get away completely. The issue we're having is that the mortgage specialist is that the underwriters won't approve of a mortgage because they won't believe that my friend is going to leave his wife to come owner-occupy a property with me due to the possibility of "occupancy fraud". The only way it would go through is if he legally separated or divorced...they need verifiable proof. But the issue is that we're strapped for time (properties don't wait on formalities) and that if he were to do this he would be out of a place to stay in the interim...my studio apartment can't fit two people. 

So what do we do? I can only qualify for $130K on my own (need $160K), so I can't get the property myself and add him on later. And I can't add him as a guarantor because of his terrible credit. We're in a big mess, basically. 

Thanks,

Ulrich

Conor Hesch at US Bank. One of few mortgage loan officers in the country that deals in the American Dream Loan from US Bank. Only 3% down, they offer $3000 in downpayment assistance as part of the loan package and also offer $5000 in rehab assistance. Only works for single family homes or duplexes. Does require owner-occupancy.

Great guy and amazing program!

I've heard and noticed via the crime maps that anything north of Dowling is relatively safe. I just don't like being that far away from the City center. 

Hmm...only problem is that I like having my own space. That's especially true when I'm trying to run a business on the side and have inventory to store. Don't want things missing. If I didn't have anything else going for me that would probably be a good idea though. 

@David Moore

Hey David. Thanks for the response. Yes, I missed up on my numbers some. The "owner-occupancy" bit was more so note-taking that I did at the time. Sorry for the confusion. That's actually what I would be paying if I did NOT have a tenant, as neither property is rented. 

I have found properties below $130K in St. Paul, but the City of St. Paul is not offering down-payment assistance at this time and the only areas that are covered right now, buy a neighborhood association, are the Frogtown and Rondo neighborhoods. Neither of which have anything that is affordable. Down payment assistance just ran out for Minneapolis a few days ago...so no more luck there.

At this point I've decided to just put things on hold and just deal with living in my studio apartment. It is too close to winter to take a chance on anything that is not currently rented out. The first property would have been amazing, but my loan won't allow a garage to be built (which I absolutely need for business purposes...and general vandalism prevention) or cash credit (to cover half of expenses for 4-5 months). So completely out the door. 

But you make a great point about North Minneapolis. There's just really not much to invest in right now...figured I'd have to "start somewhere." Currently live in Uptown/Whittier, which is where I'd love to stay. I just can't find anything affordable around here. Everything is more than $130K. What would be awesome is to find a triplex or quadplex, but those seem pretty rare. Saw one a few months back for $135K but needed extensive rehab, which my loan doesn't cover anyway. Someone scooped it right up.

@Christopher Brainard

Thank you for your reply! Much appreciated. I ran the numbers as an owner-occupant rather than having both sides rented out. Probably messed up on the numbers somewhere. 

Property #1 would have been great. Just found out yesterday from the City that they would allow a garage to be built, but no temporary garages (e.g. carports) were allowed. So that defeats the purpose altogether. Can't park a branded vehicle on the side of the street and expect nothing to happen. 

Completely agree about the location though. It's a safer part of that area in the city, but farther away from downtown. Would probably be more difficult to find quality tenants just for that reason. I feel like it will be years before I'm able to even invest though, because I won't be able to get qualified for more than $130K because of my income. Once I quit my job and become fully self-employed I'll most likely have to wait at least two more years to re-qualify for a mortgage. And unless I'm making more than $28K there's no way I'll get anything higher. Properties in "good" areas around here will cost you at least $160K+

If it weren't for the temporary garage issue and upcoming winter I'd be willing to take the chance without cash reserves. But with winter coming up I just don't see how it would work. Would love to buy a rehab in a good area for cheaper, but wouldn't even be able to afford it. Nor do I have "cash" to buy one anyway.

My question at this point is, as someone with little money what can I invest in besides real estate at this point? I don't want to wait years to cash out on a CD or bond. Don't really have money for stocks either.

-Ulrich

No thoughts on this?

UPDATE: Admin please delete other topic/subject line. 

Hello all! So I'm in a bit of a fix. For the past few weeks I've being trying to figure out what to deal about getting my first duplex. The problem is...I'm only qualified for less than $130K for a conventional loan due to my income and lack of assets (I have no savings). As a result the only place I can really invest in right now is North Minneapolis, which is considered the bad part of the City. BUT I have two properties I am considering right now in the Webber-Camden neighborhood, an area considered safer than the lower parts of N. Minneapolis.

Thanks for the help!! I think that Property #1 is the best bet overall...just no garage. Killer. I've estimated that I might not have a tenant for five months (not in actual calculations or vacancies), considering winter is right around the corner. I currently pay $580 for my studio apartment (which just went up by $30) and roughly $20 for electricity. Not sure if my budget can survive 4-5 months with +$500 extra costs...currently only make $27.5K a year.

Overall my main concern with the below information is...how can I survive without a tenant? Besides picking up a part-time job or something. Should I just save and wait until Spring or move forward with the opportunity?

PROPERTY #1

One property is a SFH converted into a duplex. Beautiful home. New roof, working fireplace (downstairs unit), hardwood floors in the downstairs unit and basement (no washer/dryer though). Everything looks like its in excellent condition (no damage, visible mold, smoked units, etc). 2BR/1B for the main floor and 1BR/1B upstairs. Both units vacant; lower 2BR was rented out at $950 and upper 1BR was rented out at $750. Built in 1936, 1 ½ stories.

The kicker? NO GARAGE! Which is a real deal-breaker for me. The reason being is because I have a crime prevention business and I plan to get my car wrapped. Parking a car that has any essence of crime prevention attached to it will result in massive vandalism…so big no-no. There is a space behind the building to build a garage, but I don’t know if it would be big enough or be allowed by the City. I called them on Friday and am supposed to hear back by the 24th. For additional info, the crime maps show that there was a murder right across the street in May…

So all that aside, here are the #s:

Asking Price: $110,000 (dropped from $125K)

Offering Price: $90K (based on lack of garage, seller’s expediency, past murder, vacancies and upcoming winter, as well as what I can afford to pay per month)

Rent: $950 (once rented); Annual = $10,830 (5% vacancy)

Operating Expenses:

Water/Garbage - $1380

Gas - $106 (altogether; split between two units)

Electric (separate meters)

Insurance - $1500

Property Tax - $1,666

Repairs (if needed) - $1600

=$6252

NOI:
=$1998 Annually

Debt Service:

$7104

Cash Flow:

-$5106 or -$425.50 a month

As owner-occupant:

$592 – MORTGAGE

Utilities – $375

$6 + $150 + $139 + $86 + $50 (electric; estimated)

$1017 a month…doesn’t include repairs

PROPERTY #2

The second property is different. It is an up/down duplex. Asking price is $99K. Upper unit was renting for $750 and lower unit was renting for $720. 2-car garage, very safe area. Owner pays water, trash, snow/lawn. Tenants pay gas and electric. 2BR/1B per unit, both vacant. 2-car garage with driveway (BIG PLUS). Built in 1906. 2 stories. The one big problem? The upper unit is fine, but the lower unit…former smoker lived there. It would have to be cleaned up before renting, so I’m sure the price reflects that. No telling how much that will cost to repair. I don't have any costs from the seller on utilities, so I had to estimate.

Asking Price: $99,000

Offering Price: $85K (based on smoked unit, vacancies and upcoming winter, as well as what I can afford to pay per month)

Rent: $850 (once rented); Annual = $9690 (5% vacancy)

Operating Expenses:

Water/Garbage - $1200 (estimated)

Gas – $50 estimated (separate meters)

Electric – $50 estimated (separate meters)

Insurance - $1500

Property Tax - $1522

Repairs - $3000 (estimated)

=$7222

NOI:
=$2468

Debt Service:

$6708

Cash Flow:

-$4240 or -$353 a month

As owner-occupant:

$559 – MORTGAGE

Utilities – $563

$100 + $150 + $127 + $86 + $50 (gas, estimated) + $50 (electric, estimated)

$1122 a month…doesn’t include repairs

Hello all! So I'm in a bit of a fix. For the past few weeks I've being trying to figure out what to deal about getting my first duplex. The problem is...I'm only qualified for less than $130K for a conventional loan due to my income and lack of assets (I have no savings). As a result the only place I can really invest in right now is North Minneapolis, which is considered the bad part of the City. BUT I have two properties I am considering right now in the Webber-Camden neighborhood, an area considered safer than the lower parts of N. Minneapolis.

Thanks for the help!! I think that Property #1 is the best bet overall...just no garage. Killer. I've estimated that I might not have a tenant for five months (not in actual calculations or vacancies), considering winter is right around the corner. I currently pay $580 for my studio apartment (which just went up by $30) and roughly $20 for electricity. Not sure if my budget can survive 4-5 months with +$500 extra costs...currently only make $27.5K a year.

PROPERTY #1

One property is a SFH converted into a duplex. Beautiful home. New roof, working fireplace (downstairs unit), hardwood floors in the downstairs unit and basement (no washer/dryer though). Everything looks like its in excellent condition (no damage, visible mold, smoked units, etc). 2BR/1B for the main floor and 1BR/1B upstairs. Both units vacant; lower 2BR was rented out at $950 and upper 1BR was rented out at $750. Built in 1936, 1 ½ stories.

The kicker? NO GARAGE! Which is a real deal-breaker for me. The reason being is because I have a crime prevention business and I plan to get my car wrapped. Parking a car that has any essence of crime prevention attached to it will result in massive vandalism…so big no-no. There is a space behind the building to build a garage, but I don’t know if it would be big enough or be allowed by the City. I called them on Friday and am supposed to hear back by the 24th. For additional info, the crime maps show that there was a murder right across the street in May…

So all that aside, here are the #s:

Asking Price: $110,000 (dropped from $125K)

Offering Price: $90K (based on lack of garage, seller’s expediency, past murder, vacancies and upcoming winter, as well as what I can afford to pay per month)

Rent: $950 (once rented); Annual = $10,830 (5% vacancy)

Operating Expenses:

Water/Garbage - $1380

Gas - $106 (altogether; split between two units)

Electric (separate meters)

Insurance - $1500

Property Tax - $1,666

Repairs (if needed) - $1600

=$6252

NOI:
=$1998 Annually

Debt Service:

$7104

Cash Flow:

-$5106 or -$425.50 a month

As owner-occupant:

$592 – MORTGAGE

Utilities – $375

$6 + $150 + $139 + $86 + $50 (electric; estimated)

$1017 a month…doesn’t include repairs

PROPERTY #2

The second property is different. It is an up/down duplex. Asking price is $99K. Upper unit was renting for $750 and lower unit was renting for $720. 2-car garage, very safe area. Owner pays water, trash, snow/lawn. Tenants pay gas and electric. 2BR/1B per unit, both vacant. 2-car garage with driveway (BIG PLUS). Built in 1906. 2 stories. The one big problem? The upper unit is fine, but the lower unit…former smoker lived there. It would have to be cleaned up before renting, so I’m sure the price reflects that. No telling how much that will cost to repair. I don't have any costs from the seller on utilities, so I had to estimate.

Asking Price: $99,000

Offering Price: $85K (based on smoked unit, vacancies and upcoming winter, as well as what I can afford to pay per month)

Rent: $850 (once rented); Annual = $9690 (5% vacancy)

Operating Expenses:

Water/Garbage - $1200 (estimated)

Gas – $50 estimated (separate meters)

Electric – $50 estimated (separate meters)

Insurance - $1500

Property Tax - $1522

Repairs - $3000 (estimated)

=$7222

NOI:
=$2468

Debt Service:

$6708

Cash Flow:

-$4240 or -$353 a month

As owner-occupant:

$559 – MORTGAGE

Utilities – $563

$100 + $150 + $127 + $86 + $50 (gas, estimated) + $50 (electric, estimated)

$1122 a month…doesn’t include repairs

Well, I'm considering two properties. Both are North of Dowling, which is fairly safe considering N. Minneapolis "central". Probably more likely to appreciate as well. One of them I'm considering offering $90K on. Wouldn't this be affordable, even if I had trouble finding a tenant? Lower unit needs to have smoke removed, but besides that I think its a good property. From what I could see anyway. The other one is very nice, but $110K with no garage. Which I really need.