All Forum Posts by: Tim Swierczek
Tim Swierczek has started 15 posts and replied 1509 times.
Post: MN Renters who are consistently behind on rent
- Lender
- Saint Paul, MN
- Posts 1,575
- Votes 1,650
Lot's of good feedback here. I hate late paying tenants but I have found that in two situations I had tenants that paid late but always paid the late fee without complaint. Ultimately, that type of tenant is telling you they will gladly pay more if they can pay a little late. Those tenants worked out fine. The ones who don't pay or need eviction notices to scare them to pay are different in my opinion and you should look to get them out as quickly as possible
Post: 4 First time investors looking for advice/confirmation about getting started
- Lender
- Saint Paul, MN
- Posts 1,575
- Votes 1,650
Quote from @Andrew Haddad:
We are 4 younger guys recently out of college looking at forming an LLC to purchase our first investment property. We planning to meet with a lawyer soon to cement our articles of organizations and operating agreement before we form the LLC.
The plan is to each put in $10,000 towards a downpayment, and then all equally cover laywer/LLC/general fees.
I am referencing this post originally (https://www.biggerpockets.com/forums/311/topics/260825-inves...), but it is from 8 years ago. I believe we have covered most of the needs in this post, but I was becoming unsure about an LLC.
From a multi-person investment point of view, is an LLC still the best way to go? We are thinking very long term, so in order to cover bases regarding potential deaths, wanting to pull out, or being unable to afford the investment it seemed like the best way to go.
Really looking for some general advice is there is any, we feel we've googled and researched everything that will apply, but are there anymore pieces to be aware of? What kind of financial safety net would be good to have per person? Are there tax implications we are unaware of? Minnesota does not have state income taxes for LLCs, but federal income taxes still apply. but we don't plan to generate revenue, or any revenue we generate would be thrown back into the LLC in the form of an emergency/maintenance fund, or towards another downpayment.
Appreciate any advice or messages with help or constructive criticism. We do have a lawyer in mind and a real estate agent as well planned
I completely agree with Basit. I've seen dozens of college buddies start investment groups that stall quickly because they all bring the same thing. Hustle.
Having said that, do you all have your own house hacks? If not, you would be best served by each buying a house hack first. If you go the LLC route, PM me up because my wife broker's commercial deals which are much cheaper than DSCR loans and you can't get a Conventional loan in the name of an LLC.
Post: Single-family Homes vs. Small Multi-family Investing
- Lender
- Saint Paul, MN
- Posts 1,575
- Votes 1,650
@Hunter Beckstrom I know many people who have been successful with both single and multifamily investing. From my experience multifamily is easier to cash flow, and has less downside risk from a cash flow perspective. Typically you will never have more than half vacant at a time and that means you are never at zero revenue. In theory, multi-family has more maintenance, due to more HVAC, and appliances but in practice, I have not noticed a difference in maintenance. That being said, it's not true that multi-family will be as easy to buy as you age. At some point you will graduate from being willing to house hack and then a single family will be easier. I'd recommend you house-hack some small mulitfamilies and re-evaluate every few years. I typically make significant changes to my strategy every 4 years and tweak the plan every 1-2 years in between.
Post: Adding Patio to Fourplex
- Lender
- Saint Paul, MN
- Posts 1,575
- Votes 1,650
@Jared Schweiss We have had patios at most of our properties and they get used. It's obvious to me that our tenants like them. I do no think they add any rental value and most patios would not add resale value as they are a cheap easy addition. That being said, it's a cheap and easy addition, and if you have tenants who have expressed a desire to use the back yard it will likely be a hit. As for the lease, you should have quiet hours in your lease and if you have a four plex you should have language that addresses care for common areas. If you do not have such language you should have language that limits disturbing noise. Our lease is quiet hours are from 9 PM to 8 AM I think. We have not had a noise issue in many years. The common area language should dictate that personal items are not stored in common areas, it may also address maintenance of those areas, but you will need to amend it to address outdoor furniture and grills. We provide a simple Weber charcoal grill at our duplex unit for tenants to share, and leave it to the tenants in our single-family properties. It is not necessary to provide one but it was easy for us as we had an extra.
Post: Seeking Business Partner for Property Investment Near University of Minnesota
- Lender
- Saint Paul, MN
- Posts 1,575
- Votes 1,650
Quote from @Eric Chau:
**Key Details:**
- Remaining loan balance: $178,000
- Favorable interest rate: 3.4%
- Monthly PITI: $1,368
- Potential rental income: Over $2,200/month
I prefer not to sell outright and am seeking an equal equity partner. The ideal partner would either manage the property on-site or have an interest and experience in developing or new builds. Experience in property management or real estate investment is highly preferred.
I am open to discussing how to structure the deal to ensure mutual benefit, including considerations for new development.
If you are interested in a lucrative real estate investment with the capability to manage or develop the property, please contact me to discuss further.
Hey Eric I have experience on the management side. it would be worth a call or zoom meeting. Please PM me if you are still looking for a partner.
Post: Earnest Money Question
- Lender
- Saint Paul, MN
- Posts 1,575
- Votes 1,650
In this market, I'd start with a low figure. $25K and negotiate it in the LOI phase. Two years ago you would need at least 50K hard maybe 100K just to get a signed LOI.
Post: Section 8 Voucher Redemption
- Lender
- Saint Paul, MN
- Posts 1,575
- Votes 1,650
Quote from @Natan Gutt:
Hi,
I am looking to start investing in section 8. I have a few long term rentals in Minneapolis and looking to find the right city to start in. I was getting locked in to start in Cleveland when the agent I was working there said that you can never redeem the full amount of the voucher because it’s always higher then fair market value of the rent.
For example. 3b 1bth house voucher is roughly $1,550, but the rents get no where near that much apparently and cap at around $1,300.
Is there a city that people do section 8 in that has houses for 100k close to turn key and also are high enough rents to match the voucher and take full advantage of that amount?
Thank you ahead of time for your help
I have heard nothing but horror stories from out-of-state investors in Cleveland. From my second-hand accounts, I would stay far away from that market. It's my understanding that you must have local knowledge to be successful there. I second @James Hamling's comments to stay in MN and look for markets here that attract good section 8 tenants.
Post: How can property taxes go up by 164%?
- Lender
- Saint Paul, MN
- Posts 1,575
- Votes 1,650
Quote from @Molly Jones:
Wow thanks for letting me know! As a first time investor I am quite wary of going out of state. Many of the connections I've made are here in Minnesota and I just feel a bit more comfortable starting here.
This particular property has special circumstances. The property is being charged $8,137.29 in special assessments. The charges are mainly due to it being a vacant building. That will drive up the taxes on any property. The tax increase was 14.75%
The 2023 tax without the special assessment was $4,054.04
The 2024 tax without the special assessment was $4,274.83
Here's the breakdown from the County's website:
Values established by the assessor as of January 2, 2023
Estimated market value:$334,000Taxable market value:$326,820Total improvement amount:
Total net tax:$4,274.83 Total special assessments:$8,137.29
Special assessment details:
010272316GST IMPRV RESURFACING$247.35
0109602023VACANT BUILDING REG$7,703.71
0125121T052021 TREE REMOVAL-5$186.23
Post: What Cash-on-Cash Return Should I Target in Multi-Family?
- Lender
- Saint Paul, MN
- Posts 1,575
- Votes 1,650
Quote from @Evan Polaski:
@Charlie Moore, the challenge I have with this question is: how are you planning on calculating CoC returns. There is no universal way, especially when directly owned.
If you buy a $1mm asset, you will likely be putting all $250k into the down payment, leaving nothing left to renovate. So your renovations will be from cash flow. So your early CoC will be 0%.
Or you buy a $600k place, and hold 50-70k for Renos. Now, you have a Cash on Cash in year 1, because you are not using cash flow for renovations.
Assuming the second way, anything north of 5% in year 1 is probably good. Anything north of 10%, I would assume you are likely not underwriting correctly.
I see many on these forums assume that a Class C or D property will have the same assumptions as an A or B. But in reality, you will likely have more frequent turn over in C and D than A and B assets. On top of, typically, higher vacancy as you wait for a qualified tenant to apply. So more vacancy + higher turn over costs quickly eats into the C and D returns, often yielding returns only marginally better than A or B assets. Additionally, C and D assets have lower rents, but roto-rooter and Home Depot don't care whether you get $500/mo in rent or $5,000/mo. That plumbing bill or new appliance will generally cost the same, so higher R&M reserves, as a percentage of rent, are needed in lower quality/lower rent assets, too.
Agreed, I had this exact conversation with another investor today when they brought up the lower purchase prices in small-town Minnesota.
Post: Hello from Duluth, MN
- Lender
- Saint Paul, MN
- Posts 1,575
- Votes 1,650
Quote from @Dan Manion:
Quote from @Tim Swierczek:
Hi @Shawn Frost. Welcome to BP. There are regular meetings of investors in Duluth. There is a meet-up that I've spoken at twice. I can send you the meetup link if you PM me. I can't post it here due to BP rules.
Would you be willing to send that my way as well? I'm new to real estate investing and my first property is in Duluth.
Sure, please PM me and I will reply with the link