All Forum Posts by: Daniel Hanson

thanks @Marcus Auerbach

thanks @Marcus Auerbach.  I did enjoy seeing your open house.  Do you find that ability to push the rents up is neighborhood dependent, i.e there is a max rent that a property can achieve in certain neighborhoods no matter how much you improve it?  Or can you literally improve a house and have it be an outlier by several hundred dollars a month compared to anything close by?

@Nolan Gray I don't have any specific lawyer suggestions, just make sure it is someone who specializes in real estate, and ask about their experience with your specific type of transaction.

Thanks @Shawn Ackerman !

Thanks @Shane Baganz

So on this Waukesha property, I calculate market rents to be around $1200 based on comparables in the neighborhood. 

By applying your 1.5% rule formula, the target should be $1500 rents on a property this price. Which, by subtraction, would give an extra $300 rental income or maybe an extra $150-$200 CF. Putting it at ~$350 -$400 CF minimum that would get you interested in investing if this comparable to Germantown. Going even further into assumption-land, $20k down with an annual CF of $4200 to $4800 gives you a target COCR of 21% to 24%.

Those are closer to the ballpark of making sense to me.  So a starter theory would be that the 1.5% rule for rents can be used in the suburbs as a target metric.  Whereas, with more maintenance, more vacancy, and more monthly headaches, the properties I've been focusing on in Milwaukee are 2% (used to look at 3% properties but have decided it's not worth the hassle for now).  @Shawn Ackerman - are you roughly in the 2.5% to 3% zone with your properties?

@Shawn Ackerman @Brandon Stevens

In this case i evaluated using conventional financing @20% down for the rental cashflow. COCR was about 11%, which is pretty low by my standards. At 10% down, CF went down to $180, and COCR went up a bit to 13%.

Also evaluated as a flip using HML but I don't really have any practice evaluating flip margins, so take my numbers with a grain of salt. The flip looked more attractive on paper than the rental, but at the 150k ARV with my estimation of $10k repair costs it only looked like a $21k profit, which seemed too thin for a first flip since my repair estimates could be quite far off.

So with all that said, I am curious if there any Waukesha single family investors on here who have specific cash flow targets they look at per door/ per property, and would you be willing to share.

@Shawn Ackerman

Hi all, i'm evaluating some potential rental purchases in Waukesha Wisconsin. Just curious what sort of cash flow for single families investors are actually seeing on properties they own. The SFH I evaluated and walked through today looked to be about $230 a month cash flow. Is that acceptable to local investors or would you shoot higher? Perhaps I am just spoiled by the higher cash flows and COCR's in Milwaukee? In this case it is a foreclosed 3-BR priced around 105,000.

@Adam Lysak  I connected with my current Milwaukee agent through BP.  Noticed they were in the area, posting as both an investor and agent.  Liked their approach and investing experience.  Sent a BP colleague request and then met for coffee.

Prior to that, I worked extensively with a young agent, who had mostly retail suburban clients but was willing to show me every investment property I wanted to see in Milwaukee.  Still working with him in the suburbs on single families (selling a house for me now).   

@John Meurer

I bought a single family rental property in Milwaukee with seller financing.  It is a general warranty deed sale, not a land contract, so title transferred at time of sale. I am not residing there, so the Dodd-Frank rules don't apply.   Because title transfered, I am responsible for all property expenses directly to water utility, property taxes etc, without having to send them to the seller first.  The seller has the ability to foreclose like any other lender if I stop paying on the note.

We set up a payment schedule for the mortgage directly to the seller's LLC address using billpay from my LLC's checking account. The note itself is set up by a lawyer using State Bar of Wisconsin form 16-2003 'Fixed Rate Note', the mortgage is set up using State Bar of Wisconsin Form 21-2003 'Mortgage'