Getting "Professional" about Real Estate - Minnesota

7 Replies

Hi all,

My name is Sevy Bialke and I'm new to treating real restate professionally. I'm still in the learning and educating phase, but my loose goals are to be a BRRRR investor in the suburbs of the Twin Cities, MN. I'd be silly not to follow the consistent advice I've heard of working on relationship building early on, but my primary goals for the next 2-4 months are just absorbing and learning. I currently have one rental property in MN and am living in a long-term flip in the Milwaukee area.

I likely would've been well served to read a few other new member intros to gauge just how much info folks include, but I've already waffled on creating this intro and I don't want to fall prey analysis paralysis. I think this post will end up significantly longer than most will read, and that's okay, but it'll be the first time I've written down my intentions which help me build my eventual goal plan.

The Start of the Journey:

I'm born and raised in MN and intend to live long term and retire there. I purchased my first primary in South St. Paul right out of college because it seemed to me I was better served to purchase quickly vs save up living with my parents as interest rates were on the rise. I lived in that home for 4 years doing various improvements (landscaping, remodeled porch, finished garage). Somewhat out of the blue my employer offered me a lucrative position in Milwaukee on a 2-year (ish) contract. I decided to refi the house for the down payment on my new primary in Wisconsin and rent the property out. I used a well-known national management company for tenant placement and management for 6 months before I dropped them for terrible service to both my tenant and I; and began managing the property myself.

Getting my Feet Wet (Trial by Fire):

My first tenants were respectable and always paid on time. They broke their 2-year lease early but were very amicable throughout and gave me no grief when I withheld about half of their deposit. At the time my wife was 5 weeks away from her due date with our second child. We had previously agreed on a no-travel ban for me the 4 weeks prior to the date, which meant 6 days after learning of the lease end, I'd be spending the weekend in MN, with a new tenant selected. I slept maybe 3-4 hours a night that week as every night after work I had to fully learn how to do the next step - how to post and find tenants (then make the posting), how to screen tenants (then make the documents and google form), how to write a lease (then write the lease), etc. By Friday I had 70+ people interested in renting, 20+ that passed my relatively strict requirements, and 14 showings scheduled for Saturday/Sunday. I drove to MN Thursday night, spent all day Friday repairing and working with the professional cleaners, and all-day Saturday/Sunday showing and performing more touch-ups around the house. Sunday night I drove back to Milwaukee with 4 great candidates lined up. Of the 4 candidates, 3 offered higher rent or longer leases, but I knew they would be short term. After going through the whirlwind of the week and about to have 2 kids under 2, I wanted stability. I went with my gut on the 1 candidate that didn't offer higher rent as I thought she would be the most stable (her history supported 5-10+ years in one unit). We had a lease signed by week's end and I thanked all other candidates. The only thing that got me through the week was discovering RentPrep. The info I learned there as well as their all-in-one screening package saved my rear-end to help me through starting out.

Is being a Landlord and a BRRRR Investor a stress I can live with?

I'm so far batting 2 for 2 for respectful and paying tenants but I'm not naive enough to think that'll last forever. I joined RentPrep's Facebook group and for the next 2 months I read and absorbed every negative story and "okay I need to vent" post I could grab. I figured if I see and hear the worst and that doesn't scare me away (or I recognize maybe how the opportunities for those situations could be mitigated with more time/effort up front), then I was willing to explore this more. In addition to being comfortable land lording, I enjoy the fix-em-up’s around the house and actually converted my current Milwaukee home from a 3-1 to a 4-2 and added 700sqft with a finished basement. I did the work myself, minus rough-in plumbing, fully permitted in my “spare” time from a full-time job as an operations manager, a pregnant wife, a 1 year old, and 2 60lb dogs in about 5 months. This completed long-term flip will give me the capital to not have to start in the hole with my next project.

My Loose Intentions (in Lieu of my yet-defined Goals):

My 2-year contract with my employer is ending in the Spring. I intend to purchase a new primary residence as a “long-term” flip. If I could, I would house-hack every 6 months into a new primary (sfh or small mf) and reap the benefits of conventional rates on primary residences and move on to the next. However, this is hard on a growing family, so we’ll see just how far the wife will let it fly (frequent jumps on sfh or even infrequent jumps on a mf may be too much for her to cope with). I intend to purchase properties in distress and, rehab, and rent out. For the first one or two, I’ll do the rehab myself (especially if it’s my primary). I recognize this isn’t sustainable, but I need that level of control to start – I’ll accept the lower profits for my perceived lower risk with contractors.

My Next Steps:

Absorb and learn. I’m burning through every podcast BP has at a rate of about 25 per week and reading about a book per week. Since I’m stuck paralyzed with my work contract, I might as well analyze in the meantime! (analysis during paralysis?)

I'm very excited about BP and am looking forward to being a part of the community!

For any that actually stuck it out for the detailed version of my intro, my hat's off to you and your patience for reading the whole thing.

Thanks,

Sevy

Seem's like you learned a lot from what you have done so far. Welcome to the forums! Look out for a connection request, it is great seeing other new investors in MSP.

Hi @Sevy Bialke

A book a week and 25 BP podcasts?! You'll be killing it in no time! One of the biggest keys to success is always being a student and never giving up on the art of learning. Also, persistence is key! 

Managing a property manager is an art form and a crucial art to learn if you plan on growing your business to say 100 units. It is possible to find a good firm and manage them in a way that allows you to save time and energy. If your plan is to have 10 units I would say you could do this on your own. If it is indeed 50-100 I would suggest getting started with a property manager sooner than later. You don't want to have to make the decision once you're burnt out and overwhelmed.

I would say defining your goals is a crucial step that will guide a lot of your strategy. Good luck on your efforts and congrats on deciding to go for real estate. Focus on building a great team around you and network like crazy. If you ever have any questions or want to bounce ideas please reach out. 

Best,

Kurt 

@Sevy Bialke welcome! Sounds like you have some experience already and the hustle to keep moving. Say hi if you end up at the local meet ups when you end up back in MN. 

Thanks @Alyssa Strom . I'm anxious to get back to the cities and am impatiently trying to start my connections on BP instead!

@Bjorik Mutize I'm hoping that my fairly minor fails in my first rental are enough of a learning lesson (my tuition) that I chalk it under my belt without jumping into another "well at least I learned a lesson" situation. Thanks for the connection!

@Kurt Pauley Yeah it's a bit much, my wife is definitely getting a little tired of always overhearing the podcasts on the Bluetooth speaker or seeing me with headphones on while doing anything around the house. My philosophy is, if I'm going to be spending the time anyway (mowing the lawn, watching a movie, listening to the radio), why not instead spend that time productively? And thanks for the good advice on the property management. I am planning on a 2 layered approach: 1) Self-sustain enough properties to cash flow to give me the freedom to choose to continue working my 9-5 or not; and 2) if I want to continue to grow beyond that, I'll reassess at that time or likely along the way before then. I'm conservative by nature so I'll plan for the property management costs in the beginning as well.

Thanks @Josh Cook , I definitely will.

Congrats Sevy, sounds like you are well on your way. The combination of BRRRR and self-management has been working for decades if not centuries - you are on the right track.

The number of units you can manage will largly depend on the type of property and tenants. I learned early that I did not want to own small multi family, because of their management and time requirements. My whole strategy has been shaped by minimizing management efforts and I would say you can comfortably manage about 40 to 50 single family homes with the right approach and systems in place. There is almost nothing I do myself, except than marketing and leasing. I have a group of reliable contractors and an intern, to help me out, my books and paperwork are done professionally by a firm etc. 

@Sevy Bialke - Welcome to BP! sounds like you've got some good experience and the drive to back it up. Only piece of advise I would give based on your post above is with the possibility of "house-hacking" every 6 months, make sure you know what your loans allow. Most loans, if they are for a primary residence, require you to stay there for 1 year. I'm not an expert just one thing to look at as you plan for going forward. As others have said, meetups and networking is a great place to start as time allows with your busy schedule.

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