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First Rental Property

Thecrensh

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At the moment housing prices seem to be high everywhere and is why I haven't bought anything in the past couple of years. My experiences have been that searching for the right priced property can be like panning for gold which is a dayumed hard situation. Property is risky and if you think it isn't there are one hell of a lot of landlords stuck with tenants that are trashing properties that can not be evicted at the moment. On the horizon is the high possibility that Biden will be resurrecting the provisions of the 1968 housing act. With that in mind remember you are buying a depreciating asset and with that I mean you will need roofs, furnaces, technological upgrades with some of the old issues like termites. It is not the bed of roses many claim it to be regardless of what they tell you on 2 am television.
With the benefit of hindsight I have been able to attract some very well financed single individuals that just don't want to live in an apartment. They want the privacy of a house and not having to live across the hallway from who knows who. So while they may not be as profitable on paper in an analytical point of view in actual practice they can attract a much better renter and believe me it has been my experience one bad tenant can mess up a property's years of profit in one swipe.
Landlording is risky and the road to profit is cluttered with undercapitalized landlords that thought it was a road lined with gold and unicorns and in my case, and many others I know, it is one very tough business to be in.
I just dropped $10K for a new roof on my rental property after the two storms hit the area this year.
 

edsl48

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Took out the old boiler. Moved the new boiler to a new mechanical room in the building. Finished all the piping in two days, but they were long. Only control wiring and venting and its all finished. Also will put an outdoor reset on the boiler to save money. Kinda wishing I would have painted the walls before I put all the piping up.
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Great idea an outside reset. Imagine the whines from a non evictable non paying tenant I was wondering how to set up a situation like this without getting into the old "landlord turned off the utilities" Great tip and now every place of mine will now have a reset button on the outside.
Thank you for bringing this up to my attention!
 

dacrunch

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I just dropped $10K for a new roof on my rental property after the two storms hit the area this year.
Pretty good deal, I'd say... if a big/good job... and your tax accountant can start writing it off...
I'm really pleased that I've been using an accountant for 20 years too... I'd never find all those deductions and depreciations myself...
 

davycoppitt

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Great idea an outside reset. Imagine the whines from a non evictable non paying tenant I was wondering how to set up a situation like this without getting into the old "landlord turned off the utilities" Great tip and now every place of mine will now have a reset button on the outside.
Thank you for bringing this up to my attention!

HAHAH that would be awesome.
A reset is a commercial Boiler term. Don't ever see them on residental boilers.

An oudoor reset is a schedule based on outside temp. I used a honeywell T775 controller

At 0 degrees and below the boiler will run at 160 degrees then the temp of the boiler water will drop as we reach 32 degrees. Then at 32 degrees we keep it at 140 or just above condensation in the boiler. With a high efficiency boiler you can walk the water temp down very low as it gets warmer outside. This is where high efficiency boilers really shine. I just dont like all the problems they have.
 

dacrunch

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The biggest problem with "heat included" is the tenants who keep the thermostat @ 85 and keep the windows open....
 

davycoppitt

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The biggest problem with "heat included" is the tenants who keep the thermostat @ 85 and keep the windows open....

Honeywell visionpro 8000 wifi. Can set min and max and lock it out with a pass code. They would have to google how to unlock it.

To heat the whole building last year was about $400 a month. All the windows were broken and the garage doors had huge gaps. Our heat bill is under $200 now and usually $150. 98% furnace and 86% boiler. I split the meters, so when we get a commercial tenant they will pay for the downstairs heat. Building has one of the best and most practical HVAC systems out there and it cost under 8k.
 
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davycoppitt

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We did it! Got the bottom leased out. Hands down some of the highest rent in the area per square footage.

2.5 year lease at $3750 for the 1st floor commercial space.

The guy owns a company that is tearing down a church and school right down the road. He is then building a 60 unit assisted living building. He will use our space for his team during the construction. They will also make a mock kitchen in the space, so future tenants can see what they will be getting. We are giving him 20k towards the buildout, since some of this should be on us. I.E. new concrete floor, bathroom, and duct work. Huge day for us.
 

hammerhead

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We did it! Got the bottom leased out. Hands down some of the highest rent in the area per square footage.

2.5 year lease at $3750 for the 1st floor commercial space.

The guy owns a company that is tearing down a church and school right down the road. He is then building a 60 unit assisted living building. He will use our space for his team during the construction. They will also make a mock kitchen in the space, so future tenants can see what they will be getting. We are giving him 20k towards the buildout, since some of this should be on us. I.E. new concrete floor, bathroom, and duct work. Huge day for us.
Win/win. How'd he know about your place?
 

Someone_else

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It looks like a great deal. Your tenants will be low maintenance. Aside from payments, I would expect builders to be very easy tenants.
 

davycoppitt

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Real nice guy. Young guy about the same age as my partner and I. I believe he or his wife saw our for leas sign while driving by.
 

davycoppitt

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Got the metal awning up yesterday. Some landscaping still. Can't wait to start another someday, only if its as good of a deal tho. Other than family completing this project is what I am most proud of in life.

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ttazzman

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Got the metal awning up yesterday. Some landscaping still. Can't wait to start another someday, only if its as good of a deal tho. Other than family completing this project is what I am most proud of in life.

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I fully understand being proud of your work....there is joy in overcoming adversity and putting yourself into a lasting project
 

davycoppitt

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I fully understand being proud of your work....there is joy in overcoming adversity and putting yourself into a lasting project
Oh gosh did we have fun. Never once did we get at each others throats throughout the project. Helps that my partner has 0 building skills, so would just be the guy holding the end of the board. The real joy was the days we spent on this. Probably some of the most enjoyable days of my life.
 

davycoppitt

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Decided to go the other rout. Will be listing my current house within the month. Been here over two years, so no capital gains. If we would have sold the 3 plex there would have been allot of tax. I will be buying out my partner on our 3 plex. The family will then move into the bottom two units. Ill move into the middle and remodel the basement, then move into the basement and remodel the middle. We will keep the top tenant. Old Christian lady who has lived there forever. She will be the best person to have in a rental that you live. We want to take advantage of the hot real estate market while we can. Can't really think of a better way. The top rent will almost cover our costs for the year.

The three plex sits on an acre in one of the nicest suburbs in MN and across the street is a nice quiet park, so wont be the worst place to park the family for a while.

Partner just dumped his flip house in Minneapolis. Story and a half with no basement for $505k Last week. He also dumped his parents house for $125K over asking the week before (was asking 999,999 and got 1125000 with the highest offer.) He is also think of selling his current house and moving into his 4 Plex.
 

Goldbrix

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Closed on my first property today. Going in on it with someone 50/50. Came across it by accident and at the time it wasn't for sale. Its been a welding shop since 1949 and the owner is ready to throw someone the keys and walk away to his cabin. He loved the idea of selling to a couple of young guys who would take care of his building. His grandfather and him put the second level on in the 70s.

Today he accepted our offer of 300,000.

3600 square feet in an amazing area. The city is working on this area to get nice retail stores in and fix the entire place up. It is right across from the citys high School. We face their football field. The city will match what we spend on fixing up the front of the building up to 10,000. They are also offering us all other sorts of programs to help with the remodel. Will be fully researching them in the upcoming months. There are 2 tenants on the second level. Originally 3 units and the city will allow 3 units. Eventually we would like to make that space offices. The first floor would then be retail of some sort. The inside has a lot of character with block walls and huge I beams. Very sweet building overall. Roof is 6 years old.

The building has no sprinkler system, so that will need to be installed. Runs about 40-70k. I'm looking to see if I can do that myself. Very simple to do. We do the HVAC work for the largest sprinker fab shop in MN and will be contacting the owner of that next week. All the HVAC will be changed out. I will make it a very sweet system.

This will be the first commercial property for both of us. We have been talking along time about getting into commercial rentals. This is sort of getting into it with training wheels with tenants upstairs. The person I am going in on this with already owns 2) 4 plex units.

My contacts through work is the reason we can pull this thing off. We deal with commercial property after commercial property. I take care of the buildings of a lawyer who owns 7 properties in this area and I chat with him monthly. He offered any advice needed on the place. He is even coming out to give us ideas on what to turn it into. Our shop will pull the mechanical permits for us.

Anyway no matter what happens this is going to be interesting.

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Across from the high school, facing the football field ? I'd be trying to figure out what kind of eatery to put in there.
If you go that route make sure you have late hours for Friday Night Football games. Many around here close at 9pm and just a few have Drive-Thru open til Midnight.
Teenagers and Football that is the gold mine during football season. If the high school has the basketball arena that is even a bigger plus to look at eateries. JMHO
 

hoarder

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BackwardsEngineeer

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Long ball in this market, selling now and going low cost minimalist will reap enormous rewards later... not sure of the when... but the backside of this market is going to be brutal
 

Goldhedge

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davycoppitt

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Those numbers don't add up...
Sorry got $125,001 over asking.

What’s mind blowing is even the million dollar market is booming. The tax value was 1.2 mill but I guess houses don’t move in the neighborhood at the tax value price. They have been selling slightly under.
 
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davycoppitt

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Go time here. Got the tennant out of the middle unit. Just doing floors and cleaning. I cannot imagine how many tenants were on this carpet. Just need to get our stuff over there and get my house on the market. The remodel of the three plex will be a fun project. Will start in the basement this winter. Place has a good structure just needs some updating inside.

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coopersmith

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Good to see your not lazy, and not self doubting too scared to pull the trigger! That will get you far in the rest of your life! sometimes you have to believe in yourself and put your ass out there...........

Good for you!
 

davycoppitt

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Right on Coop. I got lucky and was able to work with an old timer who taught me what I needed. He taught me to just suck it up and start the project, have faith that you can do it even if it scares the living crap out of you. Thats what I needed. Just suck it up and get to work.

Got the leaking tub fixed until I have some time. hahahahahaha Also have a ball valve on the shower head.

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coopersmith

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I am a farmer in eastern colorado Only half the things I try work it seems. That is my life. My best stories with the drinking/bbq bros are the times it went to shit. They all have their stories too, 'I lost 50k, heres now it went.'

Live and learn. If you never try you will NEVER win. the 50% success has kept me afloat (numerous boating accidents), and out of the conventional work force, my quality of life is good.

I also seek advice from SUCCESSFUL old farts when I need it. They have fucked up and lost money too. But they didnt give up.

I would hate be old in the 'home', sitting around wishing I had the balls to do some of the things ive gotten up to when I was younger. We are all going to die you see.

Life is a party!

I am not trying to curse you, good luck man!

If TSHTF next week I will be really pissed off, for what good it will do me.
 

davycoppitt

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Closed on the house today. All settled into the Triplex. In a not so hot market the Triplex should hold its value much better than the house we just sold. Nice to have one less property.

Market does seem to be cooling off in this area, but thats also the season.

Buyer put their house on the market as soon as we accepted their offer. So far they have had no interest. In a “nice” part of Minneapolis.
 
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Goldbrix

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Closest I came was buying REITS. Almost bought my dad's house when he past away and the market and loans were hot and almost carefree.
Dad wanted the guy who bought his carry-out the first crack if he wanted to buy the house. He decided he wanted it and my step-mom and a lawyer set up a Quitclaim Deed w/ a monthly payment schedule.
Eight of us were receiving Monthly checks from my step-sister Dad had named executrix of his estate.
The checks were nice and what got me thinking about buying the other family members out. Fortunately I did not.
Halfway through year two his payments began being late and then behind. Step-sister allowed him to make up arears in December and January.
Anyway it became a "Cluster-Fuque"with the buyer and to top it off the guy died.
His divorced wife was still on his will as executrix.
Step-Sis, Our Lawyer, her lawyer came up with a financial settlement that would allow the estate to get through probate. And nobody but the two lawyers came out happy. Some money but not what what planned in the early days of the contract.
Anyway being 175 miles away from the property I was glad I did not pull that trigger.
 

Ensoniq

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Congrats, the fixer uppers usually make the best returns.

I’m in an LLC with partners. The bank made it clear it makes no difference what the op agreement said, they’d go after deepest pockets

In my experience if you spell out distribution and strategy and have limited scope like a rental it’s safe to have partners

I personally always Insist on a clause of no changes to bylaws or op agreement if not unanimous

I’m a no debt kind of guy but went with the wishes of my partners on this current deal, to maximize cash outflow and pay the minimum on the mortgage (something I’d never do with personal finances)

The typical issue are free riding partners (we build expectations and penalties right into the agreement). Don’t do your part we outsource it and it comes out of your share of distributions

Never had to invoke, I’ve been fortunate to have always had great partners.

I wish I would have done more of these commercial ventures earlier in life. They are a great wealth building tool

Wishing you the best success
 

dacrunch

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Anyway being 175 miles away from the property I was glad I did not pull that trigger.
One of the "rules" that I applied when looking for rental purchases =
- Near where I live
- Near where I work
- Between the two

Don't want to drive to West Bumfluck because a breaker popped or the water heater needs a new element... or the rent's late...
 

davycoppitt

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Extrmely long story, but we got a different tenant in the Bottom of the welding shop. Signed a 7 year lease. Lady and her husband are awesome. From Brooklyn and wanted out. They own Salons out in New York, but wanted to move back to MN to be with Family. They open Monday. Long way since we first started. Next month on the 1st we get that rent check from every suite!

When the Two bedroom lease is up we are going to convert that to Commercial space. Too many headaches with Residential. Our office space up top we have not heard from the Tennant yet and they pay right on que each month.

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Someone_else

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Damn! That second photo is pretty, but I don't see it as a welding shop.
 

davycoppitt

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Damn! That second photo is pretty, but I don't see it as a welding shop.
It will forever be a welding shop in my eyes. Nobody has any clue what the hell my partner and I are talking about when we call it the welding shop. I’m sure we will call it that until we die.

I miss the grimy old welding shop, but this whole thing is to put money in our pocket and as much of it as possible with the space we have.
 
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Scorpio

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hey Davey,

what did you do to get that floor?
totally digging that for a project
 

davycoppitt

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hey Davey,

what did you do to get that floor?
totally digging that for a project
Poured a whole new floor. Stained then Sealed. I’ll get you the exact process. That was on the tenant. We just cut them a check for 20k for the floor, duct work, unfinished bathroom.
 

Scorpio

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yep, wondered if they stained it also,
 

dacrunch

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20 grand for a floor?

Phew.

There goes one year of my retirement income haha!
 

BackwardsEngineeer

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davy,
You did a bang up job.... looks amazing. Better yet, you got the feel of the small commercial game and handled the up fit costs... Once the money starts coming in it'll set you up to handle the costs of the up fit of the last space... Now the tough part, finding the next one!
 

davycoppitt

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Closed on my Triplex today. Bought out my partner and the contract for deed we held. Talked the people we bought it from on contract for deed into selling it to me outright. Paid them 1/2 last year (cash) and 1/2 (mortgage) this year for tax reasons. Family is comfortable in here for the time being. Still deciding if I want to keep it long term or dump it. Leaning to dumping it as I don't enjoy being a landlord without my partner. Only shooting for very high cash flowing properties with not much headache.