1st of many, 265 Weaver

6 Replies

Hey everyone, I have been doing deal analyses with the help of BP for a little bit now, always saving the reports, tweaking and researching and messing with them to see what seems reasonable, but it dawned on me that as much as this is useful for me, it is also a detriment to not be sharing this and learning from people both in my area and from the community. As a result, I have decided to begin posting the analyses that I do on a daily basis get feedback from the community to better my understanding and expedite my growth, and who knows maybe make a friend or two on the way. So one shameless plug, if you are in the Minnesota area, southern, around the twin cities, or more specifically near mankato, check out the Mankato MN Area REI meetup group on facebook to meet more of the great people in Mankato MN. Anyway enough of that....

Here's the link, to give 'er a gander

House Number / Address: 265 Weaver Street, Mankato MN 56001

Description: 265 Weaver St, Mankato, MN 56001 is a single family home built in 1906. This property was last sold for $40,000 in 1998 and currently has an estimated value of $185,000.

According to the Mankato public records, the property at 265 Weaver St, Mankato, MN 56001 has approximately 1,667 square feet, 3 beds and 1 bath with a lot size of 7,314 square feet. Nearby schools include Rosa Parks Elementary School, Mankato East Jr. School and Mankato East Senior High School.

How are the numbers run:

  • How much down 3%
  • Interest 3.076%
  • PMI? $90/month
  • Taxes, High, low, etc: $1,800/ yr
  • What makes it work, (not) feasible:

Location: South of the heart of Mankato, more suburban sprawl, tucked in that area off the university, I honestly have never been by it as far as I know. I think it’s on top of the hill in that region.

Marks in its’ favor, New siding, 2011. More quiet area, lower taxes, not too far away from a university (it’s a college town for goodness sake)

Marks against it bit removed from the nightlife scene of Mankato, but as has been mentioned in my previous posts this isn’t necessarily a bad thing, it just affects some of the market that has a large influence on this town. Can’t really see inside so that slows down things and makes it harder to judge, but looking at the outside that AC likely needs a face lift, which leads me to believe there are other minor things inside wrong with it

  • Potential repairs
  • 1 AC
  • 2 other minor things, potentially cleaning the exterior based off pics
  • 3

Thoughts: I like the place, and it actually doesn’t cashflow super duper uber negative in terms of lowering my rent. Granted it isn’t as good as or -5 but I haven’t found those places yet, and may need to refine my analysis, which is why I post these ha, but I digress Overall it’s in a great neighborhood which works to its favor and detriment and the property is nicely placed within that neighborhood to attract likely quite tenants.

Obviously most, if not all of you won't be from Mankato, or potentially Minnesota, but if you have the time to spare to give me some feedback, I am all ears and open arms. Looking forward to the chats, thanks everyone!

Hey Collin, glad you're posting on BP. I spent a good deal of time in Mankato and have rented there a few times in the past. I'll give some general advice that helped me alot before I bought my first property. I built my own excel sheet, learned the calculations and got a little intimate with the math. It did a few things for me. 1.) gave me more confidence that these are my numbers and I got very used to what the ROI would look like without even plugging things in. 2.) this was a little faster than the BP calculator, and I very quickly developed an eye for my market after analyzing 20-30 properties a day using it.

That last part is really helpful.  In today's market where inventory is low and houses fly off the shelves, you have to be quick and you want to know your baseline ROI potential quickly and begin to spend your time searching for value-adds in a property like..."can I add a bedroom?", is this a "rent-by-the-room" type property, does this property have the potential for an additional unit, etc... If you get good at understanding what an OK deal looks like in your market you'll be able to quickly spot one that looks amazing.  

Nothing is better than learning by doing, and that first property will propel you forward like you wouldn't believe!  Feel free to reach out, i'm always happy to share thoughts or help.


-Jeff

@Collin Lee Johnson I'm also new to real estate investing trying to learn before I dive in. I have been around the Kato area for 15 years. I had a couple questions for you based on your analysis.

First: I see you had a bunch of expenses for utilities. Do you feel that you would have to pay for these instead of making the tenant pay for them?

Second: On your variable expense I see you used 10% on the maintenance and cap ex and 8% on your vacancy rate. Is there a particular reason why you have these so high in regards to mankato?

Hey, just wanted to provide my thoughts on your analysis. Overall, you did a very good job. I know you ran the analysis as a house hack, but it's important to run the numbers as a traditional rental as well to ensure it will cash flow when you decide to move out. I like the 10% each for capex and repairs, as it's a conservative estimate and should cover any deferred maintenance from the previous owners. I also like 8% for vacancy, which is essentially one month vacant per year. Mankato is a high turnover market, and while you can likely get a new tenant easily, you likely will have to do repairs after moveout that could increase your turnover time. I would definitely have tenants pay for all utilities, especially in a single-family house. Mankato is strict with issuing rental licenses, so it is best to inherit a property that already has a license in place for up to 5 unrelated. The city pretty much exclusively issues licenses for up to 2 unrelated now, and they only allow about 25% of homes in a neighborhood to be rentals. 

@Tyler Stindtman yeah absolutely so the utilities are populated because I am trying to get a good picture of a house hack while I'm living there, so I am building in my expenses for half of the duplex and overall throughout the year I felt those number were good averages, if not a bit over conservative. Which brings me to your second point, i keep those expenses high because I don't know when something will strike that's bad, no one does, and just want to make sure that I have enough built up to tackle any issues as they happen. To your point they are high, and could be mitigated by doing due diligence and finding a place in good shape, but I felt like these were nice ceiling numbers.

@Dillon Dale thank you for the advice, helpful and to the point, one small thing: five unrelated, two unrelated. What do you mean by That? Does this have to do with 5 unrelated occupants? Maybe it seems trivial but I just wanted to ask, thanks for the reply!