All Forum Posts by: Karen Higgins

I'm here to discuss CRMs for real estate.  We are starting a marketing campaign, and currently are not using a CRM.  I know "when gets measured, gets improved" so we are getting after it.  Any recommendations for what you are currently using and why you love it?  We have just ordered our first set of mailers, so here comes the fun!

Things I'm looking for... easy to set up, efficient data entry, meaningful reporting, and something that could be offloaded to VA once I get the systems in place.

We plan on marketing for our brokerage and property management business, if that helps in what you recommend.  Can't wait to hear what has been working well for everyone!

@Michael Ealy Thanks for that breakdown. So helpful! This is our first significant turn around project, and at a higher price point than we’ve  dealt in before, so I want to make sure I’m analyzing as others in this space would. 

@Greg Dickerson. 

Thanks! Everyone sounds like it is best to offer at a cap rate of actuals. So to get a current cap rate of 5% we'd have to offer at 1.42M with upside potential (if all goes well) and we could increase NOI, we could sell at 5% cap rate at 3M. Now.... to see if they'd accept that offer!

Here's a little back story on the vacancy.  The owners self manage from out of the area and the college in town recently build new dorms on campus and are requiring students to live there. That is where the vacancy is coming from... so they say.  I'm going to have to dig into this a little bit further when we walk through the property next week.

We all know that it is hard to find a great multi-family deal in today's market. It's better to "make one". We have bought multiple small apartments 10-20 units, that have had upside potential with room to increase the NOI with increased rents and improvement management, with great success... but they all had a positive cashflow at the time of purchase. The building we are currently looking at is a little different and I'd love some input on what you guys would do.

 We are looking at a 39 unit apartment building in a tertiary market of Minneapolis.  The building itself looks great, it was built in the 1990's and and the city it is located in has had continued population growth over the past 10 years and is next to a  larger city with job growth.  

I was so excited about this opportunity until I received the 2019 financials.... Negative cashflow and 20% vacancy. Here is the question, how do you determine a fair price to offer? If I evaluate the cap rate at the current NOI and listing price it is 2.1%, which is crazy for a high risk, negative cashflow property. The cap rate if purchased at a price that would assume the mortgage at 2.4M would only be at 3% (with current occupancy). The pro-forma cap rate for full occupancy (minus 5% for vacancy) for purchase price of 2.4M would be 6.5%. Does that seem too risky? I would hope for a higher cap rate with the risk of buying a building with only 80% occupancy.

Thoughts?  How would you go about analyzing this deal?  What would you offer?  

Make sure you have a full screening process...  This gives you a clear reason for declining an applicant.  For example, background checks, credit checks, employement, rental history, etc.  Check with the laws in your state in regards to fair housing.

@Andrew McCotter I recommend doing a combination of both.  That is what we have done with our portfolio and over the past 9 years have grown from a single rental to over 100 units that we own.  

It can also depend a lot on your own personal risk tolerance level. Using leverage is one way to increase your buying power, but another is paying cash for a below market property, forcing appreciation with renovation and improving NOI, and then only pulling out money if / when you need it. If you do put significant leverage on all of your investments, eventually your balance sheet is going to reach a point where it may be challenging to get a loan if your debt:equity level is skewed.

One other point,  if you do decided to use leverage to buy multiple properties at once, be sure to keep an emergency fund available.  With more units, there is an increased likelihood you may need to dip into that fund for repairs / maintenance, and you won't want 100% of your funds tied up.

We own 10 townhouse style units in northern MN with electric heat for approx 2 years.  Upon purchasing, it seemed great that the tenants had their own utility bills and the rents were at the bottom end of market.  The major thing we've noticed is that there is little room for rent increases as tenants have extremely high electric bills in the winter.   These are nice units that are only 12 years old but we've noticed consistent tenant turn-over, and the major reason is the electric cost compared to comparable units in the area.   I think this may depend on your market, and if the competition also has electric heat or not.  Just a heads up on if the winters are extreme, as they are here.

@Justine Scheuher I have been a real estate investor for approx 10 years in the Minneapolis area.  My husband and I started buying property one by one in 2011 and we have grown to a portfolio of 125 long term rental units.  It's a combination of single family, small multi-family (duplexes, tri, quads) and a few 12-15 unit apartment buildings.   I love it!  3 years ago I left my career as a physical therapist to pursue this full time.  We've also completed about 20 flips over that time frame as well.   This year we've pulled back on the flipping and started a property management company.  Our goal this year is to grow the property management company, pay down debt, and keeps our eyes open to any deals that make sense.  Good luck with all your endeavors!  

We recently launched a property management company in Minnesota.  Wondering how all of these techniques have worked and if anyone has recent marketing strategies they'd recommend.  

When you are looking to hire property management, what are you non-negotiables? 

And why would you hire property management when you are local to your investment property?