All Forum Posts by: Vince Coffeen

@Adam Tafel

We’ve seen some interesting properties in West Saint Paul and South Minneapolis in the Grand/north-kingfield area, there’s lots of 4 squares around there but they’re all 100 years old or so.

 Tell me more about this option. It’s kind of rarefied air and we don’t really know anyone doing this. How much better returns are you talking about? 

Thanks for the insight

My partner and I are real estate investors looking to level up in the Minneapolis Saint Paul area, looking for input and suggestions about what to do; here’s our scenario:

• Currently rent out a condominium in Saint Paul,

• est. sale price $155k

• $94k left on mortgage.

• Plan to 1031 this $61k towards our next purchase.

• $275k cash for downpayment set aside in addition to $61k condo proceeds for a total of $336k down.

• After closing costs and finance fees etc. we end up with about $1.1M max purchase budget.

• We have a multi-member LLC set up for the venture

We find ourselves on the fence between two approaches.

This market and this budget puts us at a newer (2005+) triplex in top neighborhoods.

Pros of lower doors better neighborhood:

• Traditional financing

• Fewer maintenance calls

• Higher quality longer term renters

• Better long term appreciation

Cons of this approach:

• Higher vacancy allowances

• More risk per unit

• Less standardized maintenance per unit

• Increased competition from newer triplexes the city is heavily encouraging to be built.

• Higher property taxes

The other approach is more working class neighborhood but 5-6 units under one roof. These are usually built in the 1920s or so

Pros:

• Lower vacancy allowances

• Less risk per unit

• More standardized maintenance per unit

• Better opportunity for value creation because it’s commercial

Cons:

• Lower quality shorter term tenants

• Higher cost commercial financing required

• Lower long term appreciation

Thoughts?