All Forum Posts by: James W.

Stick built will alway be valued more than mobile homes.  I'm not sure how easy it would be to finance a property like that as it is an unusual property but I would start there first.

As a side note, I would think it might be difficult to BRRR a moblie home as they are generally valued significantly less and have less room to add real value.

Personally, I wouldn't own a rental that is negative cash flow, but you need to compare your performance with what a multifamily property can do as well.  I'm assuming the multifamily will provide positive cash flow which would better than what you have going now.  

The 1031 option into something bigger that will cash flow might not be a bad option but it depends on what your goals are too (appreciation or cash flow).  

I would think that rents would go up for your current place if the values are appreciating rapidly.  If there is more demand for the area, I would think you might be able to charge more in rent as well.  Might not be a bad idea to see what market rents are doing as well. 

I think it seems like quite a bit to bite off for a first deal if you plan to convert it to multifamily above.  In that area, I would think you could get residential real estate to cash flow fine.  Below are a few things you should consider.

I would look into the zoning to see if it would be allowable to make the upstairs a multifamily before getting too far into it.  

Who would do the work to convert the upstairs to multifamily and at what cost?  How will you get the financing for that?

How easy is it to rent out a storefront in Belle Plaine?  I would think rents would be somewhat limited, vacancy would be high and it would be hard to find long-term tenants.  I would research rents for the area looking at inventory levels for similar properties if there are others available.

If it has been on the market a long time, there is a reason.  It could be the location, the type of property or the property itself.  I could see things sitting longer in that area in general, but the property taxes are higher than I would have expected as well.  

Some people say going commercial is the best way to go, but it helps to keep things simple starting out as well.

I've seen something similar in Shakopee MN.  It was a historic brick house.  I considered it but figured it wasn't worth it in the end even though I had an idea on where to put it.  

The other part of it that you need to take into consideration is all of the costs it will take to renovate it as well.  The house I looked at needed a lot of work in addition to being moved which is why it ended up being torn down anyways.

Personally, I look for >$300 for a SFR after factoring everything (including cap ex, vacancy...) with conventional financing. Deals are harder to find at times, but I don't want to waste my time on skinny deals hoping to keep it rented with the hopes of appreciation. I self manage so that might be part of it, but $100/mo ($1,200/yr) is a waste of my time for a single property even with good tenants. If I were to purchase a larger deal, $100/door might be something to consider but it would need to have a lot of doors to even consider.  I would look at the cost/unit and still would likely want more than $100/mo as there isn't much cushion.  

For what it's worth, I take into consideration my investment as well. You will get a wide range of answers from people who are purchasing $50k properties and those purchasing $500k properties.  $200/door on a home at the lower end of the spectrum is completely different than a home on the opposite end.  

I do not think the HOA will do anything. it isn't their problem and is a waste of their time to deal with matters like this. If it happens again, tell them to move it immediately and that it will be towed next time you see it. If it happens again, get it towed. It is as simple as that.

Is the 18% loan secured by the property?  If so, that is ridiculous.  I would look at getting a mortgage on the property if possible.  

I know someone building one and their contract is 6 months.  Sounds like the builder is finishing them in around 5 months.  Similar size to what Peter states too.

 The 4% vacancy and 4% vacancy is not conservative at all.  It is on the low end of the spectrum IMO.

Welcome Justin!

You will find a lot of good information about people discussing what works for them.  Some members on here have local meetup groups so it might not be a bad idea to join a few of them to network with investors in the area as well.  I would like to attend some of these but travel a lot for work so it doesn't usually work out for me.

Make sure you take a close look at deals as good deals are hard to come by at this time.  I have seen some better deals closer to Rochester lately so it might be an easier market to get in when you start.