All Forum Posts by: Joseph Lee

Hey guys, thanks for the input! Like you mentioned, @Jay Lohn, it seems like a reasonable investment in tenant retention.

Since we're currently owner occupying one of the units, there are some pretty attractive improvement loans that we could take advantage, so may now be the time to do it. @Pavel U. or @Tim Swierczek (or Jay)- do either of you have a go-to contractor for furnance or AC install? The property is already forced air, so it's a pretty straight-forward job. The recommendations I've gotten from others have all been small shops that don't have license to work in Mpls. 

1) Does anyone have any recommendations for residential HVAC installers that do work in Minneapolis? We have a few furnaces to replace and AC's to install (possibly- see below).

2) What does everyone estimate the value of central air to be in a upper-medium-end rental in Minneapolis? Do you project $x more in monthly rent or see it as something that gets your more interest but not necessarily more rent? For perspective, the units are 2 BRs in a 1960's side-by-side duplex getting $1700/mo, so they're not cheap units from a rent perspective. We haven't had a problem getting tenants, but I'm wondering if it's worth it to get AC installed while we replace the furnaces.

Thanks for the input!

Hey @Jadde Rowe, welcome to the forums!

One note on option 2 that @Armin Nazarinia mentioned- this pre-payment is sometimes a reduced total when compared to the total outlay for PMI if you paid it until you hit 20% equity per your amortization schedule. I think our PMI buyout was something like 60% of the total PMI we would have paid had we rode it until 20% and not refinanced or re-appraised. Now, if you expect to hit 20% equity much sooner than you would through principle paydown alone (if you expect market appreciate or plan to force appreciation through improvements), your decision is a bit more complicated, because you obviously can't get that chunk of cash that you laid out for the buyout back.

Same story as Armin, though. I'm not a lender, but wanted to make you aware that this is an option that you should ask about. I can put you in contact with our lender as well if you want to touch base with him on your options.

Those look sharp, @Pavel U.  Thanks for the input. Will your supplier sell in single-kitchen quantities or do they require a bigger order? Mind messaging me their info?

Now I just need to get a new property where I can try out some of these...

The only install/assembly that was included in that cost was the countertops. They do have a 3rd party installed who they have a relationship with (Traemand). I think we were quoted something like $2k for assembly (everything comes in flat-pack boxes like their furniture) and install. 

We decided to do it ourselves, which wasn’t too bad. It’s all pretty easy, (think repeatedly assembling one of their dressers), just takes some time. Install is more involved, but not more so than standard cabinet install. Their hanging rail system is pretty slick, though. Google it if you’ve never seen it. 

To close the loop and bit and give some back to the conversation, we ended up going with Ikea since we were able to take advantage of their 20% off sale and also had the design work done for free with our purchase. We were really happy with the results. Cabinets + quartz countertops were ~$4500, I believe.

If anyone's interested at looking at some pictures, you can see it here-

 https://www.zillow.com/homedetails/3940-42nd-Ave-S...

For another option, I have a buddy who has used Boca Cabinets on a few properties and has been pretty happy with the results. They have locations in Chicago and Burnsville and are extremely cost-competitive for a nice product from what I could tell. 

@John Woodrich- not asking for you to give away your secret sauce,  but where is your dealflow coming from? My guess is your area of the north metro may be a little less competitive than core Mpls/St. Paul, but even so, it sounds like you're doing a heck of a job finding deals. Is it agent relationships, clients of yours, direct mail, a combo, etc.?

I agree with @Josh Collins 100%, assuming that you’re looking for a buy-and-hold that will cash flow more than a hundred bucks a month. 

For the sake of time spent on analyzing deals, I'd advocate using the 1% rule (or some adjusted number...maybe it's a .8% rule for a duplex, or a .7% rule for a SFH, or vice versa, etc.). It's still a very good benchmark to see if you're in the hunt or if there isn't a chance in the world that you'll make money. If it looks good from that quick look, run the numbers in their entirety. There are always anomalies like single bill utilities on a triplex that the landlord pays that will prove the 1% rule to be useless, but generally it works for small MFH or SFH. If you have limited time to put into your search, I think this is vital in allowing you to be more efficient.

Just find something that works for you and allows you to look at a listing and quickly decide if it’s something you want to look into further. It’ll take some experience of running the full numbers on a lot of properties right away, but then you use that bank of knowledge to build your “rule.” 

And a heads up- you’re unlikely to find a true 1% rule deal in many of the more desirable areas of the TC. But you’ve probably found that out already. You can get them there with value-adds, but hard to find one that will hit that threshold from day 1. 

If you’re not looking for buy and hold cash flow, as Amber said, forget everything you just read from me. 

Good luck, my man!

Can anyone suggest a lender in the metro that will do a HELOC on a non-owner occupied property? We were looking to get a HELOC while our current house-hack was still owner occupied, but we may be hopping on to our next property a little too quickly to make that work. @Tim Swierczek, is this something your team offers?

Alternatively, have any of you found any good unsecured loans as an alternative or in addition to a HELOC?

I fell off the face of the earth a bit on this one, but @John Woodrich, thanks for the mindset insight. That's very helpful and (I think) the best way to look at it. If you wouldn't want your Fortune 500 employer to knowingly skate rules, your own business shouldn't either. Again, very good perspective- thank you.

@Alex Breuer, thanks for the offer! As a layman, reading and interpreting the code is...difficult to say the least. If I have any more questions, I'll reach out.