All Forum Posts by: David J Lepard

I invest in Milwaukee. Any Milwaukee people attending?

En route now! 

Hi Tara, 

So sorry about this. I just resent the file to your email address. Please let me know if you have any problems receiving, downloading, or viewing the file. 

Best, 

Here in NYC most owners name it after the name of the building, as many here have suggested. However in NYC every single building is very valuable, so it pays to separate assets. But in less expensive areas, given the costs of maintaining the LLC and then the added hassle of separate bank accounts, quickbooks programs (our accounted recommended separating) and reporting costs, I think we're going to go with one LLC per state we're investing in, until that LLC holds +/- $1M of assets (which means so far just one for us.)

One other point I'll add, don't make it too long! 

Investment Info:

Other buy & hold investment in Milwaukee.

Purchase price: $272,500
Cash invested: $72,000

This was our first residential property purchase. Two SFRs and a duplex, all negotiated, inspected, financed, and closed from out of state. All three were previously in our manager's portfolio with owners who wanted to sell off-market. They were each operating at the 1.2-1.4% rule.

How did you find this deal and how did you negotiate it?

We negotiated slightly but as they were off-market deals, the prices seemed pretty good as they were. The best choice we made was performing full inspections, and asking the owners to fix the items discovered. We ended up getting nearly 4k of work done by the sellers which added value for our renters.

How did you finance this deal?

Our initial financing fell through and we had to scramble to secure backup financing. In the future I'll either work with a lender I know can close or have a backup lender on hand.

Lessons learned? Challenges?

One thing I would do differently: we took a big hit when our initial financing fell through (sellers wouldn't provide their schedule Es which the bank wanted to substantiate the rent figures), we had to rush to secure backup financing. As a result we overpaid in interest and the appraisal came in so late that, when it was inaccurate in a number of ways (sq ft. was wrong, rents were wrong, comps very far off). In retrospect, we should have considered delaying the closing to contest the appraisal.

@Randi Plevy That's a great point. You wouldnt want to run numbers with inaccurate property tax assumptions.

@Rebecca Knox I will keep that in mind next time I close!  

@Scott Schultz I'll have to be more careful next time. I think it was the urgency to get the power on that made everyone miss the obvious.   

Wow @Scott Schaar thats a great clause to include in the contract. I had gotten to the point where I was looking for someone to do just that, only the property fell through. I'll keep that in mind for next time!

Hi All, 

I recently learned an important lesson: Don't forget to require recently utility statements before closing on a property. I assumed this would be something title would do in all states. When I closed on my first property in New York State, we reimbursed the sellers for every dollar of what they'd paid toward utilities at the closing table. I found out the hard way this is not how it works in all states-- after our duplex closing in Wisconsin recently it turned out there was $600 worth of unpaid bills. In order to get power turned on our management company paid them and then we had to sort it out later. Luckily the seller was willing to pay her back bills, even months later. This just a lucky break for me however that the seller ended up being an very ethical individual. 

Which I guess leads to the bigger lesson: know what the local market requires at closing, and DEFINITELY educate yourself on what Title Companies will and won't check for in each state. 

Are there any similar tips you all have picked up on this topic? I'd love to hear them...

@Les Jean-Pierre We have a really great manager who lives about 15 minutes from the cabin. We handle the bookings and she handles the property and guest emergencies.  

Hi @Scott Wolf, we own some single families and duplexes in the midwest. Expanding that portfolio is the current goal. In the meantime we do love using the cabin when its not rented or for special occasions. We'd love to do additional vacation rentals in the future, but they tend to be much less passive and our time is limited presently.