All Forum Posts by: Patrick Costello

@Gavin Grady @John Woodrich @Matt Higgins @Bruce Runn @Jordan Moorhead

Just wanted to introduce myself. I'm a new real estate investor literally weeks away from diving in :) 

Gavin - thanks for making this post! I'm actually listing my South Minneapolis house in a couple weeks with plans to house hack somewhere in the Twin Cities. I've got a real estate agent who is a long time investor and feel like I'm in really good hands and learning a ton from him. Posts like this one specific to the Twin Cities and MN help confirm some of my newbie observations and learn a ton from other seasoned vets. 

My goal is to stay in the Minneapolis/St. Paul area and not travel too far out. 

A few properties have popped up over the past few months that either need work or hit that sweet spot between price and rents that allow for solid cash flow as an owner-occupier but as you all have observed, they do seem to be few and far between. 

There are a few in the Linden Hills, Fulton, Summit Hill neighborhoods that we can afford as well. On the one hand, these are great neighborhoods and the properties are in great shape. On the other hand - even with the high end of the market rents the cash on cash return is pretty low. Do you guys see these as solid appreciation plays? I suppose the livability factor as an owner occupant can be taken into account here as well. 

Here's what the property description says:

Large remodeled brick duplex that functions as 3 units. 8.8% Cap as 3 units! TURN KEY Investment- Ready to rent 1709: 5bd/2ba with a shed converted to a man cave. (1709 currently occupied @ $2200) 1713: Broken up into 2 units: *Up- 2bd/1ba* *Down- 3bd/1ba/2 car garage* (1713 is vacant) 3 blocks from Stanley Marketplace. 1 block from Montview Park / City Park. Lots of storage and built in cabinets throughout the units. Large bedrooms. Property is officially a duplex. 1713 essentially has a mother-in-law unit. Property will need to be financed/purchased as a duplex and fully converted after closing. Rentometer projections: 3bd-$1750, 2bd-$1200, 5bd: $2300-$2500 Great tenant base with close proximity to hospital. 1713 also has a wood burning fireplace, newer furnace and 2 car garage with gated alley access. Both units feature fenced front yards with sprinkler systems. Egress windows in basement 3d walkthrough: https://bit.ly/2LJv6N6

Does anyone have experience in Adams County, CO with purchasing a duplex and fully converting it to a triplex? Is that allowed? Worth the cost/expense? 

That question seems an important factor on whether this one is a deal. I'm looking to owner occupy with a low down payment. 

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*This link comes directly from our calculators, based on information input by the member who posted.

Originally posted by @Kevin Grinstead:

Hi Patrick, 

Welcome to BP and Denver. It seems like this would be a very risky endeavor. There are some other opportunities that might work for you. Many people will house hack their current house by renting rooms instead of buying a legal duplex.  

There are some areas where this will work and also some areas with a smaller purchase price to get you started. 

I would not recommend going negative. It is hard to judge appreciation in a duplex. 

 100% agree on this not being a good opportunity. I’m noticing a lot of duplexes going for this in the area. Are people buying and betting on appreciation? I’m trying to understand why someone would buy this type of duplex if it doesn’t cash flow. 

Originally posted by @Quoc Tran:

@Patrick Costello, I'm going to guess the $3900 rental income is if you had both sides rented out? If it is, then you wouldn't cash flow at all even by renting both sides out. If that's $3900 per unit, do other rentals in the area go for that high?

That’s correct - the $3900 is with both sides rented. And I also noticed that it would have a negative cash flow. No bueno.

I’ve analyzed a lot of properties like this going for sale. 

Why would someone buy a deal like this if the numbers don’t work? 

@Karen Lipa I’m in the same boat as you Karen! Just starting out, roughly the same amount to invest, looking to house hack in Denver. I’m looking to relocate from Minnesota so not being local makes things a little tougher. I’ve been working with a couple of RE agents and analyzing deals on the MLS daily - but very few show promise. I was listening to a BP podcast yesterday from a month or so ago with Paul Thompson and Paul talked about a bunch of ways to find motivated sellers. Ways like buying lists and sending mail direct, going through craigslist for rent posts and reaching out to owners, etc. Then he works out creative financing terms that create a win-win for both parties. These might be good ways to find good deals in that area that I am going to try. Maybe a bit more advanced for a newbie investor - but worth trying.

I’m relocating to the Denvet area and looking to take the relocation as an opportunity to start my real estate investing career.

Looking to house hack a small multi family with a low money down payment.

Are my assumptions correct on the analysis of this property? 

I’m finding a lot of similar properties in the Denver area. 

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*This link comes directly from our calculators, based on information input by the member who posted.