All Forum Posts by: Andy T.

That's exactly how I feel after getting to my first deal this past year. Just going through the process of everything once gives you lessons you could never learn in a book or from a podcast. Honestly, get one, and if it cash flows, you're doing great. The lessons alone are worth a college degree and then some.

@Andy T.

I would have that discussion with your realtor or I'd be happy to have that discussion with you. The fact that the foundation and roof were recently redone is very reassuring. 

So it sounds like your main concern is that most of your cash is currently tied up in this property and you would like to pull it out and pay back your HELOC asap. Figure out your ARV, the work and costs to get there and use that info to guide your next steps. You're holding a CF positive asset even with a HELOC payment under it...that sounds like a great position to me. Even if your CF is lower now, once your HELOC is paid off and you refinance at a lower rate you're gonna be really happy with it. Just sitting on it the way it is and waiting to build up more cash from your W2/other source of income to do the repairs isn't a bad option either if the ARV isn't there.

First time investors always make some type of mistake...thanks for sharing yours for others to learn from and thank God it's not a very costly mistake! 

It's good you're cash flowing at 7%+ interest rate, where you likely will be able to get a better one after some time. If it is in livable condition, then I say you just rent out both as is. 

Another consideration you could look at is furnishing one or both of the units for a medium term rental. You could furnish one for 4-5K. St. Luke's is a major hospital very close to that zip code and it often comes up as requests on Furnished Finder (from what I have seen over that past 6 months). St. Mary's by the lake is relatively close as well. There may even be some furnished opportunities since it is close to the airport. 
If from your research you can get 2,000 a month instead of 1,350, it could be worth that 4-5K investment.

Obviously doing this as OOS investor will make it a little tougher, but again, something to consider.

Were you self managing or you have a property manager in place/looking for one?

Hi @Andy T.! 

I'm also an investor and realtor in the Milwaukee area. At that price point in 53207 I'm assuming it's in Bay View? If that's the case at least you're in a great area that continues to see steady growth. 

Some immediate questions I have about this situation: 

1. What's the projected ARV of this property? Did you have this discussion with your realtor ahead of time? If not, it's very important you have a target ARV in mind before going into a deal...especially if you're planning to BRRRR.

2. What work needs to be done to bring the property to that target ARV and what does that work look like? From personal experience just replacing appliances isn't going to add much value to the property. Cosmetic remodels like paint, new flooring, new kitchen/bath will add more value and ideally the units are a bit outdated so it makes sense to do these updates. It seems like your 1500 unit is already in pretty good condition while your 1350 unit has some room for updates.

3. What's your monthly cashflow going to be with the additional HELOC payment?

If the property is in great condition and you have no major capex coming up soon and you're financially comfortable and able to support this mortgage and HELOC until you pay the HELOC off, I would hold onto it. At -200 cashflow per month, that's "only" $2400 per year. Your mortgage has still been paid down more than that and while I don't have a crystal ball and you should not bank on appreciation to make a deal make sense, Bay View is in high demand. Rates are on the decline too. Does your bank offer a free refinance after 6 months? Play around with how refinancing later in this year might affect your monthly payment.

Okay so that looks to be in the Bay View area. If you’re cash flowing I’m not sure I understood your exact problem?

Are you trying to figure out how to get your money back?

Or is the cash flow/cash on cash lower than anticipated? 

What’s the general area of this duplex? What neighborhood is it in?

What’s the beds in each unit and square feet?

Your current May rented unit might be under market depending on those factors.

Are you not cashflowing with the current rents and projected capex/repairs/vacancy and other expense? How far off?