New Member in Minnesota

17 Replies

Hi All.   My name is Bruce.   I live in the Minneapolis MN area.  Don't have a pic in my profile yet.

I have been comtemplating real estate investing for years and years. Was originally considering single family or duplex properties. What held me back are the laws here in Minnesota regarding tenants. It takes 6 months to go through the court system to get them out should the decide not to pay. In the meantime they can tear up the place costing 10's of thousands of dollars. I viewed that as high risk.

I found this forum about a week ago.  As I get older I have looked around and real estate still seems to be the best business to get into as opposed to starting an online blog or youtube channel.  This forum got me thinking about multi units.   

After looking at this forum I decided that my goal (if this is reasonably possible) is to own one or two apartment complexes with a positive cash flow after all expenses and repairs over time of $8000 per month.

If done correctly I figure there is less risk if one tenant moves compared to a single or duplex unit.

I figure two multiunits  x $4000 each might be doable.  Or is it ?  Well I have this goal to start anyway.

My financial position is I have approximately $50K cash saved up.  

I own a property in the Phoenix area that I paid $190K for back when the market was high - about 11 years ago. I have not checked what the value would be now but I would say $170K. There is $140K left to pay on it. My wife's son rents it out. So lets say $30K in equity for now.

I have about $400K in retirement accounts - IRA , 401K.

I have $150K equity in my townhome.

I am guessing I probably have enough financial leverage to get started.

I am going to read the information weekly on this forum as fast as I can.   I also will be looking for a mentor.

I have always heard you make your money when you buy.  I believe good deals take a lot of work to come by so I am looking at this realistically and not trying to rush.

Minneapolis has been good for investing I have read however recently they are building a lot of capacity in the downtown area and the article said investment potential will revert to "normal."

I have a friend that purchased a 15 unit building in a smaller suburb that he says provides $4000 per month cash.  Don't know if that includes all expenses - people are not always accurate with figures.

Are my assumptions correct and are my goals reasonable I guess is the first thing I would lke to ask ?

How long would it take me to get up to speed to learn about multi-units (I know a very imprecise question) ?  I have no experience with tenants, contracts, how to evaluate the property etc...

The other thing I would like to mention is my plan would be to find a C building in a B neighborhood and fix it up over time.

Thank you.

Bruce - absolutely, your goals are achievable!  My partner & I have the same approach.  We think multifamily provides a more stable asset.  You may not be able to buy a 15-unit building on your first deal (or maybe you can), but you could certainly work your way there.

My partner and I purchased a 4-plex in SoCal last year, learning as much as we could along the way from BP forums, books, blog posts, podcasts, etc. We're applying what we continue to learn from the 4-plex to a 13-unit apartment that we're currently BRRRR-ing. Our longer term goal is to continue to scale up.

I think my biggest advice getting started is to make sure you understand how to run the #'s on a deal.  There are plenty of good calculators available (on BP and elsewhere).  Run the #'s (with realistic planning factors), and trust the #'s...they don't lie.  If you're not sure where to start, try this blog post by @Brandon Turner  on cash flow. 

Finally, start analyzing deals.  If you analyze a handful of deals per day, you'll quickly understand the math.

Good luck & welcome to BP!

-Tom

Hi Robert welcome and congratulations on making the commitment to your future.

If you ever want to chat strategy, hit me up.  I'm in the area as well and can potentially help you understand the market a bit better.

@Robert Moore a couple of things (via mobile so brief). 

1 start to finish it takes weeks to evict a tenant. 

2 you should join as many local RE meet ups as possible. It will ramp up you education and confidence 

3 take the homelinemn.org landlord law class after that you will have all the knowledge you need regarding mn landlord tenant law. There is no reason to fear evictions.

4 good luck

Tim

Welcome Bruce. I'm by no means an expert (haven't yet found my first deal), but I would say don't let the horror stories of an eviction scare you away. On the BP podcast they say good tenant screening will greatly reduce the chance of a bad tenant. It sounds like your friend would be a good resource for you to get the ins and outs of apartment complexes, but I'm sure there are plenty of people on BP that have experience with that as well. Good luck on your real estate journey!

-Brian

@Robert Moore welcome to BP and best of luck with your goals! I'm in a similar position looking for small multifamily in the twin cities metro. Other folks have recommended the REI twin cities groups on meetup.com, as well as the apartments investing group hosted by MNREIA to learn more.

See my post in the following thread concerning this very topic of finding strengths.  You are on the right track!

https://www.biggerpockets.com/forums/432/topics/586341-2-4-unit-property-that-actually-makes-sense-minneapolis

@Robert Moore why is your name on here Robert if your real name is Bruce???


To your questions - your goals are realistic but it will take some time.  That amount of cash flow on a 15 unit is possible but with your goals don't forget to include reserves for repairs, vacancy, and capX.  Don't put much faith in your friends numbers unless he is willing to show you the detail.   $4k of cash flow sounds good but it will take a while to pay off a $60k roof.

Also there are many people in a similar financial situation to you who seem ready but are struggling to find deals.  Don't get frustrated, just make sure you have enough knowledge to pull the trigger quickly when something comes up.

@Robert Moore welcome to BP! And as the majority have said in here you have a solid financial position to jump in. 

Here are my recommended resources for newcomers: 

If you haven’t already listened to the podcasts I’d start there.

Podcasts

Episode 108 - Grant Cardone... Just listen…

Episode 283 Paul Thompson - Quite a new episode but I would think everyone would agree this is a top episode. Mainly, the systems implemented are fascinating (VA, automated offers, etc.) Plus...escape velocity...

Episode 113Jay Papasan - Very practical slow and steady advice

Episode 221 - Tim Shiner - his concept of equity build up and "shearing the sheep" shows some of the flexibility of real estate vs a 401k

Last but not least, I also recommend all the tax advice given by my fellow CPAs on the BP Podcast.

Amanda Han

Brandon Hall

Tax Reform Update – Brandon Hall and Amanda Han

Linda Weygant

Guides

Ultimate Beginners Guide

Forum Stickies

BP Calculators or spreadsheets uploaded by members

My Favorite Books

I have to say all of the BP books…right? :)

The Millionaire Next Door

The Millionaire Real Estate Investor

What Every Investor Needs to Know About Cash Flow

Hope this information can give you a good start. Feel free to reach out with any questions. 

Originally posted by @John Woodrich :

@Robert Moore why is your name on here Robert if your real name is Bruce???


To your questions - your goals are realistic but it will take some time.  That amount of cash flow on a 15 unit is possible but with your goals don't forget to include reserves for repairs, vacancy, and capX.  Don't put much faith in your friends numbers unless he is willing to show you the detail.   $4k of cash flow sounds good but it will take a while to pay off a $60k roof.

Also there are many people in a similar financial situation to you who seem ready but are struggling to find deals.  Don't get frustrated, just make sure you have enough knowledge to pull the trigger quickly when something comes up.

When I originally sent my email up years ago I did not use my real name online anywhere.   I still don't except for my business email and this forum.

Going to start networking immediately.  

And..

Been thinking about my very first steps which I think are going to be 1) Education 2) Exploring Finance Options and 3) Start Learning How to Evaluate Deals

Hi Bruce! I'm up in the lakes area of MN and always interested in chatting RE - my main market area of interest is the I-94 corridor all the way down to the Twin Cities. Welcome and feel free to hit me up sometime!

@Bruce Harding welcome to BP! I agree that multifamily is the best way to go. I’m not sure that class A inventory downtown is going to affect rental demand in Minneapolis as much as that article said. If you ever want to grab coffee and talk real estate just reach out!

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