All Forum Posts by: David Moore

@Joel Owens

Just want to chime in that I recently purchased a 9.74 cap due to cap add. When purchased, technically, it was a 7.5% cap, now at about 9 cap, and in Sep, 9.74 cap. Rents are running $300.00 per unit lower than market. This in a community with less than 1% vacancy, and a booming job market. When cap add is finished, if it ever is finished, my deal will be about a 12 cap. You are a really smart guy...people should listen to what you have to say. I will say I looked at 15 buildings, and negotiated on several, and found most sellers had no idea what their property was worth, and had no idea they were actually losing money. Finding a good deal in multi is hard work, and in my opinion, skip the MLS. The deals aren't on MLS.

@Stuart Toepke

Greetings. I concur with most of the posts previously, but one added thought. Have you ever owned a property before? You say you have 20K to invest, but in this business, especially if you have a rental, you need money to make money, in my experience. While I agree with Dan that the best value is in the 4 plex (Dan gave me a great tip on mine), consider whatever you invest in you should have some capital set aside for x,y,z. We started real estate investing after having our IRA's a number of years, and when we had a boatload of home equity in our house.

Since you haven't had a rental property before, buying a duplex first is a good way to go. It gives you a place to live, for one, but it also gives you steady income, and you can start to learn how to handle a tenant, which can eliminate what, in my opinion, is a large un-beneficial cost, which is professional property management. I started with four SFR in a town 1.5 hours from where I live, and the homes were cheaper, and give an unbelievable return. I learned a lot about how to pick, and handle tenants from those SFR.

There are great resources to learn on this site.  Nothing wrong with taking time to learn, and then make a purchase you are comfortable with.   

@Ryan Parsons

First, welcome to BP.  There is a wealth of information on this site.  

Concerning your interest in Commercial, there are several things to consider.  First, why the leap from residential to commercial?  Have you studied commercial real estate investing and are you very familiar with it.  It's easy to think that something going to auction is a bargain.  But ask yourself, why is something going to auction, if the market did not want it.  I can tell you without seeing the property it could have pollution in the soil that could cost a fortune to abate.  If you are going to specialize in commercial, great, but know what it is you are doing.  A tear down is not cheap.  Are you quite certain there are no liens on the property?  How about deed restrictions?  

I have not done commercial...only residential.  But be wary of just jumping into an investment based on impulse.  Great investments take some time to uncover.  Due diligence is key.

I have a four unit building.  Just got a bid on  replacing 32 double hung windows with energy star windows, half screens, with argon gas windows, aluminum wraps, tempered glass in the bathrooms.

Initial bid came in at $18K, doing it two units at a time, but said he would knock it down to $16K if I did the entire job at once.  I spoke with the contractor, saying the price means I need to wait on more capital.  He said he really wants the bid, so he could go as low as $13K for all 32 windows.

In my building, the tenants pay the heat, so the benefit is largely for them.  But I'm thinking it may benefit me indirectly.

Here is the bid broken down by two units:

16 windows - Heartlands white double hung white vinyl standard half screen - $5744.00 ($359.00 ea)

16 - loe366, argon glass and NEAT Glass - $960.00 ($60.00 ea)

2 - tempered glass windows - bathrooms - $140.00

16 - Aluminum exterior wrap - $1600.00 ($100.00 per)

16 - Includes Lead safe handling - $320.00 ($20.00 per)

Disposal of Old Windows and debris - $250.00

Total per two units - $9,014.00.

Cost for all four - $16,000.00

Discount price later offered by contractor - $13,000.00

Is this a good deal, fellow Minnesotans?

And both are on BP as well.

Oh, yes, two good resources.  Jay Lohn and Dan Coleman.  Both in the Twin Cities, both investors, and both are realtors.  

@Doug Thompson

I looked in West St. Paul at a 7 plex late last fall, got it under contract, but my inspector found water foundation issues. I've continued to look in neighborhoods in St. Paul that are pretty good and found that in some, the properties that are good go quick. Now that we are heading into spring, that may again happen. I think your idea about looking for a multi is good. There are less multi buyers out there. The sellers of multi's have been pretty much asking in the cap range of 6-7%. What kind of cap rate are you hoping to get out of a multi? Another quick thought....I looked at 15 4 plexes before I found one good enough to buy. Because a four plex is a rental...always a rental, you may find a good many as I did...in rough shape, needed a lot of capital expenditure (CapEx) once you acquire the building, even if the price is good. A lot to consider.

@Oscar Brooks

I had another BP friend contact me about this, and I apologize to everyone. This is a legit, real deal. But I regret now making the details known. I know how painful it must be to know this. What I'm finding is if you keep your channels open, and not just focus on MLS, you will find deals. Part of finding a deal is buying, talking to other landlords, and people just starting to learn you are out there.

We have another lead on one in my buying area. Not MLS. Might be good, but I need more details. Please feel free to check my blog for details in the coming weeks...I will write about it.

@Bruce Runn

It would go against my character to joke around about such a thing. I found my last deal not on MLS, but through direct marketing. The point was not to gloat, but to make them aware that deals can be found in non-conventional ways, and most of the deals I see on MLS have not been deals. And yes, the deal is legit. But it is one I'm passing on. But thanks for your feedback...perhaps it was imprudent to post about it.

@Doug Thompson

You could consider marketing to find something.  I do not invest in Minneapolis as I have a conflict of interest there.  Just today I overheard someone speaking with a reluctant landlord in Phoenix handling an estate on a home in the uptown area of Minneapolis.  They wanted to just get rid of it...tax forfeiture....not worth the hassle.  They literally wanted to just turn it over to someone...anyone.

I of course know the address, and could contact the seller, and make away like a bandit.  The property, a duplex, is in prime real estate near uptown.  It would be a gold mine, and the seller just wants to get rid of it.  The property, even in a broken down state, is probably worth, at a minimum, $275,000.00, and they just don't understand what they've got.  

Sorry, I have a conflict and cannot disclose the address. But there are opportunities. MLS is often not where the deals are.