All Forum Posts by: Marcus Auerbach

@Dave Carpenter you are absolutley right, the contrast between parts of the city is stark. Let's take a look at your hometown Cedarburg, one of the most popular areas in the State, on a rolling 12 months (August 17 vs August 16).

Median sales price is up by 22.46% YoY, average sales price is up 34.09%. The interesting thing is that inventory has been steadily increasing this year, while median DOM (days on market) are 30.6% down - so more sellers hit the market and they are selling faster and for higher prices.

In comparison let's take Milwaukee 53222, just north of Mayfair mall and a good neighborhood.

Median sales prices are basically flat (-0.14%) August '17 vs August '16, average sales price is up 3.88%. Inventory is down 5.3% and median DOM are down 47%! So, very strong demand (listings get bought up almost twice as fast as a year ago), yet prices are stubbernly refusing to go up.

As far as your question is concerned on where to invest next, I would say look for cashflow first before you look for appreciation potential. Don't buy the cake for the icing - appreciation is a bonus, but as much as I am optimistic about the next years, you can't count on it. As long as you are producing good cash flow, you are fine, market up or down.

The whole corridor up the lake from Mequon to Port Washington is becoming more and more popular. Most of the clients I have worked with buying a home in that area had a local job in Grafton/Ceadrburg/Port - it used to be that most would commute to Milwaukee for work. In other words, the area has developed enough gravity to produce local jobs. 

I am also a huge fan of Menomonee Falls and Germantown. Menomonee Falls is interesting in particular, because it is attracting huge amounts of money (several new 500k subdivisions, think: tax basis) while there is a good stock of older rental grade homes. Brookfield is also great, it has gotten a little pricy lately, but is producing outstanding rents.

Give me a call if you want to chat some more.

Good contractors spend their days with a tool in their hands and its typically not a laptop. If you want a lot of paperwork you will typically end up with a larger residential contractor, who has staff (sales and admin) on payroll to do that. Guess how pays for it in the end.

@Shawn Ackerman you should have let me know you were in town! I am always up for a coffee! You have been running your investments from afar successfully for a long time and I think out o state investing is one of the hardest things to do. We are all running a race here, and you are doing well with your shoe laces tied together! Respect!

What makes me optimistic for the city is that this is not just the economy dragging Milwaukee along. Many of these projects had been signed off and funded long before the economy started feeling better. The question with these developemnts is always if they are sustainable or if its just a seasonal thing and will get wiped out with the next (economic) winter.

My personal take on the inner city (and I am not an expert there) is that it is more of a culture and value issue than a money issue. If the residents up their personal values, apply higher standards on themselves and hold their neighbors accountable, it would be a cultural change. All the sudden you go from a bad neighborhood with low property values to a not-so-bad neighborhood with increadible low home prices. Money usually follows pretty quickly, homes get improved, prices go up, people feel even stronger about their neighborhood and will make sure that it look clean and neat, inspire their neighbors and it becomes a change of culture. 

The probelm with the current city programs, which aims to improve real estate through grant money will not work, because real estate is just a function of the people making up the neighborhood. If the people change, the neighborhood changes and as a consequence the real estate will change. 

I certainly hope we will see some improvements - there are so many absolutley gorgious buildings, that would make for amazing homes if they could attract the necessary money to take on the rehab. 

Good question Dhru and I don't know the answer. When I was still in the corporate world,  we would always have  it all planned out in multiple scenarios well the press release would say that we are thinking about something . I assume that they have secured options  on the land in question  and the owners have probably signed NDA's. It will probably be a while before it is firm and public, but there is way too much at stake for Walker and Trump to let it fail after the have stirred up public expectation. But then, it's not over until it's over, right?

A couple years ago I had an intern who was working on his Real Estate degree at UWM. He told me about his paper about the role of fresh water as a driver for economical development and why he would choose to invest in Milwaukee over many of the other booming cities in the US, many of them in hot and dry climates. After all, Milwaukee is right on the largest fresh water reservior in the world - the Great Lakes. His research was pointing to an increased importance of fresh water as a basis for economical development in the future. It made total sense to me.

Fast forward to today: Milwaukee has been in the news lately quite a bit - Foxconn (one of the largest manufacturers of consumer electronics with 1.3 million employees) has announced a 10 billion dollar investment in a new plant creating up too 13.000 well paying jobs in Southeast Wiscinsin, probably Racine or Kenosha - close to the lake. The facilities will be 20 million square feet - roughtly three times the size of the Pentagon. And guess what - water is a critical ressource for LCD production and clean room operations. A project this sice has economic ripple effects: it is estimated that the construction alone will create 10.000 jobs. Supporting industries and businesses providing infrastucture and services will benefit as well.

But that's not the only news. Downtown Milwaukee has seen a major turn around and building boom in the last years. The brew city has been voted as one of the most attractive places for enterpreneurs and millenials. And it shows, we have construction going on everywhere!

Among the biggest projects anchoring the boom:

• The $524 million Bucks arena.
• Northwestern Mutual's $450 million office tower and $100 million apartment high-rise.
• The $137 million BMO Harris Financial Center office tower.
• The $122 million Couture apartment high-rise.
• The $80 million conversion of the Warner Grand Theater into the Milwaukee Symphony Orchestra's performance hall.
• The $50 million Westin Hotel.

Large projects already completed over the past year include the $101 million 833 East office building, the $53 million latest phase in The North End apartments and retail development, and the $52 million Kimpton Journeyman Hotel.

Finally, there are several new and ongoing downtown-area developments below the $50 million mark, including apartments, offices and hotels.

Of course, Milwaukee has it's challanges too. The city is among the most segregated ones in the US and parts of the inner city have a bad reputation for crime and violence. It will remain a challange for the city leaders and the comunity to work on this issue. These are the area's where one can pick up houses for 50k, 30k or even 10k - but they come with their own set of issues and are in my opinion not a very good long term investment.

The surrounding areas and suburbs are doing quite well and demand for rental properties is high. While we have plenty of new multi family developments shooting up everywhere, many of the catering to high end tenants with rents around $1800 to $2600 and up, nice single family rental properties remain a rare comodity and are high in demand. The supply of sub $200k SF properties is limited to existing inventory, as new construction starts at about $300k, with the majority in the $300-$500k range. High cost of construction does not allow for new SF developments under $200k effectivly capping supply.

Demand and supply have been forcing SF prices up and will in my opinion (short of a major crisis) continue to do so. All good areas in the Metro area have seen double digit appreciation in the last years (while the inner city has been flat). My personal focus has been on single family homes in middle class areas, with rents typically around $1500.

Rents have gone up in the last years, but there is a limit in affordability based on household income and we make it a point to not participate in the annual rent increases, at least until we see substancial increases in average net wages. I feel it's worth it, based on basically zero vacancy rates and very low turn over (we are typically under 15%).

I expect the market for high end multi family to reach a saturation point soon, probably putting pressure on high end rents, but there will always be a subset of tenants who prefer the life style of a single family home in a residential area over an appartment building, even if it's really nice.

The idea of a backyard BBQ with friends and family is just too much engrained in the American dream.

A couple years ago I had an intern who was working on his Real Estate degree at UWM. He told me about his paper about the role of fresh water as a driver for economical development and why he would choose to invest in Milwaukee over many of the other booming cities in the US, many of them in hot and dry climates. After all, Milwaukee is right on the largest fresh water reservior in the world - the Great Lakes. His research was pointing to an increased importance of fresh water as a basis for economical development in the future. It made total sense to me. 

Fast forward to today: Milwaukee has been in the news lately quite a bit - Foxconn (one of the largest manufacturers of consumer electronics with 1.3 million employees) has announced a 10 billion dollar investment in a new plant creating  up too 13.000 well paying jobs in Southeast Wiscinsin, probably Racine or Kenosha - close to the lake. The facilities will be 20 million square feet - roughtly three times the size of the Pentagon. And guess what - water is a critical ressource for LCD production and clean room operations. A project this sice has economic ripple effects: it is estimated that the construction alone will create 10.000 jobs. Supporting industries and businesses providing infrastucture and services will benefit as well.

But that's not the only news. Downtown Milwaukee has seen a major turn around and building boom in the last years. The brew city has been voted as one of the most attractive places for enterpreneurs and millenials. And it shows, we have construction going on everywhere! 

Among the biggest projects anchoring the boom:

• The $524 million Bucks arena.
• Northwestern Mutual's $450 million office tower and $100 million apartment high-rise.
• The $137 million BMO Harris Financial Center office tower.
• The $122 million Couture apartment high-rise.
• The $80 million conversion of the Warner Grand Theater into the Milwaukee Symphony Orchestra's performance hall.
• The $50 million Westin Hotel.

Large projects already completed over the past year include the $101 million 833 East office building, the $53 million latest phase in The North End apartments and retail development, and the $52 million Kimpton Journeyman Hotel.

Finally, there are several new and ongoing downtown-area developments below the $50 million mark, including apartments, offices and hotels.

Of course, Milwaukee has it's challanges too. The city is among the most segregated ones in the US and parts of the inner city have a bad reputation for crime and violence. It will remain a challange for the city leaders and the comunity to work on this issue. These are the area's where one can pick up houses for 50k, 30k or even 10k - but they come with their own set of issues and are in my opinion not a very good long term investment. 

The surrounding areas and suburbs are doing quite well and demand for rental properties is high. While we have plenty of new multi family developments shooting up everywhere, many of the catering to high end tenants with rents around $1800 to $2600 and up, nice single family rental properties remain a rare comodity and are high in demand. The supply of sub $200k SF properties is limited to existing inventory, as new construction starts at about $300k, with the majority in the $300-$500k range. High cost of construction does not allow for new SF developments under $200k effectivly capping supply.  

Demand and supply have been forcing SF prices up and will in my opinion (short of a major crisis) continue to do so. All good areas in the Metro area have seen double digit appreciation in the last years (while the inner city has been flat). My personal focus has been on single family homes in middle class areas, with rents typically around $1500. 

Rents have gone up in the last years, but there is a limit in affordability based on household income and we make it a point to not participate in the annual rent increases, at least until we see substancial increases in average net wages. I feel it's worth it, based on basically zero vacancy rates and very low turn over (we are typically under 15%).

I expect the market for high end multi family to reach a saturation point soon, probably putting pressure on high end rents, but there will always be a subset of tenants who prefer the life style of a single family home in a residential area over an appartment building, even if it's really nice. 

The idea of a backyard BBQ with friends and family is just too much engrained in the American dream.

@Sarah Bojorquez oh well, where to start? There are so many ways.. Let me zoom out a bit and ask you this: Why do you want to work with investors in the first place?

Truth being told, most investors are not agent friendly, but they are looking for an investor friendly agent. Kind of ironic!? Makes it sound like all other agents are unfriendly. They are not, they have just lower hanging fruit that is much jucier.

What most agents realize is that it is much easier to help a family buy a new $500,000 home and sell their $300,000 home - as opposed to working with an investor to buy a $80,000 property. That's 10 times more comission for basically the same amount of work (sometimes less)!  Your paycheck makes you rethink your strategy real quick!

The reason I work with investors is that it's my passion. I am an investor, I love to share what I have learned as an investor myself, I personally benefit from the networking with other investors and it's repeat business. Investor deals make about half of my volume, but that equates only to a small portion of my income.

When I started with KW my instinct was to reinvent the wheel, because I did not understand that they have it allready laid out, tested and optimized for me and were willing to spoonfeed the necessary knowledge to me. All I had to do is follow the plan and it really works well.

I guess my best advice for you is to become an investor yourself and grow your own business. It will benefit you personally, but it will then also naturally bring you business. And it feels great if you can help someone to get started and you see them grow and become successful. That's emotionally very rewarding and helps you overlook the size of your paycheck a little.

Have to agree with Huy. Most agents are so busy running after business, that they dont have the mental headspace to go and buy a property. That includes the successful ones. I think once you make north of $200k a month the idea of $200 in cash flow seems a little less attractive and you keep chasing after big business. 

One of our mega agents used to be a flipper. I asked hime once and he just laughed and said not enough money in flips. He is running his own team and is very succesful.

Our brokerage has a huge focus on training and development and REi is part of it. I have attended a special training held by an agent how specializes only on investors. Normally the classes are top notch, but this one I walked out - it was just the bare basics and I could tell it sounded like greek to most of the agents present. You can learn much more on BP. But then, being an agent investor gives you an inside track.

@Account Closed - getting licensed is the first step and that works a little different in every state. It gives you the necessary ceditials to join a brokerage and start your real education.

Most people (inclusing myself) have a litle bit of a romatisized idea what life as an agent is like. Sounds like lots of free time, showing some nice homes and getting accepted offers and big paychecks, right? 

Let me pop that bubble. It's not that easy: you can have a lot of free time, but then there is not much of a paycheck. What you will find is that about 10% of the agents do 80% of the business, then you have some that do okay and the vast majority is doing 3 deals a year or less. It's not an easy job and to be in the top 10% you have to work very hard. I believe I have read an article from the NRA that said the average income of a real estate agent in the US is $26k a year (it might have been 28k, I have to look it up). Most people give up after the first year. 

I am a full time agent now for almost a year and I start to understand why, because I see it all around me every day. Fortunatley things are going good for me. I got lucky to sign up with a national brokerage who offers lots of training. Most brokerages will say they do that and hook you up with an experienced agent to shadow them. Reality is the good agents are busy and they don't have too much time... Spending enough time on training, roleplay and practice in the beginning is definitley critical. It took me about half a year to build some momentum and thanks to the support that I have I am well on my way to 40 deals in year one. I have to ad that I work at least 6 days a week, and often 12 hours. (But, okay I have to admit, I also took 5 vacation trips with my wife since I left the corporate world lol).

I have been an investor since 2010, but I am only an agent since 2016, so its a very fresh experience for me. I am happy to share how it went, what I have learned along the way and what I would do differently today. Feel free to PM or call me!

@Tyler Mutch has hit it on the head.