Went to a Seminar and it Was Actually Helpful, Not Pushy Or Hyped

[Lee Syndergaard]

I recently rolled the dice and went to a free real estate seminar, defenses up. I was actually impressed: no guru, no hype, just good info on the local market. Of course they had their agents peppered throughout the room, but the ones I talked to seemed nice enough. The good news: the real estate agents are all investors, at least the ones I spoke with.

Below are the notes I took during the seminar. Perhaps you can pull some tips from it.

• A lot of the dirt cheap homes were scooped up in the 2008 - 2011 crash
• Fannie/Freddie: 15% down; 740 credit, 45% DTI, 2% maximum seller contributions
• Home prices have gone up, but not to the 2007 levels. Rents have also gone up
• Steps
  • Find a great buy
  • Choose the right mortgage product
  • Pay off the mortgage
• Fix and flips are hard to come by right now, all got scooped up
• Townhomes can be a good way to go, but look at HOA. See what it covers, ask what their cash reserves are to see if it's managed well. If their cash reserves are low and they haven't done any large projects recently, it's probably not managed well. Make sure they allow rentals.
• Landscaping: make sure all the tenant has to do is push a mower. No bushes or fancy gardens.
• Rentals are hot right now. Twin Cities isn’t building starter homes, just big expensive ones, so people are renting and demand is greater than supply.
• If a tenant applicant has a bad credit score, it can be okay if there’s a good explanation for it
• Have all leases expire at the same time. End of May was suggested
• Consider month-to-month rents for some tenants
• Twin Cities is a strong market, virtually no vacancies
• When screening a tenant, talk to 2 landlords ago
• Get cashier's check for 1st month’s rent and 1 month for deposit
• Don’t give their deposit back until the very last day of the month, or after I’ve inspected after move-out
• Set up EFT - Cosi? Cozy? Not sure how it’s spelled. Reliafund.
• Get an umbrella insurance plan, ~$500/year
• David (speaker) suggested not using a mgmt company. Be responsive and I’ll be fine
• Let calls go to voicemail. Don’t take maintenance call. Get the message, hand off to the handyman and have him handle it, then send me the invoice.
• $300 - $600/month cashflow per house is considered a good return in this market
• Real estate agent’s commission is always paid by the seller
• Lots of tax benefits. Save receipts for everything. Meals, etc.
• Set up separate checking account for the entire business
• Lower cash flow on a rehabbed property can be okay due to lower expenses (if I just fixed everything up)

[Todd Dexheimer]

Lot's of good information. A few comments:

Current home values in the Twin Cities have far surpassed 2007 prices

In today's market, avoid month to month. 

I would not have all leases expire at one time if you have 5+ units. Have them expire between April 30th-August 31st and have a blackout period from November 1st-March 1st. 

Deposit - You have 21 days after they move out to give it back. Don't give it back on the spot or wait until a month later

$300-$600/unit is an unrealistic return in this market. $200-$300 for a sf, Duplex $150-$200 and apartment under $100 (some people will tell you more, but they aren't realistic with their expenses and reserves). 

Maintenance and repairs will be about the same on a renovated property. Things need to be repaired, that's reality.