All Forum Posts by: Marcus Auerbach

just like @Shane Hedeen said it's professional career and most good agents have 60 hour work weeks - it's just not a good part time job (unless you want to get your family in trouble by listing their home). But that's besides the point: I know very few agents who are also investors, I would guess less than 5%.  I think that says something about the value of getting licensed to start investing.

@Christopher Nerio we have family in Leesburg, great area and I can say I have been there. As opposed to Youngstown, OH - but the numbers paint the picture. We have these kinds of neighborhoods in Milwaukee and there is a lot of hype around them from out of State investors. Of course, the prices are so low it seems like a no brainer. It's almost like penny stocks: they are so cheap that you can buy thousands and if they go from $0.02 to $0.04 you have made a lot of money, right?

There is a reason why these properties are so cheap. Think about it. They are sold for a fraction of what the sticks and stones are worth they are built of. And the lot is for free. You are basically buying a liability that nobody is willing to pay at least the replacement value of the structure. At some point you need a need a new roof and it will cost just as much as on a property in a great area with a good school district, where people actually want to live in. Same is true for plumbing, electrical, heating and windows. The only problem is that a fully improved property will be valued the same as the wreck neck door, because nobody who can afford a $150.000 mortgage with 3.5% down would willingly choose to live there. Let that sink in for a moment. That's a pretty low bar. You don't realize it until you have a client who seems to be well equiped to live in a rough area is asking you to help him buy a home in a better area, even though it means he has to sell his wife's car to come up with the downpayment. He's motivated!

The numbers seem attractive at first glance, but as you zoom out and look at the whole life cycle of your investment (i.e. 30 years), the picture changes dramatically. The low upfront investment and attractive cash flow are quickly off-set with high repair and maintenance expenses, higher turn over expenses and the cost of sunk capex. And you are missing out on the two main wealth generators in RE: appreciation and principal pay down. How long does it take to make a million with cash flow? Run the numbers through the BP calculator and look at 10 years and 30 years.  Many only realize it after the have accumulated a large portfolio of junk properties. Let me know if you want to buy an 82 property package in the inner city of Milwaukee: for sale, really cheap!       

Facebook for Real Estate Investors. And: done.

The best time to hire a snow removal contractor is in the summer. Most landscapers keep their equipment and staff busy in the winter doing snow removal. There are two basic concepts how the work is contracted: all inclusive (a flat rate per season) or a rate per push (sometimes per inch of snowfall). The more sophisticated contractors will book a mix of both. If there is a lot of snow and the winter is long they tend to loose money with the all inclusive contracts. If there is very little snow they starve with the per day contracts. Usually they don't like to take on jobs after fall, because their schedules and crews are already set and most importantly they can't inspect the site for easy to damage obstacles. Be sure your contract includes also definitions of ice management - salt is a huge part of the expense - and provisions for special events, like blizzard or massive snow fall and liabilities (damaged cars, mail box, curbs, garage door etc). Typical rates I have seen for small MF type jobs with parking lot are around $500 per winter give or take.

I have been an investor long before I quit my corporate job and became a real estate agent and Realtor. Looking back I would very much discourange you to become licensed just so you can write your own offers. First it takes quite a bit of time and money to become lincensed. Second there are ongoing expenses, fees and dues that will quickly eat up the profit from a hand full of deals. Then there is continued education - I just had to complete additional 18 hours of CE. And to answer the question from @Emily Kessler at least in Wisconsin you have to be with a broker, who is ultimatley responsible for anything you do and usually expects in return about half of your commission. 

But here is the main reason: the worst co-brokers to deal with are part timers. They know just enough to feel confident and do things without fully understanding what they are doing or asking for help. They often lack the experience, know how and skills that are necessary for a professional transaction. Usually the other agent has to pick up the slack. REO or HUD transactions ad another level of complexity and require their own paperwork, which is extra extensive and hard to understand if you lack the background. I guess as long as you only get yourself in trouble it's alright, but then why would you do that to yourself? I would say that anyone who does less than 30-50 transactions in a year can not get the experience to become a good agent. It's like taking a few classes in law and then trying to represent yourself in court.

@Christine Walsh you can alsways PM or call me if you have questions. You should fill out your profile on BP, so people get an idea about you 

I have to echo what @Account Closed said - a lot of hype around low income neighborhoods in Milwaukee. Properties are sold for far less than the sticks and stone would cost to build them, with the lot for free. Looks like gold, right?

Milwaukee County:

Inventory: 2551

Supply: 3.8 months (6 would be normal)

List Price: 138k

List to Sales Price: 93%

DOM: 73

Price increase YoY: 4.3% (9/2016)

Greater Milwaukee Area:

Inventory: 2255

Supply: 3.4 to 3.7 months

List Price: 288k to 389k

List to Sales Price: 94-97%

DOM: 82-106

Price Increase YoY: 9.7%-20.5% (9/2016)

Yes right here on the BP marketplace.

Keller Williams corporate does a lot of research and is talking about a market shift for a year now. Agents on both coasts have started to feel it sooner than we did in the Midewest. Personally I think we might be looking at a softer year because we start seeing some buyers fatiuge that gets amplified by rising interst rates. But as long as the makro economic indicators point in the right direction we are not going to be not anywhere as bad as we have been 6 years ago. On the stock market we would call it a technical correction - and they are like thunderstorms: the hotter the days before, the bigger the storm. But that's a regular market cycle and nothing I am personally worried about, just in the contrary, it provides great opportunities to buy.

The argument the a single family portfolio is more risky than one large multi family is nonsense. It only holds true for a lone SF, because then your vacancy is 100%. As soon as you have 2, 10 or 100 they support each other just like a MF. On the other hand my SF portfolio has a mix or loans and lenders. The 30 year fixed rate mortgages anchor the portfolio and provide risk mitigation to rising rates. A MF has only one loan and one lender - if that lender decides to call his note due you better have a good plan B. 

@Ahshar Sylvestre your equity criteria is great. It will automatically eliminate most transactions in the last 10 years. We have now just exceeded the national price level peak from 2006 - that's 10 years. Once you tsrat going back further in time you find people who have bought their home in a market with lower price points than today - they are emotionally more open to accepting your offer.

While you are on your quest to the perfect list keep this in mind:

"Ready, aim, FIRE" 

works better in most combat situations than 

"Ready, aim, aim, aim, aim, aim,..."