All Forum Posts by: David Moore

@Tyler Jaros 

That is a really good first step.  I would advise you lay out your business objectives.  Lay out your finances, and what you want to do in the business.  For instance, say you are aiming for (a) making $200.00 net cash flow per door, (b) Investing with sweat equity because you are good at x,y,z and can save money by not using contractors to fix your homes (legally, of course).  Communicate to the lender that you know what you are talking about.  Know your backyard.  Know  the city ordinances, what other properties rent for, and why you are a good investment for the MLO.   Competence is big. 

 Another good idea is to come to the next Minnesota Reia meeting.  Avoid signing up for the $$$ seminars.  That is chaff.  But you will meet other investors with a lot of experience.  I was at the money game one night and met another investor  who had a great community bank lead in the  Twin Cities.  Of course, I lost the number (doh!).  I now have a private lender, and a good wholesaler contact.  You will hear some incredibly bad deals that other investors want to offload, but some are really good opportunities. 

Personally, I pray over every transaction as well.  Some may laugh, but I seek the Lord's guidance on my deals.  He doesn't offer bad advice. 

@Tyler Jaros , first off, welcome!

I am an investor who lives in the Twin Cities.  I invest in Southern Minnesota.  I see you are getting a lot of advice.  The best so far has been from @John Van Uytven .  I want to follow up with a suggestion that you read J Scott's book on Flipping Houses.  I don't flip houses, yet, but I learned from J Scott (he is on BP, BTW) that I needed to find my 'backyard'.  In other words, find an area, ideally within 100 miles of your home, where you can really learn the area, and know x, y, and z in detail about it. 

Also, I found Kiyosaki's book, 'Rich Dad/Poor Dad' to be very helpful.  Listen to the podcasts by Josh and Brandon.  You will hear regret in each of their voices, the same regret we all have, because in this business, you make mistakes.  The best solution is to read and learn, but finally to act.  I suggest a business plan.  My wife and I had a plan this year to acquire house #2 and #3, and then be done for the year.  We close on house #3 this month.  Others have tried to talk us into other possibilities, but we've said, 'Nope'....sticking to the business plan.

This is also a capital intensive business. In order to get a mortgage, even an FHA, you need your cash downpayment, a good job, and good credit. A dilapidated duplex will need work, and in the Twin Cities, plumbers, electricians, and the like aren't cheap, if you can get them to come out at all. The bank may give you money for the repairs, but may not as well, and you'll need cash on hand to handle repairs. You also need to know the code for the city you are investing in. Others have said they got in a year out of college, but your situation financially could be greatly different. The market in 2011 was highly favorable for investors...quite a different story now.

Mark Cuban, not exactly a dim wit, says you should pay off student loans and credit cards first, before investing.  That is sound advice.  Tyler, you haven't really given us your financial picture, nor should you.  But your financial picture is a key player in how much, and when you should invest in real estate. 

Raymond,

Thanks...I could never figure that out.  I get it now.

@Marcia Maynard - I agree with you. But, I will truthfully tell my tenants the owner of the property is the LLC, and that I am not the only business partner in the deal. I will truthfully tell them that I must discuss any requests with my business partner. I've also studied and will soon put properties in Land Trusts, with my LLC as trustee and property manager. It does not misrepresent the truth that my LLC is the trustee and property manager. Who the beneficiary of the trust is, I cannot divulge. The main issue is to treat the tenant with respect and truthfullness. I don't give them my home address. I give them a well maintained property compared to my competition. They don't ask for stuff they already have.

I've been looking at leads in St. Paul as well, and I've seen some crime maps that concern me.  In fact, if you venture into downtown St. Paul, there is a definite lack of Police presence. I just spoke with another major investor in Minneapolis yesterday, and he says it is important to know the code enforcement in St. Paul.  Also, on zillow, I looked at a Dayton's bluff duplex listed for sale, that offered rents close to 2% of purchase price.  Trouble is the school district rated at the bottom of the scale....1 out of 10 on Zillow.  If you don't think that is pertinent, go for it.  But I'm shying away from St. Paul until I know a lot more about it.

Looking for the whiz kids out there to lend some advice on acquiring private financing. Now, here is the deal. Next month I'm closing on property #3, and that has left me a little cash shortage. At the same time, a lakefront property in a southern Minnesota town I invest in is going to foreclosure. I've got the O and E title work already ordered. My real estate agent knows the family personally, knows how the house was acquired, and is as perplexed as I am that the owners haven't sold it to avoid the foreclosure. I've sent a letter to the family attempting a sub to, but with no response, it is looking like a trip to the sherrif's sale. I put out a call for private funding. I've got three good sources who have responded. How do I do the deal? I'm thinking 55K will secure the property from the bank. How do I do the private funding? Two of my private funding sources are quite experienced, so I'm sure they will have terms. But what is reasonable? The term will be one year only. My realtor is highly confident in a handsome ARV.

I have a lot of dumb questions in this. Acquire the funding in my LLC or get an S Corp? I assume there is a contract or promissory note. Any idea how these get set up? Be as thorough as you can please. Thanks.

@Brandon Honeycutt,

A good resource is the MN REIA that meets monthly. Just google that, and it you will find the site. There are some good leads here. I invest outside of the metro. I'd be interested in hearing how your investments in the metro go.

@Keith Albrecht:

First of all welcome. I live in the Twin Cities, and I am an investor. Don't let the bank deter you. There are other ways to get deals done. At my last REIA meeting, two private investors stood up, in front of 100 investors, and told us they have money to lend. Just bring them the deals. The hard part is getting over your fear. I really like Rich Dad/Poor Dad. Great book. I am closing next month on my third property in one year. I have another foreclosure opp with equity, and I am exploring a purchase of an 18 unit building.

BP is a 'yes' community....many brilliant people are here who can help.  I say, don't wait.  Don't let your bank scare you.

@Ryan Russell:

At the auctions, don't the banks show up?  How do you get them for less than the bank offers?

In the town I invest in, the Water Department will send a bill to the tenant, but the understanding is if they don't pay, the owner is responsible. I've noticed most other landlords in my market pay the water bill, regardless of whether the property is SFR or not. The other landlords are my competition for tenants, to a small degree. Would you cut the rent a little to not pay the bill, leave the rent (average market rent) as is and tell them to pay it, or just pay the water bill yourself?