All Forum Posts by: Tim Swierczek

Quote from @Ravi Gupta:

I have 2 rentals and one primary home. Substantial equity built in all three properties looking to connect with banker/lenders for HELOC loans with best interest rates to expand my portfolio.

It's often better to get more leverage than worry about the best rate on a HELOC. For example, a typical lender offers 90% CLTV on a primary residence. This amounts to an additional 20K on a 400K house. That additional 20K is can lightly remodel two units of a duplex or do a moderate facelift on one unit. If your new property needs a remodel that rent bump alone justifies a .25% difference on 100K. This is a quick example, but there are many great reasons to have a HELOC, the idea to understand is that they are cheap money compared to the options that come after. Meaning, that cash is most affordable, then first mortgage, then HELOC. After that, you are typically looking at Private Money loans, Hard Money Loans, and the most expensive money a partner (typically 50%).

Put another way, if you're looking for a HELOC to remodel your primary residence or to pay off credit card debt, you should look for the cheapest loan that meets your needs. If you're using HELOC money for investing you should look for the highest possible CLTV (Combined Loan to Value) and then look at costs. 

The best lender I know of for 95% is also typically the cheapest rate lender, I use but they are also higher on closing costs than others. In the end, they make me more money than the cheaper loans and consequently more profit, I'm focused on profit not costs.

My wife brokers investment property loans to 75% and I broker primary HELOCs to 95%

Quote from @Stephanie Hopkins:

I live in Minneapolis, Minnesota and would love to be in attendance, but I am currently unable to attend. I am new to Real Estate Investing, and I am in hopes of finding good experienced councel to navigate my path into Real Estate Investing. 

I have missed part 1 and part 2 on Private Lenders. Will there be another meet-up on this same specific topic in a few months? 

 There are over a dozen great meet-ups in the Minneapolis area. PM me and I will send you links to the ones I like and attend.

@Karin L Mahmoodi Based on the Georgia Landlord/Tenant Guidebook. It appears you are able to hold her responsible to cover damages and lost rent. I did not read the rules around security deposits. you may be allowed to use those funds and still file a small claims action for any remainder, but I can't imagine that it would be worth it if you have at least one month's rent in security deposit.  I would keep and organize all of your communication around this issue, including gathering pictures of the unit and the area in question that was repaired. I do not know if you can change the locks. It would be worth it to contact an attorney.  In my state, Minnesota, changing the locks on a tenant before the tenancy is ended is a huge problem.  The question is, did she relinquish possession? It seems to me that she did but I wouldn't take the risk without talking to an attorney.

The guidebook also says your lease should state notice periods for you to enter the property. I would give her notice by text, and ask her if she has relinquished possession. Giving notice or confirming she has given you back possession would allow you to enter the property. Most states allow you to enter with notice for a valid business reason, and checking the condition of a property that has been vacated is certainly a valid business reason. Just make sure to give notice or confirm her claim on possession so she cannot use it against you later in court. 

Here's the handbook link https://dca.georgia.gov/housing-choice-voucher/landlords/geo...

I strongly urge you to consult an attorney. It will likely cost much less than you have to lose in this case to get 30 minutes of legal advice

Hey @Chad Gardner

I just did an analysis if St Paul multifamily purchases with @Adam Tafel for our Twin Cities Real Estate Investing Show. Our analysis was much different than what you have found. The median MF sold for 380K over the last twelve months.  The areas you are looking in are a step below the most expensive so I have no doubt they are higher, but you are also looking at a small sample size when you only look at homes available for sale now. In other words, by analyzing sold properties you can see what has sold and what will likely come up again. More expensive homes have longer average days on the market. The average days on the market for median priced homes are less than half the 600K average DOM. So you will naturally see more of those higher-priced homes in those markets. I recommend you find our podcast listen to the analysis and then contact Adam who is a St Paul expert. He can help you find plenty of home that will be a better match for your criteria.

Quote from @Mike Tikh:

Currently stuck in analysis paralysis on trying to find the right location for a first property, with a willingness to move anywhere in the US. 

Goal

My objective would be to go with a MFH, 2-4 units, higher would be better. I'd house hack and live in one of the units the first year, and use an FHA 3.5% loan. For amount, it would likely be in the $500-700k range.

My expectations are to have a negative cash flow while living there, and possibly a slight negative cash flow after moving out (until interest rates lower or rents increase). For example, a $650k 3-4 unit where each can rent out at $1,500, allowing for a negative cash flow of $2-2.5k/month the first year.

Possibilities

Given those goals, it would rule out the more expensive places (California, Seattle area, Austin). However, I have no idea how to choose from the remaining cities, it seems there are a lot of potential options:

- Midwest - Michigan (ie: Grand Rapids) seems to have options, also seeing Columbus Ohio and Indianapolis coming up

- Reno - I've seen mentioned several times on here

- Pittsburgh / Philadelphia / Twin Cities - All mentioned as lower cost to get started, and seem to be experiencing growth

I'd ideally like to find a place that has strong potential for future growth, a diversified economy, and I don't mind living in (being close to nature would be a plus). 

Any thoughts on how to choose - what metrics to evaluate, resources to read to help?

 You can make money in any of these areas. Pick a place you want to live. The Twin Cities has traditionally been an excellent place for growth, but there are many metro areas that will offer you similar profits. This one purchase will not make you rich, your not buying Mar-la-go so don't give it so much importance. Find a solid property in any major city and you will do fine, then focus on getting your finances ready for the next one. Do this 4 times, and you will be happy.

Quote from @Patrick Drury:

@Mike Tikh
Keep in mind if you are buying an FHA 4-unit it needs to meet the sustainability test. I don't believe triplexes need to. A lender can probably chime in on that. The sustainability test is that 3/4 of units need to cover 75% of the mortgage from my understanding. The last thing you want to do is put a deal in a contract pay money for inspection and get an appraisal when you could have just ruled it out from the start with that. The sustainability test usually makes it hard to owner occupy 4 units in A locations in Columbus. If you can find smaller local banks in the market you pick they may have more unique products that they keep on their balance sheet or try and do the 5% down conventional on a 4-unit

FHA's self-sufficiency test applies to both 3 and 4-unit properties. Everything else you said was spot on. If someone wants to purchase a 3 or 4 unit they can use the Fannie Mae conventional 5% down product that came out a little under 2 years ago. That product is more expensive and does require reserves after closing.

Quote from @Todd M.:

I had my LoI accepted on a 17 unit building this week!  Big step for me.

I'm looking for MN based RE attorney to help review and consult on the upcoming purchase agreement.

Any suggestions?

I familiar with saying you get what you pay for, but what should I be expecting to pay?  roughly

Thanks in advance

 Congratulations Todd, What city?

Meet-up Tonight 11/12/2024 6-7:30 PM

We've floated this idea as a meetup topic for years - and finally, here it is! Tim and Adam will go through the entire Twin Cities metro through a real estate investor's lens and mindset - sharing data, tips, personal experiences, and predictions. This event will be perfect for anyone new to the area, new to investing, or simply looking to expand their local knowledge.

The Twin Cities is a massive area to break down so tonight we will specifically be covering
*St Paul

Please RSVP through the meet-up link

Tim Swierczek and @Adam Tafel l will be the main presenters - but we like our Meetups to be an open dialogue! Bring your questions and your own local knowledge. Snacks and drinks will be provided.

Quote from @Liz Zack:

We are about to close on a 1m multi family in Minneapolis. We are getting push back from the seller about creating a purchase agreement with our lawyer that they would then need to review with a lawyer. We are OOS investors and it’s unheard of not to use a lawyer to review PAs, especially at this price point. Would love more context here re everyone else’s experiences! 

Hey Liz,

As a loan officer who has completed more than 2,200 loans in Minnesota, I can assure you that attorneys are completely unnecessary, and expensive in Residential Real Estate in MN.  That being said, a professional is necessary. I would recommend you contact a Realtor to facilitate the deal. The cost should be less than an attorney and from my expirence you will get a better smoother transaction.  Here's what I see when it comes to using attorneys instead of Realtors in MN.

They bring up issues to increased billable hours. In other words they create problems and cost where they don't exist. Save that money for a good home inspection that includes a sewer scope.

They understand the law but typically do not understand real estate transactions well. This is because MN does not use attorneys to close we use Title companies. They do hundreds of transactions a month and can guide you better than most attorneys when it comes to title issues.

They use a complicated form that creates extra work and confusion with no benefit to the buyer or the seller. 

You can get all the advice and guidance with the forms you need from a local Realtor who has worked on hundreds of Real Estate transactions that have common forms that everyone understands and pay a $250-600. All previous advice notwithstanding I would recommend you use an attorney if you don't use a Realtor to facilitate, which is not the same as using a Realtor as a fiduciary representative. No commission is earned only a fee for their time and expertise.

Typically sellers want to avoid attorneys to save the costs. Offer to pay it. If money is not the issue I would ask them what they are hiding.  PM me if you would like to jump on a zoom and discuss it.

Hey @Quentin Shaurette Welcome to BP. I run a few meetups and attend several others. I'm happy to share them with you. BP does not allow them to be posted here. PM me and I will send you a list of 10 local meetups.