All Forum Posts by: Aleksandrs Vilumsons

It might not be a bad option. There could be added risks with renting to young adults in college, but those risks extend to any potential tenants. Good tenant screening will probably be very useful and necessary to ensure that you don't get stuck with problem tenants, even if it is only for a semester or two. 

While I am very new to REI, I would say that from what I have read, heard, and been told, having some sort of entity is crucial to protecting yourself and your assets. I'm sure many people have done great things without an entity, but for me personally, I think I would prefer that type of protection. Right now I am talking with a CPA to better understand what type of entity I should be starting and how to structure my business.

Hope all works out for you whichever way you decide to go. 

It might be something to look into, as long as you think about the different financial aspects of any of the potential deals. If the city allows you to purchase the homes, they would certainly be very cheap. Rehabbing some of those homes might be very costly, depending on the home/unit. The biggest hurdle to most investors would be having good tenants after the homes are fixed up. If you think that you can handle the risk, it might be a path forward. In most investing scenarios, even outside of real estate, as the risk increases, so should your return. Many investors would shy away from this scenario because there is way too much risk compared to the potential return on the investment. 

If you still want to look into this, perhaps research if there are any federal, state or local agencies that have money available for people looking to invest in those types of areas. There could also be non-profits that are looking into improving certain portions of the city as well. 

I hope you find a path that always you to use your talents, your gifts, and your drive to help others who need it. Good Luck!

Welcome to the BP community Tom

Carlos, 

If anything, you can take this time to do more research and start building a network in your area. I graduated in 2015 and I am now only starting to build my network. If I had started my junior year, I would be so much farther ahead than I am right now. This doesn't only mean individuals that are in real estate right now. I think being in college gives you a unique opportunity. Many of the students that you are going to classes with now will find jobs in other parts of the country. If you can start seeing potential in future partners I would start establishing those relationships now. In college, I tried to create good relationships with people who I thought were smart, had good leadership skills, and who were good people I could trust down the road. A solid network of good and smart individuals can be an amazing tool that will help in your future investing, and in life in general.

It also sounds like you have started formulating your goals, which is very important. Understanding why you are investing will greatly increase your ability to create a business plan and help you when deciding on a strategy. 

@Account Closed I think I may be starting to see what you mean. 

Are you saying that some investors do not need to see that cash flow from Day 1? That those investors can purchase into a market that is more expensive and as long as they can stay afloat and they made a wise decision, the cash flow will follow? 

If that is the case, then I think downtown Milwaukee, WI might be in that situation. From my understanding, there will be hundreds, if not thousands, of new units created in the next few years in the downtown proper. Many empty-nesters and millennials are seeking housing in that area and that kind of life style. So while those buildings and units are coming on line, the initial investors have to put up a large chunk of change. Once those units are complete, however, they have the option of exiting and getting their investment plus some interest based on the new, and higher, value of the property, or they could continue to hold onto those properties and receive the cash flow, plus be the owners of very expensive properties which have appreciated greatly since they made their initial purchase. 

With all that being said, I would say that having both cash flow and appreciation would be a great advantage. An investor would not want to invest in an area or neighborhood where the value of their investment would decrease over the years, but it is also very difficult to understand what areas/type of living will be popular in five or eight years, let alone fifteen or twenty. I think it is an incredible gift to be able to discern those types of trends before they happen. Hopefully, one day, I will be at a level of knowledge of my market(s) where I can take some of that extra risk, because in the world of investing, the greater the risk, the greater the reward. 

I'm very new to the real estate investing world, but that does seem like a lot of stipulations that he is guiding you into. I assume that the 10% flat fee is based on the $ the unit rents for, but what is the 6% management fee based on? Total value of the property? 

Also, if you mean Milwaukee, WI, I have lived in Southeastern Wisconsin my entire life. Fourteen or so years in Waukesha County, ten more in Milwaukee County, plus I went to university in Milwaukee too. If you need to know more detail about the region I'd be happy to help. I don't know everything, but I'd be willing to share the information that I do know. 

While I am very new to real estate, I've always understood that metro areas similar to Milwaukee don't benefit/suffer from large swings in property value as much as some other parts of the country might. As I begin my real estate career in Milwaukee, I'll be focusing on cash flow more than appreciation of the property. 

It seems to me that in a market like Southeastern Wisconsin, significant appreciation would be driven by factors outside of my control. I would have never guessed 5 years ago that buying any land in Kenosha County along the freeway would be a good investment, but now we have dozens of companies (Amazon, Uline, etc.) either building or expanding, creating hundreds if not thousands of new jobs and therefore, an increased demand for supporting housing infrastructure. The decisions of those companies was completely outside of my control.

What is within my ability to control is the location of my properties, the condition of the units, the tenants I accept to live in my units, and the management of those units. These all would increase my ability to have good cash flow. At this stage in my life, I want to increase my passive income and build long term wealth, and buying and holding multifamily properties will help me to obtain those goals. I think the strategy an investor picks always has to fit their goals, so I would disagree that "Cash flow is for poor investors or investors that are poor."

Joined BiggerPockets two months ago to do research and learn more about real estate investing. I've made the decision to move ahead and really start developing a business plan/strategy and to begin engaging with the BiggerPockets community and my local REI community. My initial focus will be purchasing and rehabbing small multi-family property in the suburbs surrounding Milwaukee, Wisconsin.