All Forum Posts by: Adam Ramsey

I'm wondering what anyone's experience has been with their property values after a nearby development has finished.

A little background:

I have a duplex 1 block off a main thoroughfare in Madison, WI. Madison is a medium sized community so the traffic isn't crazy bad. Directly across the street they are developing on what was a large vacant lot when I bought the duplex (This is the Union Corners lot for people that know Madison, it is approx 2-3 city blocks x 1 city block in size). The street (not main thoroughfare) that bordered the lot was full of homeless people sleeping in their cars and winnebagos when I moved in. That has been cleared out and they just built a local specialty clinic on one end. They are currently building apartment or condo buildings that I think will have office/retail space below them. After that they are putting in a specialty grocery store (farmers market style store called Fresh Thymes). And lastly they will be building co-op style condos. From what I understand is that these condo's will be unique with more of a community feel to them offering: community dinners and activities etc....

The main negative is that it will increase traffic and parking in the area which is already decently busy for the size of the town. The positives are more jobs directly in the area and the crime has gone down since they moved the homeless (it wasn't horrible but we'd get a car break in here and there, 1 gunshot into the air and some loud arguments in the street). 

Has anyone had direct experience with this or have an idea of what I can expect for my property value?

Hi @Braden Downs,

It's worked out great for me so far. Unfortunately I was a little over excited and overlooked a few aspects like an old furnace and fridge. Those went out on me within a year so I had larger expenses quickly. I should have asked for a home warranty from the seller but was looking for the best deal possible. I also should have known to look at these items as I've worked in Real Estate for awhile. One good thing is I shouldn't have to worry about those items for a while now!

Other than that it has worked great and luckily I found a good deal that should cash flow me around $7-800 if I move out and fully rent it. 

One thing I didn't realize initially is how strict FHA is on the condition of the property. I had a few items that were required that I initially was willing to overlook, like missing smoke detectors and simple things like that. Fortunately, I already had an accepted deal in place and the sellers were willing to work with me on getting these done with a few amendments.

I don't remember the in's and out's of what FHA required on condition but I know small, usually easily fixed items like smoke detectors, chipping paint, misplaced downspouts are items that they will require.

I would recommend getting a good idea of what they require and keep that in mind while looking. If you find a good deal but it needs work, you may have difficulty getting it financed if the sellers aren't open to addressing the items. I would also recommend knowing the age of items like the roof, furnace, etc... Your real estate agent probably will bring this up to you. I acted as my own agent and completely forgot on my own deal, go figure! Other than that the FHA loan has worked great for me. I don't like paying PMI but I did not have the cash on hand to do a conventional loan.

When it comes to tenants, make sure you have a good understanding of landlord/tenant law at your locale. I already worked in property management for awhile and had a good understanding. Usually the local landlord/tenant resource center can give you good information. Also, if you have to find a new tenant, make sure you fully vet them. It's easy to get excited and just put someone in there your first time. I inherited a tenant when I bought it that the previous sellers put in. They flipped the house and quickly rented one unit to make it look better. The tenant paid fine but I had some suspicions. She moved out and I found a nice new tenant. However, I did turn away multiple people which was hard because I wanted that rent money coming in.

Lastly, when saving up for it, make sure you also have extra cash available for unexpected expenses like maintenance, bad tenant, vacancy, etc... 

I would do it again. Best of luck!

Thanks! That's what I was assuming.

I currently own a duplex in Madison, WI. I live in one side and rent the other. 

I bought the duplex about 1 1/2 years ago for $195,000. I used a FHA Loan with about 5% down with PMI of $120/month. I currently owe approximately $180K on it.

Luckily the market has gone up quite a bit since I bought the property and I did some updates. I would guess my home would appraise at $220K at the absolute lowest but probably about $230K maybe 240K. 

Of course I would like to get rid of my PMI. However, I would also like to start looking for new properties and using some equity towards the downpayment. Depending on the situation I may stay in my current spot or move to the new property if it's a multi family. I probably will wait about a year so I can save up more cash and build more equity.

Pros/cons to refinance now and then use a home equity loan or HELOC for additional capital or doing a cash out refinance when I'm ready to buy again?

I currently own a duplex and I live in one (with my brother renting from me) and have the 2nd unit rented out. I also am a licensed Real Estate Agent and work for a property management company.

I tried reading up on what a "Real Estate Professional" was for tax purposes but left unsure. I work in Real Estate full time. However, most of my time is as an W-2 employee of the Management Company. I get a base salary but then also receive non taxed commissions whenever I sign up a new owner for property management or rent a property. I also get non taxed commission when I sell a property (typically only 2-4 sales in a year). Approximately 60-70% of my income is from my W2 salary. I personally manage my rental separate from the company, which is not a lot of work most of the time. 

My question is, do I qualify as a "Real Estate Professional"? I'm not sure if being a normal W-2 employee counts towards this. 

Lastly, if I do, is it worth it, does it increase audit risk? I am mostly considering doing this to use losses from the rental property to cut back on my taxes from the non taxed commissions I receive. 

Thanks for any insight!