All Forum Posts by: Adam Gollatz

Hey @Lassy G. thanks for the referral! 

Josh, feel free to reach out. Milwaukee is a small market, and if I cant help you, I can put you in touch with someone who can.

Hi Danny, there is a lot of competition in Milwaukee from out of state and out of country investors which is really driving cashflow numbers down.  A lot of the B class neighborhoods you have to look at appreciation and loan pay down if you want the numbers to make sense. For what you are looking for, I usually tell clients to be prepared for ~125k all in (roughly 15-20 in rehab) and properties will appraise for ~140. These will cashflow depending on how much debt you have on it. With 100% of that being debt and 3rd party management your cashflow numbers are around 75/mo.

Another interesting note, it’s going to depend on how you run your numbers. I’ve seen two investors underwrite the same deal and come up with 150/mo differences in cashflow. Feel free to reach out if you want to chat more. 
 

@Jordan Smith Not sure what happened, I swear I posted to this topic already. Anyway, I got a little time, let me try to address some of the things in your post.

Your background looks solid, your strategy is sound, and your goal is in line with what a lot of people are looking for in REI. Id personally recommend having the girlfriend sell the condo. Cash is king in real estate and while you can use private money, when your starting off its hard to find friends and family who would just throw down 100k. Id also say that it doesnt make much sense to try to manage an out of state portfolio of 1 unit with no intention to grow it.

My advice and I'll tie this into your needs: Just get out there and start networking. Find local REI meetups, get on facebook groups, reach out to people, etc. Put networking above everything else and do it in a way that it doesnt create a burden to people. As you network I think you'll find what you need and are looking for. My only other piece of advice is dont get bogged down with analysis paralysis and having to hit a home run on your first deal. Im a similar age as you and been doing this for ~5 years now, full time for about 3. Ive worked as a realtor (David Mo is actually on my team along with 2 other agents), as a contractor/project manager, done flips in 3 different states, built a rental portfolio thats up to about 15 properties right now that I self manage, I have a 5M dollar adaptive reuse office to apartment conversion in downtown MKE, and even started lending privately and funding other peoples deals. Some things I enjoy more than others and its really allowed me to focus on what I do like and what I am good at.

We should connect though, Id like to talk more about your CRE experience and maybe theres a way we can work together.

It gets listed in the finished below grade square footage field. It adds value but a 1200 foot ranch with 300 extra in the basement won’t comp out or appraise the same as a 1500sf place.

I assume its a buy and hold rental? Are you self managing or do you have a PM? You want to find out what tasks you are even remotely good at and which ones you arent and then get the ones you arent good at off your plate ASAP. Software is typically expensive and can only really be supported at scale. I think cozy is good for rent collection (and free) and then start organizing a google drive to store your documents (leases, check in/out sheets, misc PM documents, closing statements, receipts, w9's, insurance docs, entity information, etc). 

Hi @Miles Morrison, I got my start househacking back in 2017 and Marcus is right. House hacking and investor math dont go hand in hand so dont get bogged down looking too hard at the numbers. If you look at a house purely as an investment, you'll likely end up living in an area you dont want to live in. If you look at just how pretty a house is or other emotional factors, you'll end up overpaying or buying more house than you need. 

A successful househack is one where if you paid fair market rent and had a tenant paying fair market rent you would cover the PITI payment and maybe make another 400-500/mo to put toward capex and repairs. Monthly rents should generally be around 1% of the purchase price. Will you be putting in sweat equity from time to time running over to restart a water heater or furnace, showing the other unit, shoveling snow, etc, of course you will. But it will build character and teach you about what goes into repairs, maintenance, tenant screening and all of the other facets of being a REI.

@Brandon Roberts if you want to get into Brew City all you have to do is send 1 bottle of nice single barrel whiskey to yours truly and I will write you a stellar recommendation. Kidding (but not really).

Like someone said, I wouldnt bother trying to change the face of wholesalers and as Rebecca said, be transparent with what you are doing. I think the best wholesalers are true investors themselves. They have funding to close on deals and the ability to do a cleanout, light rehab, or a full rehab and know what landlords experience in different areas of the city. When you understand what your end buyer goes through it allows you to talk to the seller correctly. 

When you dont understand the costs and headaches you inevitably end up writing offers too high. You've got 2 options at that point, walk away and cancel on the seller/waste your time or you have to take it money from a side. You either take it from the seller by "renegotiating" or you take it from the buyer by fooling them into thinking its a good deal. I see lots of wholesalers do this on this forum or on facebook groups. They are out there putting out this image of them doing great things, newbie investors start trusting them and they use that trust to trick them into buying something that no actual investor would buy. 

Hey Brandon, welcome to the Milwaukee market. Good luck wholesaling and feel free to reach out if you want to connect and chat some more.

@Ryan Lynch Hey there, welcome to the group. While you may think they are dumb questions, they are actually pretty common and its a good thing to ask right away!

1- Absolutely buy something closer to "ready to rent" I tell most of my clients to expect 3-5k in cosmetics and maintenance when getting even some of the best properties out for rent. You dont need a turn key company to do that. In fact, I tell most people to avoid that route.

2- That varies, but the best PM companies have in house (w-2) employees to perform basic maintenance tasks and contract out bigger jobs. You can check with @Andrew O'Brien and welcome home milwaukee. I refer my clients to them as a starting point.

3- Thats a matter of personal preference. Id probably recommend putting down 25-30% so you have a solid amount of equity and helps with the cash flow numbers, but with investment property loans around 4% its nearly free money.

3a- I dont think thats too risky, but most people I see take the approach to start with one, see how they like it and then dive in further

4- A good realtor and netoworking is key. It sounds like you are financially stable, so Id recommend traveling out to see the area first hand and have a few meetings.

5- I started out owning most of my properties in my personal name and have just recently moved to using an LLC. I think it depends on a mix of how you do business and how risk tolerant you are. I have about 20 properties in one and have no concerns. With leverage, the bank is the real owner of most of that portfolio, so good luck getting anything ;-)

6- I think there are deals out there, it just depends on what you consider as a deal. I talk to some people and they want to start off with 10-12 caps in B areas that are going to appreciate at 5-10% a year and have 20% equity at purchase. Yea right. In hindsight some people accomplished that buying in 2012, but thats an outlier and you cant expect that in todays market. But I dont think its unheard of to expect to buy into a little equity 5-10% and get 100-150/door cashflow in what most would consider a c+/b- area that should see growth. Id be happy to talk about the Milwaukee market more. Shoot me a message and we can connect. 

Hey @Stuart Grazier most of what I learned from STR comes from @Lisa Loesel. Shes a realtor and STR investor in Milwaukee. I would reach out to her to chat.