All Forum Posts by: Chad Nagel

If you only have 5% to put down, you can't afford to invest. Trust me, living next door to your tenant is not something you will want to do very long. I suggest that you buy the property using conventional financing. The more you put down, the less your debt payment is, and the better the cash flow. Being over-leveraged is no fun when the market turns south. Eventually, you will want to have this property paid off, right?

I'm looking at a property that backs up to the Fox River in Wisconsin. The River overflowed and flooded the town of Burlington this past summer following some heavy rains. The property's yard overlays the fringe of the river's flood plain and has been known to be under water, although the house sits higher and is far enough away from the river to avoid major problems. 

Are there any grading options or other strategies to protect the yard if the River spills its banks again? Or is  "you live by the river, expect flooding" the best that anyone can do?

Would you email me more information on the two Milwaukee properties, [email protected]? 

2854 North 28th Street Milwaukee 53210 Wisconsin

2917 North 16th Street Milwaukee 53206 Wisconsin

George, that's a pretty broad question. May be worth separating "most affordable" from "return and income". Affordable doesn't always and necessarily equates with return and income. This is too complicated of a matter to address on a quick forum. Seems like different people here have successes with several different markets. From my experience, a few years ago markets like Nevada, Oregon, Florida, Texas etc were fantastic. Now they are not as affordable. Then you have Midwest markets that are more affordable, meaning they have higher cap rates, but there may be different reasons for that, which will affect the actual return. For example, some markets have higher cap rates, but have negative migration or very little growth. Or the demographics are not as good, with higher poverty and unemployment. Demographic and jobs growth are very critical in long term real estate investments. You also want to factor possible appreciation. If you buy in CA for example, the cap rates are extremely low, however, the appreciation potential is far higher. If you buy in OH, the cap rates are lower, but appreciation would be lower as well.

What I sometimes do is conduct a statewide search on Loopnet.com. You can enter the parameters you are looking at, and then go state by state and see what you find. If you like what you see - nice building at a reasonable size for the # of units, at a reasonable cap rate and price, and at an area that is relatively close to an employment area, that would be a good place to look. If you see a few of those, even better.  Regularly do search for "fastest growing cities / towns / suburbs" "best towns for retirement / families / jobs / millennials / baby boomers" "most affordable cities" etc and see which cities come across the list which are both affordable to you and attractive. From there you can start zoning in and talk to some local pros and BP members.

But remember - high cap rate can come at a high price and does not guarantee high returns. Also, pay attention to "fire sale" situations. There are waterfront areas in Florida for example that are selling at very attractive prices. We are going through massive climate change and the last thing you want is to be stuck with a property nobody wants 5-10 years from now