All Forum Posts by: Jordan L.

@Dawn A., thanks for the referral. How have they been to work with? What type of cost are you looking at when using SVA (knowing that everyone's situation is different)? Thanks in advance!

Great! Hoyt Park again? Thank you!

Hey all, when will the next meeting be? I keep missing them....thanks!

What would be realistic? Biggest reason I am using those is because that's what the sublease currently is. 

@Russ M. I agree with what you are saying but there is more to the story.

So here is the interesting thing regarding the property. The first floor commercial space and one of the smaller 2 bd apartments are being rented to one tenant for a total on $1,300. The tenant is using the office space and then turning around and subleasing the 2 bd apartment for $1,000. Hence my mismanagement comments.

@Jason Bott thanks for the reply. The building is old (1880) and I would say it is in rough to adequate shape. Definitely has some deferred maintenance, and needs a new roof. Doesn't need a complete gut though. Electrical is updated. This helps and shows an opportunity to lower expenses. Thanks again!

So the property actually is located in the Halyard/Brewer's Hill area. I could see the lot being used for additional commercial development, apartments/condos or a parking lot (potentially developing myself). There has been a decent amount of construction over the past 5 years, but wouldn't value it any higher than $30k. 

Pro forma at a $365k purchase price with another $100k in improvements would be about a 5% cap rate.

Expenses I am figuring after increasing the rents and financing on a 203k loan:

Hi all!

I am looking for a little help and insight on a mixed use multi-family deal I am working on in Milwaukee, WI. There are some interesting facets to the deal that I would love some advice on and also help in determining the value. It is a C class property in a C+/B- area located on a main thoroughfare. The specifics and financials are below:

3 Story Mixed Use Building

• Total square footage: 4,920 sq. ft.
• 1st Floor: Commercial Office Space - 1,400 sq. ft., 4 offices, reception area and conference room
• Current rent - $650/month
• 2nd Floor: 2 apartments - 700 sq. ft., 2 bedrooms, 1 bathroom
• Current rents - Unit 1: $650/month, Unit 2: $650/month
• 3rd Floor: 1 apartment - 1,600 sq. ft. 3 bedroom, 1 bathroom
• Current rent - $800/month
• Total rents: $2,750
• Includes .26 acre build-able vacant lot
• Insurance: $4,400/year
• Taxes: $12,623/year
• Average Commercial Lease in the area: $13 per sq. ft./yr
• Average area cap rate: 8%

Asking price: $365k

As you can tell by looking at the numbers, the property seems to be mismanaged (low rents) and has quite a bit of deferred maintenance to the tune of about $100k in work. This would include a new roof, fixing leaks on each floor and renovating all 3 of the residential units. A big questions are what should I actually be paying for the property, how much is the vacant lot worth and what would the property be worth after I completed the renovations. There also would be a potential to house hack the 3rd floor unit. I am conservatively estimating the potential rents per unit (post-renovation) at: 

• 1st Floor: Commercial Office Space - $1,100/month
• 2nd Floor: 2 apartments - Unit 1: $1,000/month, Unit 2: $1,000/month
• 3rd Floor: 1 apartment - $1,500/month
• Total rents: $4,600

Please let me know you thoughts and any additional information/questions you have. Thank you!

@Darren Budahn

Try searching Shorewood Village Neighborhood Improvement Loan. There is a bunch of info online, just don't snap it up before I make my purchase!

@Joshua Martin

Thanks for the warm welcome. Been great getting some nagging questions answered and some good advice. I have also spent some time driving around that area and it seems very spotty. Cash flows seem incredible and destroy the 2% rule, but I just don't know if I want my first investment to be in a D area. Seems like unneeded added risk for a first-time investor. @Darren Budahn what have been the pitfalls (if any) of your $50k duplex in the Sherman Park area?

@Darren Budahn

Nice, more great information. 

The reason we are targeting Shorewood for our duplex is the school system (kids) and the interest deferred down-payment assistance loan and duplex/attic conversion loans that the village offers. Seems like free money and offers some easy ways to force appreciation.