All Forum Posts by: Evan Kraljic

Hey AJ! Good on you for already looking this far ahead. 

Since you're still in college I'd say that getting all your finances set and prepared for purchasing a property should be your #1 focus. So all the basics like saving up enough for a low down payment with 3-6 months of emergency savings, building a good credit score (preferably in the 700s), and not taking on more debt than you need, so ideally no car payment especially if you'll have loans to pay off. 

Building a network is very important too, and the two main pieces to that are your real estate agent and mortgage lender. Both of those could wait till summer but if you're proactive you could probably reach out and schedule a quick phone call to discuss your plan. I would recommend Conor Hesch, Tim Swierczek, and Kim Burke for loan officers. Also join the Millenial Investor Focus Group on facebook, lots of great info and references in there that has helped me immensely. 

I'd recommend NE Mpls or South Mpls for B neighborhoods within 5-10 miles of downtown. North Mpls would be more C-D neighborhoods. South mpls has "Uptown" west of 35W which has higher property values but might be tougher to find a deal. On the east side you'll have generally lower prices and better cash flow but might be looking at C neighborhoods, which aren't all bad but just make sure you have an experienced agent (and hopefully investor) who knows the areas well.

Good luck man!

I think the most obvious thing to do here is talk to some real estate agents in the Twin Cities who also buy investment properties to get some pointers. Jordan Moorhead and Alyssa Strom are two that I've seen on these forums. 

Also I had an agent/investor help me get my first property and thought it was great for learning on the fly. I was worried about the conflict of interests initially but I don't really think that is an issue personally. My agent works with a team of investors and they found an off market deal for me that I thought was pretty solid, which is just one anecdote but still shows that the right agent will work hard for their clients.

@Jarvis Naylor No problem man. Also one other thing that might be helpful for you. I am also just starting out in investing/landlording and thought Brandon Turner's book on managing rental properties was extremely helpful. He also includes a link to 33 different landlord forms that can be used for various situations that you can receive via email without purchasing the book. Here's the link, I plan on creating my own lease but the others serve as a good starting point for lease changes, move in/out checklists, etc.

https://www.biggerpockets.com/landlordbookbonus

Good luck Jarvis!

To your first question, you can only change the way rent is collected if you discuss it with the current tenants and decide on something together, then write it into the current lease as an addendum and get all your signatures on it. I just had something similar where the landlord I purchased from was old school and had them drop off checks each month. I added in that rent could be paid by Cozy or check, one of the tenants just wrote out checks through the end of this lease with them post-dated for the first of each month, the other signed up on Cozy. 

You need to give one full rental period plus one day notice to terminate a month to month lease. So assuming your rental period starts on the first day of each month, if you give them a notice that the lease is being terminated it would not end until the end of February. You should also check your lease to make sure the minimum required notice was not changed in there.

Also I recommend reading over the landlord tenant handbook, this is answered in there as well as many other questions you may have in the future.

https://www.ag.state.mn.us/Brochures/pubLandlordTenants.pdf

Landlord tenant law, too: https://www.revisor.mn.gov/statutes/cite/504b

@Mike Porttiin No problem man. A duplex with an ADU would not be considered a 3 unit property, still a 2 unit. That is what makes them a semi-attractive option, because the distinction of having to owner occupy makes it less valuable and limits your flexibility/buyer's pool but you don't have the whole hassle of complying with commercial code. The only other thing I heard of for zoning is a city official told me they want 1 parking space per unit so you'd need 3 for a triplex but still only 2 for an ADU. But this requirement can be waived if you're within a certain distance of a major public transit line. Sorry for the vagueness if that last sentence, I don't remember the distance or what constitutes "major" but it had something to do with the length of the route. Good luck!

Hi Mike, I have a somewhat similar situation with a duplex I just closed on. 

My first comment would be where did you see that the 2040 plan is allowing ADU without owner occupancy? I know that idea had been floated out there but last I heard that had not been finalized yet. If it has... that's incredible and please tell me your source on it so I can verify it because it would make my life a hell of a lot easier haha. My understanding is that the 2040 plan makes it so that zoning can be changed to accommodate triplexes anywhere in Minneapolis, but along with that comes more stringent building codes that are compliant with commercial code instead of residential, so fire and soundproofing are required.

To answer your question, I'm fairly certain that an ADU requires a separate stairway entrance. If I'm understanding your post correctly and you can only reach the attic from stairs inside the 2nd unit that's an issue, so please correct me if I'm wrong. Especially since it's illegal to have more than one kitchen in a unit, so it'd be breaking code there as well. Also if the attic is on the 3rd level it will require either 2 stairway entrances or a sprinkler system installed for fire safety, so that is something to be mindful of as well.

If I were you, I'd start talking to the city or a qualified contractor to give them a lay of the land and see what position you are in. It's good that you are being diligent up front but code issues like this will get a different answer from pretty much everyone you ask. I've just started out and only know a few contractors but I can tell you that @Bruce Runn would probably be a good resource for you on this one, as he's done a few of these conversions in the past.

@Austin Jacobus Good on you for developing an interest in personal finance and real estate so early. Your biggest gate keepers will be money (like it is for most first-time home buyers) and to a lesser extent your credit score. There are workarounds for the second one but I'd recommend talking with your parents and seeing it they can add you as an authorized user on their credit card account, and also be sure to sign up for a card right once you turn 18. This will help you to start building your credit history. 

Aside from that just get a job and save as much as you can without compromising having fun with friends, you're still a kid of course and have sooo much time to make moves in real estate. Aside from that, hands on work helping either at your job or helping your parents with home improvement projects will pay dividends later on. 

At 14 it's probably too early to think about post high-school plans, I mean I didn't really until my junior year but I also didn't know jack about real estate till 4ish months ago and I'm 23. Anyhow, there's a million different paths you can take at this point but I think a fast track would be going to tech/trade school for electrician/HVAC/plumbing, you'll make decent money after a couple years won't have too much loans to pay back if at all and will learn a great trade for future real estate investing. 

@Cyrus Hanson Yeah I talked with both zoning and building code officials in Minneapolis. From what I've heard it sounds like zoning shouldn't be a big deal with the 2040 plan going through. For duplex to triplex they do want an off street parking spot for each unit, though this clause can be waived if you're within a certain distance of major public transit or bus line, which I'm pretty sure I would be. I don't remember the exact criteria so you'd have to call to verify, but yeah aside from that I think most areas will be qualified for triplexes starting in 2020.

Building code gets a little trickier at least for going from 2 to 3 units, because of the change from residential to commercial building code, which would include soundproofing between units, fire doors, etc. I just met with a couple contractors who are going to provide me bids on what they think a renovation would cost as an ADU vs going to a triplex and requiring those extra modifications to make them code compliant, so I could let you know what the difference is when I get those bids back.

@Adam Widder Thanks Adam! I will talk to a city planning official this week

@Jordan Moorhead Thanks man. Yeah I kinda figured that would be the case. I'll start reaching out to electricians so I can get an idea of what it'll cost for my place. Since it is multiple panels that need to be upgraded I'm guessing you are right and that 15k is low. Hopefully I will be able to delay that until after the top unit is done and I can start saving up more.