All Forum Posts by: Jack Medford

@Matt Maurice runs a great PM company in Milwaukee, and he's helped me narrow down my target areas. I'm currently looking in West Allis and some select southside neighborhoods/suburbs of Milwaukee. I've got a few homes currently on the North West side. Those cash flow well for the price, but not sure the return is any better after maintenance and capex. 

@Marcus Auerbach might also be able to help highlight some areas to focus. He's a very knowledgeable Realtor and investor in Milwaukee. 

Lastly, @Rebecca Knox does some investing and wholesaling in Milwaukee, but she also runs a Milwaukee based investors group. If she doesn't have the specific knowledge you're looking for I'm sure she can point you in the right direction. 

Best of luck as you get started in Milwaukee!

What is the condition of each unit? Do they have some deferred maintenance that you plan to take care of when the tenants leave?

I think you've got two options:

1. Raise rent to full market value - This will cause some (maybe all) to leave but will give you the chance to fully turn and fill the units with new tenants. 
2. Raise rent gradually each year. - Maybe bring everyone up to $1,000 and then go up gradually from there until you are at full market rent. 

With either option you are likely to lose the lower paying tenants by the end, so it is just whether you want to peel the band aid now or stretch it out over time. 

As others have suggested, house hacking is a great way to start. However, that doesn't mean it is the best choice for you. Figuring that out will depend on a few factors. Off the top of my head, here are the relevant questions:

• How much money do you currently have for a down payment?
• Assuming the Seattle market is too expensive to cash flow, how much are you left paying every month after receiving rent?
• What is the difference between the above number and your current rent/mortgage?
• Are you saving enough to make a significant impact on your finances?
• Would buying Midwest rentals net you more money every month than if you house hacked?
  • If yes, is the difference enough to make you comfortable with the potentially increased risk?

Without going too much further into the weeds, I think these are the important questions to make sure you have an answer for if you want to really weigh both options. 

As an example, I went through this process recently. While Madison isn't as expensive as Seattle, it is very expensive by Midwest standards. Instead of choosing to pay ~$1,800/month to rent a 2 bedroom, and then using my down payment to buy more rentals, I bought a duplex outside of the city. The monthly mortgage on this duplex is roughly $1,400/month. I rent the 1 bed side for ~$800, giving me ~$600/month to cover myself. 

If I decided to rent that $1,800/month house, could I have generated the $1,200/month income gap with my down payment by buying cheap rentals? Definitely not, so the decision was clear. 

@Garrett Davis has been building a PM business out there. @Calvin Ozanick also runs a company out there. 

@James Tackeberry Welcome to BP. We've got a really active community of investors here in Madison. When you're starting your transition out this way, let me know if I can help at all. If nothing else, I can help point out the best local beer. ;)

@Scott Trench Before getting into it I will mention that I've been a holder of various currencies since 2015, but do not consider myself an expert. I will do my best to explain as I see things, but welcome others with more knowledge to expand and/or point out inaccuracies. 

"Bitcoin is similar to hundreds of other cryptocurrencies. Each crypto has it's nuances, it's slight differences. But, at the end of the day, there seems to me to be no particular reason to me that Bitcoin will be the one universally adopted in the end. Perhaps it has odds over, say, KodakCoin. But, why Bitcoin vs. Litecoin? Vs. Ethereum? Vs. XRP"

I think this highlights why more research should be done before making strong opinions one way or the other. As you put it, Bitcoin's value is in its ability to replace other currencies (such as gold or fiat) as a store of value. With that being the case, why would people choose Bitcoin over the others? 

Gold is the best comparison, as BTC is often called digital gold. It may not be tangible in the sense that you can hold physical BTC, but the code that surround BTC is irrefutable. I think both of these currencies are complimentary. One is physical, the other digital. As long as you hold your private keys, you will always be in control of your BTC. Just like if you lock you gold in a safe, you will always be in control of your gold. Give it to a 3rd party to store, and that is where BTC and Gold both become vulnerable. 

Fiat government currency has shown that it is not a good store of value. The system is centralized to a max and is subject to inflation. BTC will never be inflated. It has a fixed supply that cannot be changed. Fiat currency is constantly being printed, causing it to lose value over time. 

Ethereum is a different concept from Bitcoin. The goal of Ether and the Ethereum blockchain isn't really to be a store of value. It is attempting to be a platform for development of Digital Autonomous Corporations (DAOs) as well as as Smart Contracts. This is a different use case entirely than Bitcoin, so I do not really see the two as competitors. 

Similarly, XRP was not created to be a store of value. It is currently being used by banks and financial institutions to help with cross border payments and to manage liquidity costs. If I remember correctly, the creators have mentioned that crypto investors should not be seculating with XRP, as the price of the token is intended to stay low. In addition, Ripple appears to fairly centralized compared to other cryptocurrencies. 

LTC on the other hand has a lot of similarities with BTC, making it the most obvious competitor. The main reason Charlie Lee created LTC was to improve the scalability of BTC. There are some differences, such as processing speed, but the functionality is largely the same. 

So why would someone choose BTC over LTC? 

There is an important point that many BTC maximalists will pount to. There is no creator/owner that can be easily pointed to. BTC is a protocal created by an anonymous entity and is now entirely run by the people who make up the ecosystem. LTC, and all other currencies, have a central founder. Even if the coins themselves are entirely decentralized, they still have founders/leaders who can heavily influence the community. 

I highly encourage you to listen to actual experts, as again, this explanation was just my best attempt. The two podcasts I'd recommend were done by The Investor's Podcast. This podcast is normally focused on stocks, but they did two back to back on Bitcoin. 

The two I recommend are #259 with Dr Saifedean Ammous and #260 with Plan B. The main takeaway I received by listening to these two episodes was the concept of stock to flow, and why this is important when deciding upon a store of value. 

Before jumping straight to the bank I'd suggest finding a few agents in your area to talk to. Give them a basic rundown like you did here. David Greene actually has a really great intro line that I'd suggest...

"I want to house hack. Here is what I know so far and what I'm looking for. Who is your preferred lender, so that I can get pre-approved with them."

This will help cut down your search for lenders, since good agents typically know what which lenders have programs that might help you get qualified. 

For Wisconsin, I'd recommend checking out Milwaukee and the Rock County area, such as Janesville and Beloit. 

Milwaukee has a very active community here on BP which can help point you in the right direction. It also has a fairly large inventory of properties that fit the 1% rule and are in decent areas. 

Janesville and Beloit are on the smaller side, but they cash flow well. On top of that, Amazon may be coming to Beloit soon. Not sure if that is a bonus or not, but figured it was worth mentioning. 

@Katy Jansen I agree with @Chase Binnie, especially if you are working with the numbers you mentioned above. If you find a property between $40k-60k and has an ARV of $140k-150k then you will have no problem finding a partner to bring the additional funding you need. (Assuming the rehab is within reason.)

The big hurdle will be actually finding this property. Milwaukee has a lot of inventory, but it is fairly competitive. Get in touch with @Rebecca Knox so you can get added to the Brew City Facebook group. The moment you've got a deal you can float it there and you'll probably have a couple partners fighting to get a piece.  

Anyone know how to find year over year stats of how many total housing units are in a specific region? I'd like to get this info for my county or city, whichever is easier to obtain. I'd preferably like to split housing units into single family vs condo vs multi-family, but I'll take what I can get. 

I was able to find some of this via factfinder.census.gov, but it only goes back to 2009.