Deal or No Deal? Milwaukee Mercantile Apts

[David Stover]

Hello BP,

I'm new to REI and running the numbers for my first property. I'd really appreciate experienced investors to take a look at my work and let me know if my assumptions are sound or if I'm completely off base. Also, based on your experiences, does this seem like a wise investment for my REI goals, or am I running headlong into trouble?

Please indulge me for a moment while I introduce myself and describe my understanding of the property:

About me: My goal is to replace my earned income with income from long-term buy-and-hold properties. The niche that interests me most is large MFH, and I'm looking at Milwaukee as my intro market. I currently live and work in SoCal, but I may ultimately move to the Wisconsin/Illinois area (SO's friends and family).

About the property: 7 units (6 Efficiency, 1 2BR) in a 3-Story house on the Upper Easy Side. My research suggests this is a solid B neighborhood, comprised largely of young professionals and UWM students. I rate this property as a C/C-.

The home is very old (Pre-1900) and the photos suggest a property that may be sound mechanically but certainly not finished well or pleasant inside. I believe this is reinforced by the facts that 1) the home has been on the market for a long time, and, 2) the price was recently cut $43K. As such I've assumed $25K repairs will be necessary to force appreciation to market price.