All Forum Posts by: Joel Florek

@Luka Milicevic Thanks! 

The on the floor is actually from Lowes. I am a fan of their tile selection best between Home Depot, Menards, and Lowes. But about the same price. That tile flows from the landing at the top of the stairs, through the kitchen, and through the bath. I decided to only go with lower cabinets but include upper shelves. Im excited to finish and see what I get the unit rented for. That will determine how I approach trying to fundraise for the next property I pickup. 

@Daniel Hsieh Unfortunately in some cases realtors who represent clients trying to buy boycott properties that aren't listed with another agent. Some might disagree with me but my mom has been a realtor for many years and currently works as an assistant for a few different realtors in our area. We have also bought and sold 15 properties and have used realtors sometimes, and not used them other times. The peer to peer work that happens between realtors is more powerful then one would think if your with the right group. If you go with a realtor do your research. Find out who is the top producing realtors in your area for your type of property. Do your due diligence and interview the options you come up with. Figure out their plan and reach out to references.

And remember, everyone wants a deal. If you want to sell quick your deal has to be better then the other options, not just comparable.

Thanks @Astrid Cuas! Good luck on picking up your unit. A 4plex was a great 1st step in my opinion. Its enough units that if one is vacant all bills are still paid for. Going bigger on the first unit would have been a bit more stressful. My advise would be to buy good bones! Yes I have run into some issues right away, but structurally this building is rock solid. It was built as a fire house and then a health center at one time. The floors are 12inch beams 12inch on center. You don't find that anymore. Being 135 years old nothing has moved. You can tell little things like that walking through. There is a tile floor that was clearly there when the building was renovated in the 70's that hasn't cracked at all. Those are the types of signs your looking for. All the windows were and roof was new in the last 10 years. I had a heating expert come do an inspection of my boiler since it is old. Other then the ignition source ($100 part) he said that although not super efficient, the boiler is going to last a long time if you have a technician do biannual maintenance. Being a brick building though the heat holds extremely well though so it shouldn't be too terrible this winter.

I bought the property for $125k. Total rents if I wasn't living in a unit would be $2300 to $2500 for the building. I have 80% of my purchase price on a commercial loan for 5.25% and the remaining 20% on a private loan for 8%. After all expenses the property on average through the year will be about $1700 a month. So that puts me at $600 to $900 a month cash in my pocket on my first property when fully rented.

Let me know if there is anything I can help you with!

I have a few pictures here @Pat Martin.  I'm actually from Marquette so you know both of my towns I have lived in quite well. I work in Iron Mountain now. I want to keep buying multifamily properties from Marquette to Appleton. Someday I would like to move into the Milwaukee market as well. I would like to focus on building the business, renovations, and financing, not so much the day to day management in the future.

Scares me to think of that happening in a multifamily property where its not just one tenant causing problems for themselves...  This is where good insurance pays off!

Congrats! I am just renovating one of my 2bed apartments in my 4plex I bought. I refinished older cabinets with white paint and new fixtures and they look great! The paint I chose allows you to "patch" unlike glossy paints. Sherwin Williams was great with helping me determine the best choice. Choose one or two main colors to use and buy 5 gallon jugs. If you can pick a color that allows you to buy miss tints. You can pick up good quality paint for $3 to $5 a gallon if you do it this way but you need to go to an actual paint store like Sherwin. I went with a prefab granite for my kitchen that was $36 a square foot installed from Home Depot. I love them and it adds a huge wow factor in the apartment. No one in my town has granite in their apartments so my unit will be set apart from all others that are at a similar price point. I love tile for tub surrounds and floors, but don't use a light grout. Dark grout will keep your floors looking new for many years. I also like larger tiles. They install faster which is a huge plus. I have done a full rehab of the apartment and am at $6000 in material for a 1000 square foot 2bed. New ceilings, lighting, bath, kitchen, and floors.

Good luck!

Good luck! Bathrooms are some of my favorite to rehab. Gutting to the studs and rebuilding an average bathroom doing some higher end finishes should put you in about $1500 in materials if your smart about what you spend a more money on and what you don't. Some unique tile work always puts in a big wow factor. I've had a lot of comments on how I've used a more generic tile theme with inserting some glass tile "bling" into it. it appeals to almost everyone but give the custom finished feel people pay extra for. For $10 or $12 for the 12inch by 12inch patterns they work great as backsplashes on the vanities. The extra $40 you spend on a small addition makes all the difference during a showing.

I graduate from college on May 2nd this year with a degree in finance from Michigan Tech. 3 weeks later I started my first job as a program manager for an engineering company in the maritime industry. 3 weeks after that I closed on my first 4plex. 3 months in and loving every minute of it, even through the minor hiccups.

My typical day starts at 6:30am when I wake up. I'm to the office by 7am, and leaving work for my home depot run by 4:30 or 5pm. From here I have spent every night fixing, repairing, or renovating something.... I am usually working till about 9:30 in time to cook diner, watch a short Netflix show, and hit the hay.

 The plan was to tackle a complete renovation of one of the 4 units first. Given my rather significant experience in renovating properties I figured I could do the work in 2 months. Well... that hasn't exactly worked out the way I wanted.

One of the first weekends after closing my parents made the 1hr 30min trip to come help for the day. After a long and successful day we were cleaning up when all of a sudden my dad starts screaming from the basement... not a particularly good sign. I ran down to see sewage pouring out of the old and now broken cast iron pipes. Luckily we work well in a crisis and had a section of my sewer pipes redone within a few hours. We had already been working for 10 hours and that pretty much put my mom over the edge... 

Fast forward a month and I was just closing my eyes for bed when my upstairs tenant comes knocking on my door at 11pm... now what?! Come to find out there is water leaking through the wall and dripping onto his window sill right by his computer and other electronics(I recommended he buys renters insurance when he signed the lease)... hmm. The next day after work I crawled up onto the first level of roof to see if I could spot the problem. Yep, the water is going right through the cracks between the brick. With no gutters and 135 years of rain, snow, and ice the mortar had been completely compromised where my pitched roof ends. I paid a home inspector before purchasing. He even went up in his boom truck to look at the tuck pointing. He mentioned it would need to be redone in the future but he failed to point out if you tapped on some of the bricks you could practically pull them out. Luckily the significant damage was only in a few non structural points so I had to take two weeks of late nights standing on my ladder chiseling, cleaning, and tuck-pointing the bad sections. What made this job even more fun were the hornets that built a nest in the holes and attacked me while holding tools balanced on a ladder 25 feet in the air... Needless to say after a few bites I have no more leaks.

Just as I thought I was about to wrap up my renovation on the empty 2 bed I noticed the sound from the apartment next to it literally made it seem like you were in the same room. No insulation of course. I believe in doing things right and wanting to make a place my tenants can call home so out came the layers of particle board, drywall, and then plaster and lath. New insulation, tub and drywall went back up. Thank goodness I did that because I found a cracked pipe that would have leaked as soon as a tenant moved into the apartment.

After all this in just the first 3 months I am still loving it. Real estate is something I absolutely love and my property is step one in me working to reach my goals in life. I understood all these things would happen when I bought the property, I had just hoped a few of them would end up being projects that would need to be done 1 or 2 years in, not the first week, and months of ownership.

My message to anyone looking to get into the game is to be realistic about what your getting yourself into and be ready for the unexpected expenses. Don't think you will have a few years before the problems may come. I am lucky I know how to fix most problems myself or can reach out to my dad for advice if needed. Each problem cost me a few hundred bucks between material and new tools I had to buy. If I couldn't do the work myself those bills would have been significantly higher!

I'm about 2 weeks out from finishing the vacant 2 bed that I was hoping to finish over a month ago. I will post some photos when its all done. Just finishing mudding in the bathroom and tiling the tub surround and floor. I'm hoping to get $700 a month out of the unit. Its a large 1000 square foot open concept unit. $6000 in renovations for the unit gave me updated ceilings, LED lighting, floors, a kitchen with granite counters, and a brand new bathroom. The only thing I am contracting out is the install of the new carpets. Similar units in my area that are outdated rent for $650 so I'm asking about 8% more then market rents. As a note, when I did my financials I planned to only get $650. My strategy is to have the best looking units in my town for the "B" price range so my vacancies get filled first and hopefully my tenants will want to live in the building longer term. 

If I were in your position I would work to find someone who has been investing in your area and poses the skills and experience of managing properties, dealing with tenants, and trying to build their business. You can then let them keep doing that work but become a financial partner. What I have found is the people digging to make it to a loftier goal have deals lined up with aging investors who are looking to get out of the game. If you come in with the money and partner you have an opportunity to not be responsible for all of the pieces of the real estate game. Depending on how you want to structure the deal the partner you bring in could manage, get a portion of the equity, and have some sort of incentives or bonus for increasing the financial performance.

To give you a real world example one of my close friends and someone who I hope to work with has a deal for a 46 unit complex that he has been offered in the near future. Its an aging investor looking to get out of the game and wants to see someone he worked with get an opportunity before going to the market place. My friend and I both own properties that we scraped to get but we dont have a significant piece of capital to work with to make a deal that big. A person like you is needed in our case. We know the rents, we know the market, we know how to deal with problems and evaluate properties.

Food for thought. Good luck! 

Steve Vaughan, thanks for story. I think we will have to start at a brewery or the local candy store/cafe. Both owners are members of our yacht club that have been doing some great work in business and real estate. What is this board game?