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All Forum Posts by: Todd Dexheimer

Todd Dexheimer has started 32 posts and replied 2968 times.

Post: Start With Cheap Rentals or Buy Better Property With a Loan?

Todd Dexheimer#2 Multi-Family and Apartment Investing ContributorPosted
  • Rental Property Investor
  • St. Paul, MN
  • Posts 3,028
  • Votes 3,680

Invest in A or B locations, not D locations. Buying a house that is in a bad area for cash and thinking it will cash flow, because it looks good on a spreadsheet is the best way to go broke and hate real estate. Bad areas are tough to cash flow and provide very slow appreciation. 

If you're buying a SF/duplex, I would highly consider only buying in your back yard and not purchasing out of state. If that doesn't work for your area, then look at different ways to invest, like investing in a syndication, buying a NNN lease property, note investing, hard money lending, etc.

Don't be in a rush to buy. It sounds like you've still got a lot to learn still, so be diligent and soak up the information. 

Post: First rental across country, should I get a property manager?

Todd Dexheimer#2 Multi-Family and Apartment Investing ContributorPosted
  • Rental Property Investor
  • St. Paul, MN
  • Posts 3,028
  • Votes 3,680

Find the right property management company and hire them. 

Post: Grandma will loan me anything at 5% rate

Todd Dexheimer#2 Multi-Family and Apartment Investing ContributorPosted
  • Rental Property Investor
  • St. Paul, MN
  • Posts 3,028
  • Votes 3,680
Quote from @Matt Menard:

@Jay Hinrichs Hi! What I am presenting is a deal much better than a single family home. You do not need decades of experience in being a landlord. In fact, it is a poor strategy. Start out big enough to have a management company be the landlord. 

 @Matt Menard what kind of experience do you have operating 400+ unit apartment buildings? You're soliciting on BP to the Ethan saying that your deal is better than him being a landlord, without context and a stated track record. This is Grandmas money at play here and she wants to help her grandson get started. 

I've done SF's, duplexes, house hacks, BRRRR, flips, wholesales, etc. These are all great paths to get started and learn the ropes. Ethan passively investing in your syndication, one of my syndications or anyone else's syndication doesn't teach him much and would be poor use of his resources. If his grandma wants to invest in your syndication, then solicit her directly.

Post: Load bearing wall or not

Todd Dexheimer#2 Multi-Family and Apartment Investing ContributorPosted
  • Rental Property Investor
  • St. Paul, MN
  • Posts 3,028
  • Votes 3,680

A load bearing wall is often easy to spot. In most buildings 1980's or newer a load bearing wall is a 2x6 wall and the wall will carry down through the basement (walls stacked on top of each other or a post and beam system). The easiest way to tell, is if the joists above the wall is split and land on top of the wall, meaning the joist lands perpendicular to the wall and stops at or slightly after the wall. There is typically another joist that would go the other direction that is connected. If you take that wall out, then they would be floating. If the joists/rafter are running perpendicular to the wall and especially if there is a split in the joist/rafter, it may be load bearing. 

It's best to consult with a contractor or engineer if you're not sure. 

Post: New real estate investor

Todd Dexheimer#2 Multi-Family and Apartment Investing ContributorPosted
  • Rental Property Investor
  • St. Paul, MN
  • Posts 3,028
  • Votes 3,680

I personally would avoid out of state investing on your first deal (or even your 10th deal). Buy something local. This helps you understand the market and have more control over what is happening with your property. Financing will also be much easier. 

If you're set on going the OOS route, then invest passively in a syndication. 

Post: Self Directed IRA - what to invest in?

Todd Dexheimer#2 Multi-Family and Apartment Investing ContributorPosted
  • Rental Property Investor
  • St. Paul, MN
  • Posts 3,028
  • Votes 3,680

Debt funds are great for a SDIRA since there are no tax benefits with them. A traditional equity syndication could also be a good option, but pay attention to the potential tax implication. A lot of people say to avoid the syndication because you can't utilize the depreciation losses, but the fact is, 90%+ of our investors can't take advantage of the depreciation loss due to them having a regular W2. 

Post: Why Class D/Section 8 returns are not as good in Real Life vs on Paper - Real example

Todd Dexheimer#2 Multi-Family and Apartment Investing ContributorPosted
  • Rental Property Investor
  • St. Paul, MN
  • Posts 3,028
  • Votes 3,680

I don't really think the issue is Section 8 vs Market rate. They are both different niches that require different skill sets. You can lose money or make money with either strategy. The real issue to me is that SF rentals just don't make much money and typically lose money. I used to own a hundred 1-4 family rentals and still own 23. I bought these for cheap 2008-2014 prices and have them leveraged at between 15-40% LTV. I cash flow each year, but not by much.

Here is the reality: on paper, they look good, but the reality of the new roof, furnace, water heater, appliances, flooring, sewer line, etc come to fruition and eat that cash flow up for the next 5 years. 

You can get lucky with a few of them. I have some homes that have made me $10k+/year for 10 years, but others that lose big money each year.

Now, as I compare neighborhood class, I have to side on the A class and B class side of the coin. Better neighborhoods appreciate faster than bad neighborhoods. Buying in the best neighborhood possible, to still cash flow (on paper at least), will create the most wealth possible. 

Post: Why Class D/Section 8 returns are not as good in Real Life vs on Paper - Real example

Todd Dexheimer#2 Multi-Family and Apartment Investing ContributorPosted
  • Rental Property Investor
  • St. Paul, MN
  • Posts 3,028
  • Votes 3,680
Quote from @Lucas Thomas:
Quote from @Joe S.:
Quote from @Lucas Thomas:
Quote from @Laura Winters:

You don’t make money on section 8 properties by rental value. You get massive tax credits for participating the affordable housing sector. The beauty is you don’t need to have 100% of your multi-dwelling unit to get this benefit. Depends on the state and city but they usually only require a certain % to participate and they don’t care how you run other portions of the property. Also you get massive credits + funds when you develop these houses. It isn’t making money because you are treating a different beast in a tame way. Section 8 / affordable housing is not something for RE newbie to touch. The people, law, and property are all challenging. 

 Well that's mostly only for commercial properties. The rest make money cause of normal landlord reasons. Tenants move in. Don't move out. And they let you increase the rent every year without having to figure out if the tenant can afford it. They can cause its government funded. You just have to do the investment right.  

LUCAS,
Are you managing these yourself or do you have someone that handles it for you? Also, how many of these kinds of properties do you have if you don’t mind saying? Whereas you raised your hand as a brave soul stating that you are doing well in this class of Property. :)

Well HELLO :D

I'm a subject matter expert in these actually.

I used to own a property management company who specialized in these. I used to run 250 doors of SFH, condos, mobile homes, duplexes, triplexes, Fourplexes, and a few commercial multifamily that all were in war zones. Meth dens are my favorite to buy because people think they "cooked meth" in them which makes them sell for cheap. I have seen every horror story in real estate cause I ran so many doors, it was just an average Tuesday for me. LOL

For management: I do both depending on the state as I own 35 properties in 5 states (Mix of SFH, Condos, Fourplexes, Duplexes, and Triplexes). If its in the Southwest, I manage it myself because it has very little weather and not a lot of external factors that affect the properties. In the Midwest/Northeast, I flew out and interviewed six different managers in each state and I hired the professionalized mom and pop shops that were under a franchises who knows how to run warzones. So you get the corporate infrastructure but with someone who cares about making me money. I do this because the water and weather shifts are too much for me to follow and having to winterize and unwinterize is too much of a hastle.

I'm a Landlord's Landlord.

But don't get discouraged by anything I said. I started out like everyone else. I bought a 5 bedroom house in the "Hood" and rented the rooms out individually to people from Craigslist as a Live-In Landlord. I bought my first crack-head condo for 40k and rented it for 1k a month. And I house-hacked my 1st 4 plex with a VA loan and evicted my upstairs neighbor which is why my standard protocol in my house-hacks is never let ANYONE know your the owner.


 What are you winterizing and dewinterizing each year? I live in MN and own thousands of doors in MN, WI, OH, and KY. We don't do winterizing. The furnace needs to be operational and it's best practice to remove the hose from the outdoor fixture, but other than that what are they charging you for? 

Post: Syndication vs Investment propery

Todd Dexheimer#2 Multi-Family and Apartment Investing ContributorPosted
  • Rental Property Investor
  • St. Paul, MN
  • Posts 3,028
  • Votes 3,680

This answer depends a bit on your age, your risk tolerance, and a few other factors. If you are young, more risk is appropriate. 

If you're in your 20's and 30's, then go ahead and invest all $120k. 

If you're in your 40's and above, be more cautious. Do you have only $120,000 to invest? Or do you have a large retirement account already set up? 

As for your first question, if you don't want to spend time in the business, then invest passively - either via syndication, debt fund, or a REIT. Don't expect to buy something on your own and not put time and effort into it. Buying a few rentals may not be a 40 hour job, but it will be a 2nd job. Some weeks it will be no work, but others it will be 5-10+ hours, even with hiring a PM.

If you're willing to put in the time and effort needed - especially on the front end, then buy the rental or do a few flips. 

Post: High Quality Syndication Companies

Todd Dexheimer#2 Multi-Family and Apartment Investing ContributorPosted
  • Rental Property Investor
  • St. Paul, MN
  • Posts 3,028
  • Votes 3,680
Quote from @Chris Seveney:
Quote from @Spencer Cuello:

Has anyone worked with a multi family syndication company they would recommend? I'm looking for minimum investment sizes on the lower end to start. 

 I would check out passive pockets as well as the ask about a real estate company or syndication and passive investing forums. MF has seen some significant changes and people recommended precovid may not be recommended now, so be careful.

One person I always had a lot of respect for was @Todd Dexheimer who runs a great company and is very knowledgeable (full disclosure not an investor but have met him several times). 

Also a question will be "what is lower end" starting investment.

 Thank you Chris and @Arn Cenedella. Both of these guys are also great guys and have excellent track records in the industry. Chris would give you diversification outside of MF.