All Forum Posts by: Marcus Auerbach

@Chris Bruni welcome to BP! How we grow up has a huge impact on our lives. It defines what is normal for us and where we see boundaries and limits for our lives. It may take years of hard work for an adult to shift those mindsets and boundaries we inherit from our childhood, and many will never attempt to push the envelop and remain within for the rest of their lives. For a lot of young investors I work with buying their first deal is a huge leap of faith and very scary. I know it was for me! I very much enjoy working with your son as an agent and I noticed his un-impressed and confident approach to buying real estate - I just did't understand where that came from: now it makes sense. I think he will be doing very well. Again, welcome to BP!

@Ryan Kraft the question is which of these concerns have the potential to pull the rug out from underneeth Joe and Jill homebuyer? When I read through the Florida posts here I find it a little concerning that builders have ramped up so much that it's hard to sell a 5 year old home - that sounds like they are headed for oversupply. But that would be a local and not a national issue. Wage growth is the biggest concern I think. But I hear from friends in my previous industry that it has become very hard to hire and they are offering higher salaries and sign on bonuses on a middle mangement level. Let's hope this is going to become a trend, because higher wages across all income brackets will not only provide fuel for the builders, but also reset the rent to income ratios, cause some healthy inflation and errode mortgage balances (on my rental properties) and after all national debt. I am spending a lot of time rethinking and adjusting my strategy these days - what I have been doing very successfull for the last 8 years is comming to an end it's time to adjust to a new normal. 

@David Faulkner yes, that's the HQ, these are national statistics. KW economists are actually really concerned about what they call the next market shift. Excluding major subprime mortgage crisis markets are always cyclical - peaks follow troughs and so on. We are in a strong sellers market and it's hard to say if we are in stage 3 or 4 - which is the peak before the downturn. Personally I am a little bit more optimistic, because the demand is not going to disappear over night and the inventory shortage will take years to correct. As long as nothing major happens on a political or global economical level the current market state should remain for a while.  

@Account Closed have you thought about moving? Seriousley. People move for jobs all the time. I have been BRRRing since 2010 and I could not have done it remotley - without being on the jobs all the time - at least once a day. I used to buy 30 minutes away from my house, now I focus on areas no more than 15 minutes from where I live and work. The idea of running a serious rehab across state lines seems insane to me. @Shawn Ackerman - respect, I don't know how you do it! I work with several out of State investors and investing can be done, but you want to try to keep it passive. Especially if you happen to have a job as well - not to mention and a life. Also keep in mind, you are probably planning on more than one property - maybe 5, 10, 50? - to run it like a business. it does not pay to have one or two. You need scale. That also means that you multiply the issues which are already amplified by the distance. Did I mention moving yet?

Here are three slides from Gary Keller's 2017 vision speech. How much the market has chnaged in short 4 years!

The greater Milwaukee area is on a 30 month run with exceptionally tight inventory and multiple offers pushing prices up year over year. The Milwaukee market is quite diverse and while we have areas that have seen double digit appreciation in 2016 YoY there are others - especially low price point areas - that have flat lined. December through March where rough as far as inventory - we were down to 2.4 months of supply (6 would be normal) and anything left for sale has been picked through many times. I see now a lot of fresh inventory hit the market, but anything attractive sells within days. Some of my clients don't want to believe it - they ask me to schedule a showing for next weekend and are surprised when it's gone. We have not seen much construction in the last almost 10 years. Many builders went broke 2009/2012 and a lot of trades people have other jobs now - my old painter how used to have 6 crews is now a nurse. Development has shifted dramatically. Nobody is building starter homes anymore. Anything new is 400k and over. The new starter homes are downtown condos or just rentals - in either case multi family developments. Nobody is building 200k homes anymore, profits are just too skinny and land too expensive. We have an almost unprecidented development boom in downtown Milwaukee of almsot $300M in current projects, reshaping the skyline clearly visible from the lake. The inner city areas remain an unresolved issue and many people are moving either downtown or outside of Milwaukee county to escape the high property taxes. Competition amongst investor is fierce and while HGTV flip shows drive a steady flow of new flip "investors" into the market place most give up either before or right after their first deal. The buy and hold market still offers great opportunities, in particular in the medium price ranges and areas with lower property taxes and higher rents a solid mix between cahs flow and potential for appreciation is achievable. While prices have gone up and DOM have come down the market still offers double digit ROIs for investors with capital. For those who don't and have relied on desperate sellers offering 20+% instant equity at closing the pickings have gotten slim. Deals can still be found on MLS every morning, but they are usually gone before the end of the day. If we are going to see inflation (expected as a result of increased money supply) and finally some wage growth across the board we should see a number of good years to catch up from the lost decade 2006-2016 in Milwaukee. Rising mortgage rates and unforseeable knee jerk moves from Washington remain risk factors - we don't know what the next market shift is going to look like.

@Jennifer Sleider do as Greg recommends. You have a good heart and you recognize their loyalty, but this is a business and you have to treat it as such. It's also easier for them to move into a new place and then stay there and not have to move back. Once it's updated and nice you will get plenty of tenants to choose from. It takes me usually 1-2 weeks to sign a new tenant in Milwaukee. 

@Kamaron Perkins you have to take ocupancy within 90 days on FHA products. Not sure if/how they verify your compliance. Discuss details with your lender.

The probelm with any free online data service is the data quality - it's just worth what you paid for it. Zillow will give you a first idea, but most of my rental properties will yield about $200 - $300 more than what Zillow suggests. The data they use is based on many properties in poor or average condition. If you provide prime condition people are very happy to pay a premium.

@Joseph Walsh if you stay outside Milwaukee County taxes are lower and offset your higher purchase price allowing for decent cash flow. The sweet spot between potential appreciation and cash flow income is in most of the suburban markets outside of Milwaukee for a BRRR between 150k and 175k. The trick is to buy something dicounted enough to have the budget for a full rehab. Light rehabs don't work well with BRRR here and you are much better off in buying a property that is already updated and finance it over 30 years without any cash outlays outsie of down payment. This has been pretty much my business model as an investor for the last 7 years. Happy to help you get started.