All Forum Posts by: Justin Rademacher

What areas are you looking to buy in or are you open? Out of state investing can be tricky to navigate and takes a team who are experienced and know how to navigate those complexities. 

A good property management company is worth their weight in gold. So what you may "give up" in expenses, you should easily recoup in ROI. For example, a great property management company may charge one month in lease up fees, that same property management company typically has a very in depth vetting process. This will save you money and headache down the road with "misplaced" tenants. ROI isn't always just about the return of money. Time freedom is important to consider. The less time you have to deal with vacancy, the more time you can spend on expanding your investment portfolio.

With something like this, having a conversation about expectations is absolutely crucial. I would have a meeting with them and let them know what you expect in regards to communication etc. Let them know how happy you are with other aspects they are managing for you etc. Then let them know the importance of needing effective communication in all aspects of the management business. 

Once you have this conversation with them, I would ask them for their ideas on how they can rectify the situation. If their plan works for you great! If it isn't up to their standards I would work on collaborating with them to see if you can come up with a solution together. 

If all of this fails, then I would look for a different company. 

With the investors and investments that I look at, the very first thing I ever do is get information from the listing agent. I want to know the following:

Current rents, copies of the leases, owner paid utility costs, property taxes, and insurance costs. These are the big ones. I then run those numbers through a tracker I use to calculate cash on cash returns, cap rate, and monthly cash flow. 

If the numbers work, then I take the next step in going to look at the property. What you will find by skipping the initial analyzation phase of the deal prior to looking at the property is...sometimes the property will be in amazing shape and you fall in love with it. This can create buyer blinders. Meaning you are blind to the numbers or you compromise certain things to justify the purchase. 

If current property is vacant, I run potential rent numbers through to see if they check out. I will also often connect with my property manager in that area to make sure he/she thinks they can rent the units out for that much. 

Once this all checks out, I then take the next steps in setting up a potential offer. 

Hope this information is helpful 

The greatest asset that an agent will give you is time. Finding the right agent will be absolutely crucial. On top of time, an experienced agent specializing in investment properties and specifically commercial will be able to effectively navigate the complexities of a transaction such as these. 

I would interview numerous agents prior to pulling the trigger on one. I have a questionnaire that I have created that I can send you if you would like. Just drop your email and I will email it over. 

The greatest leverage you can use is to find a real estate agent that knows the investment side of the business. This will be crucial in helping to find on and off market deals. You will want to make sure that the agent specializes in investments as some agents may not have the knowledge or expertise with what you are looking for.

I do have a questionnaire that I have created that gives you the top 10 questions when interviewing investor specific agents. If you drop your email I would be more than happy to send that to you.

our purchase price on the 25 unit was a little over 1M

This ultimately comes down to your goals. What is the exit strategy? What time frame is attached to that exit strategy? What are you using the cash flow for...more investments or living?

Scenario 1- If you are more interested in the long term play. Then appreciation is by far the best thing to be looking at. Which makes the 4 plex more than likely the better option. With that being said, being that the duplexes are not in as good of an area...there may be potential for value add opportunity. If there is value add opportunity in the duplexes, this could be a better play when you either cash out refi or sell. If there isn't any opportunity for value add in the duplexes, I would stick with the 4plex for an appreciation play if that is what you are going after.

Scenario 2- If cashflow is ultimately what you are looking for, then the duplexes are obviously the better option. If no value add opportunity with them, then you can always 1031 them down the road into other options if your investing goals change. 

Hope this information is helpful.

Minnesota is a fantastic option for what you are looking to do. My partners and I have 25 unit apartment complex we own in Rochester MN. The nice part about MN is that there is a perfect opportunity to cashflow...create some value with value add potential...and then cash out when complete. This is our current strategy with the 25 unit. 

The market obviously is different from city to city but while you do your research I would look into the following:

Saint Cloud MN, Minneapolis/Saint Paul MN, and Rochester MN