All Forum Posts by: Jon Coleman

@Rebecca Knox - Thanks for reaching out!  It sounds like you've been involved with a number of great programs benefitting the community.  I'd not heard of SecureFutures but I'm very passionate about financial literacy and have loved having the opportunity to teach about it over the years through Junior Achievement.  I'm glad to see SecureFutures offers virtual training so that students in underserved communities can continue to reap the benefits!

Safe Families also sounds like a great organization.  It is great to see the partnership between churches, the community, and host families!  Strong Blocks also seems to be working towards an excellent goal, especially given the challenges low-income folks have on the path to home ownership.

Contacting the local aldermen and engaging with communities of interest are great idea as well!  You've certainly given me a lot to chew on and dig into.  Thank you again for your advice and I look forward to crossing paths in the future!

@Robert Jelinek - Kudos on making so many valuable connections! It sounds like they will be a boon even if they aren't providing a great deal of benefit to you at the moment. There is a lot of appeal with BRRRR, particularly in being able to effectively recycle funds back into more investments, although it seems tricky to determine both a reliable ARV and not go over budget on renovations.

@Ruben Goodbear Anders - I'm new to REI and my W-2 job is in fintech. Have you started looking at any properties in Milwaukee yet? I hadn't seen many apartment complexes for sale in the area and some of what I had found seemed like night and day, with an inexpensive 18 unit in a challenging area contrasted with a sprawling complex listed for tens of millions of dollars. Best of luck and hopefully you are able to find some properties that fit with your criteria!

@Robert Jelinek - Welcome (or welcome back)!  I'm sorry to hear that you are hitting a wall and having a tough time getting started.

You shared that you are getting rejections due to not having any investments yet.  Are these rejections coming from people who you are trying to raise capital from, partner with, or something else?  If their concern is that you don't have practical, hands-on experience, is there opportunity to help them with their projects as a way to gain experience and also provide value to them?  If raising funds is your primary pickle, have you explored options like tapping into your current home's equity or getting a low down payment loan on your investment property through traditional lenders?

Best of luck in your pursuits!

Welcome, Ruben!  Congratulations on your Milwaukee duplex reno and kudos for doing so at a long distance!  Are you planning to get an apartment complex in the Milwaukee area or locally in Austin?  It certainly sounds like there is a lot of interest from folks in tech moving to Austin so hopefully that will create opportunities for you!

View report

*This link comes directly from our calculators, based on information input by the member who posted.

I am new to analyzing properties and could use the community's input.  I used the APOD supplied by the seller in the calculator and tried to minimize adjustments.  The two items I did change were capex (none listed so I used 10%) and repairs (bumped from 5% to 10%).  Everything else listed is based on info provided by the seller.

Here are some of the questions/concerns I have:

• The repair amount is almost exactly 5%.  This makes me wonder if it was ballparked/estimated instead of using actual repair costs.
• Similarly, vacancy is listed as 5%.  Wouldn't a seller normally list actual vacancy as opposed to estimated vacancy?
• Is it normal for a seller to leave capex off an APOD or would that just be in a year where they didn't have anything to report?
• The paperwork for the listing showed the number 4 crossed out twice and replaced with 2 for ranges and refrigerators.  Given that there are 4 1 bed/1bath units of 667 sq ft I'd expect 4 appliances.  The fact that there are only two makes me wonder if there are shared kitchens, although this seems pretty unusual and like the kind of thing that would be called out.  There are no interior pictures (which in itself is a concern) so I can't verify that there aren't shared kitchens.
• The listing states there is a property manager on-site.  Given that this is only 4 units and they all are generating the stated rent, I'm not sure what to make of this.  I'm wondering if one of the tenants is paid to handle certain parts of the property management, such as repairs, cleaning of common areas or lawn/snow.
• The listing states the land is residential but the property record shows the land use as commercial.  In another spot, it lists it as "C2 Neighborhood Commercial District". Is this normal for a 4 unit building?

I am still working on developing my criteria but I have developed my goals.  My aim is to get involved with affordable housing and to strike a balance between quality units with lower rents while still managing to turn a profit (albeit a lower one).  I know that there are many challenges with affordable housing and lower-income tenants so I can recognize the value in taking on a more manageable property to start.

Thank you in advance for taking the time to help me review this deal and learn more about what to look for!

@Scott Krone - Thank you so much for the suggestions! I'd seen Brew City REI mentioned a number of times in the BP forums but wasn't clear on the ability to join as it seemed like it was invite-only. I'd very much welcome the opportunity to meet more folks in the industry and find ways to collaborate.

I hadn't heard of Near West Side Partners but I see that their mission meshes well with my own goals.  The other non-profit I'd mentioned is located right in that part of Milwaukee as well so all the better!  It looks like NWSP are well-organized and have a variety of issues they are working to tackle in the area.  I'll see if there is an existing relationship with the other non-profit and, if not, I'll work on forging some new ones.  Thank you again, Scott!

@Conrad Scoville - That's awesome that you've been able to learn so much from your dad!  It is interesting to hear that residential clients have been so much more challenging to work with.  I can see it being particularly difficult if a client changes their mind in the middle of a renovation and having to make big adjustments to the project!  

For sustainability, I can imagine it is an easier sell if there is a cost-savings for the client to offset additional expenses, especially for commercial properties.  Have you found that LEED certification is something many retail/commercial clients pursue?  When it comes to reusing materials, have you found a reliable source of materials or has that been a challenge?  For composting, my wife and I use Waste Not and they offer a service for $4/week to pick up a 5 gallon bucket and have found it to be a great value.

Regarding property management, I would prefer to be more passive in the long run but in the short run I am comfortable with taking on the bulk of it. I recognize that there can be a lot to tackle and to know but feel it would be valuable with getting the hands-on experience before asking someone else to take over. I've read a few books on landlording and I can see why it can be daunting to take on, what with needing to be familiar with so many different laws, fielding maintenance calls, potential evictions, addressing non-compliance issues, screening tenants effectively, and so on. As for BRRRR, I'm just exploring it as an option and trying to learn more about it, particularly since I have little knowledge when it comes to renovations. I like the idea of using financing with mortgage rates so incredibly low right now but also don't want to be overleveraged.

@Marcus Auerbach - Thank you for sharing your advice on affordable housing.  You bring up excellent points around the difficulties and expenses of evictions as well as high capex.  I hadn't realized how much more expensive capex could be on certain duplexes in Milwaukee until I watched the video you did where you spoke about the level of customization in those older homes on things as random as door sizes!  I'd also read your comments the other day on a deal analysis where an investor had only planned to set aside $64/month for capex on a home built in 1890 and I really appreciated the detailed breakdown you shared on the potential for very large expenses.  It certainly seems that there have to be sizable adjustments made in calculations when considering properties that could need so much work, particularly if the tenants are lower income.

For pursuing affordable housing, has your experience been that the challenges are greater with the properties or with the tenants?  

I should provide a bit more background on my pursuit of affordable housing.  My mother is on the board for a non-profit organization in Milwaukee that provides housing, services and life skills training for low income women, particularly those from the 53205 and 53206 zip codes.  The women are able to live at the facility for up to 12 months while they are in the program getting on their feet.  During their time in the program, they receive training to improve their financial management, maintaining a household and building career skills.  The aim my mother and I have is to provide affordable housing for some of these women after they leave the program.  Because of the relationship we have with the organization and the training they provide, our expectation is that we will know more about our incoming tenants and that they will be better equipped than their peers to maintain stability.  These would still be individuals with many challenges but our hope is that some of the risks would be mitigated thanks to the program.

That being said, I am very open to starting out with below median to get the practical experience needed to be successful.  I've been taking a look at a variety of deals as a first investment but my knowledge of Milwaukee neighborhoods is a weak point so I've been working to learn as much as I can to remedy that in the interim.  Thank you again for taking the time to share your advice and insight!

@Demetrius Lindsey

Thanks for your reply!  How did you go about setting your criteria and how has it changed over time as you've made multiple investments?  I've been working on developing my criteria but I think I'll need to work with an experienced realtor to refine some parts of it (particularly when it comes to Milwaukee neighborhoods).

While profit is certainly a factor in any investment, I'm looking to balance that goal against some more philanthropic ones so the end result is that I'm less focused on the numbers (cap rate, cash-on-cash return, etc.).  I'll still analyze the income, expenses, purchase price, rehab costs and the like on deals but I don't have specific targets for cash flow or appreciation.  

I've still got a lot to learn on the many, many neighborhoods of Milwaukee and recognize that making rent as affordable as possible will require investing in areas that may be more challenging.  My plan is to partner with an area realtor who has a high level of familiarity with the neighborhoods of Milwaukee that are more affordable and provide the best opportunities to help others.  I don't mind taking on a property that needs a significant amount of work, particularly if this can grant greater opportunity to improve the home's quality for tenants.  For property type, I'm interested in approximately 2-12 unit multifamily.  For financing, my thought is to go in with cash offers and then to finance after the fact (even if the property value hasn't changed greatly post-renovation).

Thank you again for your advice and I'd love to hear any thoughts you have on improving my criteria!

@Michael Anderson

That is great that you've been able to research financing options and have a plan for pursuing the purchase. If you're looking for both experience and building your savings, you might consider connecting with people in your area who do flips/BRRRRs and offer to assist with unskilled labor. In David Greene's BRRRR book, he makes a recommendation to hire individuals for the parts of projects that can be done by unskilled labor as a way to keep costs low on rehabs. There may well be people in your area who would hire you to assist with those tasks. This could be a win-win as it would give you the combination of income/experience you seek and they'd have a highly motivated, hard worker for their renovation projects. While this wouldn't likely generate a large amount of money for you very quickly, it would be a great way to make headway on both of your goals at the same time. In addition to learning more about flips while doing work for them, they'd likely also be willing to help connect you with people in their network who could help you in your new career as a realtor.

Hopefully other folks on BP can share their insight and advice on wholesaling as well as finding success as a new real estate agent!