All Forum Posts by: Jamie Labrec

Under 704.19(3) at least 28-days notice must be given by a landlord or tenant if they have a year lease or month-to-month lease when wanting to not renew a lease/contract.  From what I know a contract can stipulate a longer notice to vacant (terms), as long as it was agreed upon (in lease contract) by the tenant and landlord.  As I am not a lawyer I would advise your friend to seek advise from legal counsel. 

Investment Info:

Small multi-family (2-4 units) buy & hold investment in Fond Du Lac.

Purchase price: $170,000
Cash invested: $1,100

Used a construction loan and seller credit to have only ernest money & home inspection cost into this deal. When completed next summer this should be a nice BRRRR.

What made you interested in investing in this type of deal?

I was looking for a buy & hold property. Where I wanted to find property (close to where I live) the market is currently too hot and my numbers don't work for it. I traveled out 2 hours and found this community to invest in. It helps that I grew up in the area.

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

I found this deal on the MLS. Currently that is how I find all of my deals as I don't want to invest time into cold calls or post cards as I have a full-time job. MLS listings have motivated sellers.

How did you finance this deal?

A used a local community bank that I had built a relationship over the last eight years.

How did you add value to the deal?

Showing that we cared about our property and providing instant curb appeal. Being responsive to residents and doing a lite rehab on a vacant unit to increase rent by $80.

What was the outcome?

Currently the outcome is set for summer of 2021 when the full rehab is completed on the property.

Lessons learned? Challenges?

When not renewing a resident lease come with a plan on how you will fill that vacancy to reduce that time your unit is not making you money. I was okay with the one month vacancy as we were doing the rehab for that unit ourselves.

Did you work with any real estate professionals (agents, lenders, etc.) that you'd recommend to others?

I worked with a rock star real estate agent/investor. Unfortunately he has since moved out of state and is not renewing his license come 2021.

@Kevin Janssen

Check the year-to-year lease to see if it specifies how far in advance the tenant or landlord has to give written notice for termination of lease.  If there is nothing specified in the lease then a 28-day notice is sufficient.  The written notice is based on the rent period. 

Example: 28-day notice is issued on 9/28/2020.  The tenant has legal rights to the premises until the end of October.

Notice was issued on 10/5/2020; tenant has the premises until the end of November because the 28 days doesn't expire until November 2.  If the rent is based on the first of the month then they do not have to move out until the end of November.

When reviewing the statute be sure to review the manner in which a notice must be given as well; SS 704.21

@Michael Leeson

I would recommend reading this article 

https://petriepettit.com/blog/landlord-tenant/cdc-and-hhs-issue-order-for-temporary-halt-in-residential-evictions-to-stop-the-spread-of-covid-19

It is posted by one of the better law offices that deals with Landlord/Tenant laws in Wisconsin.

@Joseph Hammel  For a year lease you would first issue a written notice "5 days to cure."  The written notice from the landlord gives the tenant five days to remedy or move out within five days.  If tenant remedies, the tenancy continues.  If they do not then the landlord may start eviction proceedings.

There is also a 14-day notice.  This written notice specifies that the tenancy has ended because the tenant is in default under the rental agreement.  This notice does not offer the option of paying the rent or correcting the breach.  This option cannot be issued until a 5-day notice has been issued during the lease period.

Wisconsin State Statute 704.17 is one you will want to review, along with your rental agreement, prior to issuing any type of paperwork to the tenant.  During this COVID pandemic we currently cannot charge late fees in Wisconsin.

@Evan Koehler given the information you provided I would recommend buying the book "Investing in Duplexes, Triplexes, & Quads" by Larry Loftis.  I firmly believe this book will help you in your early decision making process and determining how you will enter the RE market as an investor.

@Phillip Davis

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@Tramaine Robinson

Call around to small local banks/credit unions. I would recommend exploring a commercial loan, which will require 20% down. There are 5/1 or 7/1 arm loans that amortize in either 20 to 25 years. Simply put; every 5 or 7 years (depending on your loan) your APR will be adjusted. You can get creative here to if you can educate the seller in providing you seller credit. This would make your overall loan higher while allowing you to bring less of a down payment.

Example:

Duplex purchased for $100,000

20% down payment would be $20,000

Seller agrees to provide a seller credit of $10,000

Your loan amount becomes $110,000 while you down payment reduces to $10,000

A conventional loan only allows you to do 2% (maybe 3%) seller credit of the agreed upon price; whereas a commercial loan does not have that restriction.

@Marcus Auerbach You do bring up a good point.  Depending on the area, below grade space is assessed slightly lower than above grade.  Legal egress windows are a must and help bring in natural light into an otherwise dark area.  Most people are buying properties with the standard 8 foot ceilings.  I've done both of my builds with 9 foot ceilings which makes the basement not feel like a basement.  So I sometimes forgot that 8 foot is the norm.

What's great about BP forums is that this information will remain here.  So in the future if a newer investor is searching specific key words they may stumbled onto this thread and get inspired by some out-of-the-box thinking.

Do you want to start REI but don't have a big stack of cash laying around? This is not a house hack it's a home hack because a home is a place where one lives permanently. In my specific case, I home hacked because I have no intention of moving. With the current mortgage rates, people are looking to refinance into lower rates. WAIT! What if you have an unfinished basement, now might be a good opportunity to finish that basement off.

Now this is all dependent on your market but in January I decided to finish the basement of our house. I live in Wisconsin and contractors cost roughly $70 an hour. Like most people I make less than that per hour, so it was in my best interest to complete the project myself. Otherwise I would be sitting on my couch watching Dancing with the Stars; not doing anything. Before I continue, I enjoy construction (I’ve built the only two homes I have lived in). Guess this would be considered my hobby so I decided to tackle this 1064 square foot project myself. WHAT, THAT’S CRAZY! The project took me four months to complete. Although I had a three-month timeline I don’t consider the extra month a waste of time because I was still working a full-time job and spending time with my family, so I could be a part of the little things in their lives.

So how did I finish the basement? I installed two things that add value to a house (bedroom and bathroom). This helps to create appreciation into the property. When it comes time for the appraisal your comparable houses play a huge part into the value of the property. The higher the bedroom and bathroom count the better; generally. It is possible to overbuild your property and not be able to regain the value you put in so be careful here. Look around the neighborhood to determine how other properties are configured (bed/bath & square footage). You will want to stay around the same.

The property was finished off with a family room/rec room and a den/office. With the work and finishes that were put into the project, it was completed at a cost of $10,000. Is my time added into this, no, but some of the things you learn (mentioned below) are invaluable. After the appraisal, I created added equity of 100k; that's 10x what I put into it. The next step in all of this was to cash-refi. I've been able to get rid of the PMI we had on the home, lower my APR by over 1%, and pull out 50k in cash.

Guess what! Now you have that cash pile needed to start your REI. If you can work on the project like this, you were able to gain some additional skills or polish some of them up. You learned what you liked and hated about construction. This is valuable when you go to do a deal as you know what projects you will tackle and which ones you will subcontract out. Don't forgot, you would have looked at several ways to finish a certain project (paint, flooring, lights, etc) so you now have a starting basis for what things cost. Now when you walk a property you can start to estimate your rehab budget. Only information you are lacking is your labor cost.