All Forum Posts by: Matt Higgins

I love your deal!  Building looks great! 

I just bought a 3 plex in Centuria wi for 110k.  I had to put 8 grand into the rehab.   $2100 monthly income.  Small town Wisconsin investing is the best! 

The 10 year yield is up to 1.28 from a low of .52 in august.  The 30 year bond has a 2 in front of it for the first time in awhile.  Combined with lumber, food, housing, gas, it’s obvious that inflation is beginning to ramp up.  We have an administration that is increasing the money supply by putting it directly into the bank accounts of US citizens.  They have little interest or ability to actually raise taxes and add stress to the economy.  I believe inflation is happening, and this time for real!  This increase in money supply is creating asset bubbles all over the economy, and the end result will be inflation.  How much I don’t know. 

My action would be to lock in long-term rates on multi-family projects and try to push maturity out a fresh 10 years.  If you actively manage your retirement portfolio sell bonds to buy stock.  Lock in 30 year money on any single family homes that you can.  Refinance your single family home if you haven’t.  Personally I would wait on acquisitions until the eviction moratorium ends to see how things shake out.   If you can borrow long term at 4% you will probably do great, but a rise in rates and an increase in distressed properties could definitely have a negative impact on home prices. 

Am I overreacting or wrong on my prediction?  Anything wrong with my action plan?  Any other ideas on what to do to battle inflation?

  

@John Woodrich

John woodrich has been great for us.  He’s all over the bigger pockets 

And as you said, “many of your tenants have so much money that their biggest problem is how to spend it.”  You sound like a guru.  

Good luck 

@James Hamling. Thanks for the lecture on covid.  I had no clue that it has effected some people differently than others.  I guess all I have to do is buy buildings that only have essential workers living in them.  Brilliant!  Kidding, but cmon man.  I’ve bought a few deals over the last couple months, but I think underwriting the bigger deals is a lot harder than it used to be and that was the point of my post.
 Riddle me this.......How are you going to perform on a minneapolis apartment syndication unless you steal the building taking into account the numbers below.  

Vacancy in Minneapolis is expected to rise to an estimated 6.5 to 7% (star tribune), Minneapolis, Minnesota rent growth is at  (-10.40%) (co star) and these numbers are backwards looking.  Rent collection for class A was in the mid 90s but class C was at 84%, again all backwards looking numbers. 

I would think syndication would be a hard sell now that paying rent is optional.  What  a weird economic environment to sell friends, coworkers, and family on a “can’t miss deal”.  I walk a lot of deals and my first thought lately is, “I wonder if that tenant is paying rent today?, will they be able to pay next month?, and what the hell would I do if they couldn’t? I’m reading that Biden is pushing moratorium out to the end of March, but it will probably be in place throughout the summer.  We are in uncharted waters. I think the buy, fix, raise rents, and refi is a risky proposition.  I know people who have had those things go bad, and your reputation is a tough thing to get back.  I’m not sure that now is the time to go meet w a “guru” and “give it a try”

@John Woodrich has done great things for us!  Thanks J 

We have a saying “first year is the worst year”.  There are usually unexpected problems and maintenance that first year.  Also, I would love to have a 10 million dollar building, better yet a 100 M $ building break even while someone else pays down the debt.  Hang in there, stay on top of your property manager, and keep an eye on your expenses.  Buying a deal on a $100/month cash performance is too skinny of a deal, but you’re learning and now you’ll have a better idea of value in the future.  

The minneapolis monthly rental market is less than hot, but that’s a great area.  It sounds like you should have been raising rents annually on your last long term tenant, $25 or $50 a year, but that’s a sunk cost now.  There is no harm in trying the short term rental market especially as soft as long term Mpls is at the moment.  I’ve never done it so I have no expertise.  I would be interested to hear how it goes.