Milwaukee Deal Analysis HELP!

[Sara Zielke]

Hello!

First time poster and newbie REI. My husband and I have been trying to get into REI for almost a year now. While the market is a bit nuts now (thanks @MarcusAuerbach for your excellent market updates!), even if the market was great, I can't make a deal work on paper unless the property sells for under $100,000. My husband and I rehab'ed our own house mostly ourselves, so we have some knowledge on pricing for things like CapEx, but maybe I'm overestimating? We're mostly looking at older homes (duplexes-quadplexes), as that is what the inventory in MKE mostly consists of, in Bayview, St. Francis, West Allis, and areas around (not in) Wauwatosa (Washington Heights, Coopers Park, Story Hill, etc.). I'm hoping for some advice on where I'm going wrong with my analysis. Taxes and CapEx seem be killing my deals. I can't do anything about taxes, so I can only assume I'm estimating too much for CapEx. I would appreciate any help I can get!! I've listed below a sample of my CapEx analysis for a duplex. My CapEx is also assuming that everything is new which makes me think that it's actually an underestimation. I'm also estimating 10% for repairs since the homes are older and 7% vacancy (which I still need to verify with property managers- if anyone knows a better number here, I'm open to feedback). My husband and I plan to do the property management ourselves, but I am including an 11% PM fee just in case things change in the future. Thanks in advance for your help!!

Sara Zielke

Sample CapEx Analysis for MKE Duplex. Home ages range from ~1900-1940

CapEx	Quantity	Replacement Cost	Total replacement cost	life span	Cost per Year	Cost per Month
Roof (most homes here older and have more than 1 peak in roof- not simple gable roof)	1	12,000	12,000	25	$ 480.00	$ 40.00
Water Heater(s)	2	1,200	2,400	10	$ 240.00	$ 20.00
Appliances: Washer	1	500	500	10	$ 50.00	$ 4.17
Appliances: Dryer	1	400	400	10	$ 40.00	$ 3.33
Appliances: Stove/range	2	500	1,000	10	$ 100.00	$ 8.33
Appliances: Fridge	2	600	1,200	10	$ 120.00	$ 10.00
Appliances: Dishwasher	2	400	800	10	$ 80.00	$ 6.67
Driveway/Parking lot	1	5,000	5,000	30	$ 166.67	$ 13.89
HVAC	2	4,000	8,000	20	$ 400.00	$ 33.33
Flooring	1	6,000	6,000	6	$ 1,000.00	$ 83.33
Plumbing	1	5,000	5,000	30	$ 166.67	$ 13.89
Windows	1	5,000	5,000	30	$ 166.67	$ 13.89
Paint	1	4,000	4,000	5	$ 800.00	$ 66.67
Cabinets/counters	2	4,000	8,000	20	$ 400.00	$ 33.33
Structure/foundation	1	10,000	10,000	30	$ 333.33	$ 27.78
Garage door	1	1,500	1,500	10	$ 150.00	$ 12.50
Landscaping	1	1,500	1,500	10	$ 150.00	$ 12.50
Cap Ex Total					$ 4,843.33	$ 403.61