New member in Milwaukee

[Jon Coleman]

I recently joined BP after having been enjoying the benefits of great information and discussion across the site.  My background is in retail banking and I've since moved to a management role at a fintech firm but I'm interested in getting involved with real estate investing.  

I'm new to REI but have been working to rapidly grow my knowledge through reading a variety of books, attending webinars, meeting experienced investors, analyzing deals, and finding advice on the BP forums. I started building my knowledge base by reading a number of books about REI in general, landlording, and deal analysis, but have since shifted focus in an effort to learn more specifically about my local market.

The area that interests me the most is affordable housing for low-income individuals.  I'd like to be able to strike a good balance between making rent affordable for tenants while also earning a fair profit.  It certainly seems like there are plenty of challenges in this area (limited appreciation, troubled tenants, evictions, deferred maintenance, Section 8, etc.) but it is still something I'd like to pursue.

I'd love to hear advice from folks in the BP community on their experiences not just with affordable housing but with REI in general. I've been able to learn a great deal from forum posts but am always open to advice and hearing more about the experiences of others!

I could also use the community's advice on another topic related to getting started. A big challenge I have right now is trying to determine how best to provide value to others who I'd potentially be working with (realtor, GC/handyman, property managers, etc.). I recognize that many experienced folks would be apprehensive about working with someone who is newer to REI and that there is little incentive for them to do so, so I'd love advice on suggested ways to provide value. Bring referrals? Offer to help with manual labor on a rehab? Something else? Thanks in advance for your thoughts and advice!

[Marcus Auerbach]

@Conrad Scoville - love your green approach! Every time I land in Munich and drive to my hometown in Austria I am reminded about the German's success with solar panels: literally very home has panels on their roof and you see plenty of pastures that have solar panels on raised racks and cows grazing in the shadow underneth.

The german goverman provided massive tax incentives when they made the decision to exit nuclear. And cost of energy is twice as high. The combination created a huge industry, drove prices down year after year, started new businesses and jobs, which in return created additional tax revenue.

The program was such a success that they were able to power down coal fired plants and delay the scheduled construction of new gas fired plants. And BTW Germany is on the same lattitude as Canada - we have a lot more sun in the US!

@Jon Coleman I admire your spirit and vision, but I am concerned that reality may be very sobering to you. Affordable housing is a tough business and I am not sure if I would recommend that to get started with.

Elon Musk did not target affordable mobility at first when he started Tesla. It is a lot harder to compete successfully at the lower price points and survive. In my former life I oversaw the development of a new line of skid steer loaders (construction equipment). We started with the middle size, which is the bulk of the market, then launched the big heavy loaders and finally the tiny ones. Problem with the tiny modles is that they have essentically all the same components a big loader has: a body, a diesel engine, hydrulics, cab and controls, arm and bucket. And it takes as almost as much time to assemble a tiny one than an XL loader. But guess what, the market would pay 3 to 4 times more for a fully speced out heavy beast than for a tiny one and we had a hard time keeping the little one above break even.

Affordable housing is the same. You really need to know what you are doing. Evictions are very costly and you can't afford many before they eat up all your profit. The houses usually need a lot of capex, but will not provide you much of an ARV opportunity to build equity and scale.

Milwaukee is an interesting market, because you can literally choose the your model and then find a few neighborhoods to match. I would suggest you pick something along like below median and cut your teeth there.