Fox Valley Area & Multi Family Investing

[Amanda Wirch]

I am a brand new forum member, currently educating myself on investment real estate.  I live in Minneapolis MN, but while we like living here so far, the prices in the metro area are pretty far outside of our comfort for what we would get.  We grew up in the Fox Valley area of WI and are back every several months for visits.  We have watched the growth over each visit, particularly in Oshkosh and surrounding smaller towns.  Pricing in the area is still within a range we feel comfortable with, and we are willing to hire a quality property management company to manage properties for us.  

Our goal is not any sort of real estate empire: we consider ourselves buy and hold investors.  We arent interested in older homes that have been broken up into apartments -- but rather apartment style buildings with 4-8 units.  We hope to hold between 5 and 10 buildings for the sake of some initial cash flow and allowing them to pay themselves down and provide future income.  

Area investors: what parts of the Fox Valley are you investing in?  Are the markets positive as they appear to be to us?  I've looked in Oshkosh, Neenah, Menasha, and a little bit in Appleton because those are most familiar to me.  I'm checking crime maps, prices, and sticking with properties with at least 4 units to make it worth my while to pay the property managers.  I've found some 4 unit properties for under 200k, which is unheard of in Minneapolis.   I'm willing to hear any tidbits that you wish someone had shared with you about the area and the market when you were just starting your journey! 

Thank you in advance!

[Jordan Moorhead]

Hey @Amanda Wirch!

I don't know much about the area and understand the buy and hold goals.

What gets lost in the buy and hold investor mind many times is the potential upside when the property is sold. If I find a property in a strong market that makes $100 a month, put $15,000 into it to add value, hold for 3 years and sell for a $40,000 profit my total gain during that time is $42,400 not taking loan paydown, tax benefits and other potential income into account.

If I find a rural property or a property in an smaller metro area that makes $250 a month, invest the same in repairs, hold for 3 years and only sell for a gain of $15,000 my total gain is only $21,000. 

To some point the old saying of, "location, location, location" always matters.

My point is that cashflow should be a large part of what you look at but the most money is made when you sell. I'd be sure to look at the historical appreciation in those areas before you buy and make sure that fits in line with your long term goals.

Again, I know nothing about those areas and am by no means looking to discourage! I've just talked to many investors recently who miss that point, along with experienced investors who see all the money lost by not considering location. There may be great areas in those towns that have more potential for upside in the long run.