All Forum Posts by: Marcus Auerbach

@Timothy Hood additional considerations: what's the overall condition of the building and where do you see it in 5/10 years. How much life is left on the interior? - That's a more important question to ask than what repairs are needed now. If the kitchen an bath rooms are 30 years old you may have to start planning to replace them sooner than later. This will drive your vacancy rate. But you also have to be careful to not renovate the condo out of the neighboring units. You can easily stick 20k in a full condo rehab (kitchen, bath, floors, doors, trim etc) which will make it a great unit, but it may not fit in the building anymore. And you wont be able to get it apprised/sold for what you are in.

Overall, you are at the mercy of powers you don't control. For that reason condos are not the first choice for most investors. The relatively small amount makes it seem like a low risk, but your actual risk might be lower with a 100k SFR. If the risk is low 8% ROI are ok, but with elevated risk that's not much. Also, the small numbers don't work so well with your fixed expenses: It takes me as much work and travel (maybe less) to show and rent a $1500 unit than a $600 unit, however obviously these expenses are easier to be paid for from the higher rent and cash flow.

Finally I would not buy for FMV fair market value. If you think that $35k is what you can sell it for you need to buy it for 75% or less of that amount - otherwise you make no profit on the front end and you have zero buffer for the risk of loosing value. What HomePath is asking for is irrelevant and if you get it for $10k less than asking that still does not gurantee you got a good deal. Generally HomePath is pretty straight forward, just a little paper intense to deal with, but your Realtor will deal with that. Hope I was able to provide some good food for thought and good luck Timothy!

Not to repeat many of the great comments made I'll ad just one point: make sure that the finished "package" works - what I mean is, if your overall approach is to stick to necessary repairs, paint and carpet (and sell the house for 150k) then stick with cheap and easy. If you have updated kitchen, granite counters and tile bathrooms new windows etc and spent the money to make the whole house really nice the electric heating would stick out like a sore thumb.

@John Horner I have heard similar statements before. What they referred to was plain asset appreciation. They compare - whatever number they use, maybe 2% - with interest on a savings account. Basically assuming that you invest 100.000 cash to make 2% in appreciation, which then gets eaten up by the realtor fees when you try to "cash out".

A slight simplification leaving out discount at purchase, value ad remodeling, leverage and OPM, depretiation, principal pay down and .. oh yeah cash flow. 

@Kristin Wollmer looks like you got a good handle on the numbers. What about the building and the location? Some locations just look and feel right, others not so much. You can look at crime rates, schools, parking and shopping, but at the end its a feeling that you have when walking the area. What about the building? Does it look trustworthy, does it look like a place people would want to call home? You dont have to rely on your own judgement, bring some friends over and ask them for their opinion. Good luck.

@James W. I wouldnt do it. The underlying issue is that they dont play by the rules and you keep bending them in their favor. Tell's me you are a reasonable guy, but be aware that every time you do this they are encouraged to take it a step further next time.

@Jim Wollmer you've got great opportunities right on your doorsteps! You need a thick skin to play in the D class market and you definitley earn have to earn your cashflow the hard way. By no means this is a passive investment. Property Managers are not the answer either: hard enough to find a good one in the first place and even they will not take care of your investment as you would (after all for them it's $100 revenue on the line (monthly), for you its $50,000 or $100,000 of YOUR skin - that makes a difference). Don't even get me started on pig-properties in 30k neighborhoods - they will need a 10k roof at some point or a sewer line and a $30k interior makeover and you will have no property value to support it because no matter how nice your house is the 'hood will dictate the price. Do yourself a favor, play it conservative with your first properties: buy something that close by in a market you actually understand and pick a property where you can ad real value fixing it up and you know it will be easy to sell if you should decide at one point landlording is not for you. Sorry for smacking you with a 2x4 but you asked for opinions LOL. Giving up a couple hundret bucks in monthly cashflow is a thoretical loss, because you quickly burn it up spening hours driving arround takeing care of issues, not even mentioning the emotional pain you could potentially get yourself into dealing with people who just happen to live in a D class area..

Postlets works great and I have received 7 inquires in the last 24 hours. I have pretty high qualification criteria and we will see how the quality is, but from what I can see in the inquires I expect quite good. This makes it a clearly better choice compared to craigslist. I have started playing with facbook boosted posts and ads and I am finding this the least productive. Yard signs always yield a ton of calls, but very random quality and I have stopped using them alltogether. Talking to a few people in the last days it seems like October is generally busier than September. 

I would like to hear from my fellow investors in Milwaukee or Wisconsin how they are seaing seasonality. How big of a swing do you see? How is the market for you right now?

@Marina Shlomov I set up a postlet yesterday night and found it super easy to do. They use a lot of checkboxes which makes it very searchable for aplicants looking for certain criteria.

I am big about great pictures and I dont have much of this particular property (didn't stick to my process, we were moving contractors out same day as tenants moved in), but this weekend it will be vacant and I will bring the fisheye and get some more material for postlets. They also have a video walk arround ap which I will definitley try. Thanks again for the idea, I'll let you know if it makes a difference.

@Brian Karlow that's a great point and I have tried it before with Q4 leases and structured them so they come due in spring or summer - I had the same experience as you, no issue for the tenants - it's also in their best interest to move in spring or summer: nobody in his right mind volunteers for moving during the winter in Wisconsin. Thanks for the reminder, it's been a while since I had to do that.

@Marina Shlomov - great advice, it makes perfect sense - I'll definitely try that tonight. Craigslist has spoiled me a little bit the last year, so I never had a reason to explore something else. My natural target audience is paying premium rents for nice homes and are somewhere in the area between blue collar and white collar. I have noticed that professional pictures make a huge difference if you want to appeal to a certain audience, portlets.com probably allows for a nicer presentation if I remember correctly. Now I know what I am going to be doing after dinner...