All Forum Posts by: Joseph Walsh

Self land-lording for way too long before realizing/accepting I don't have the makeup for it.  Hired a great property management company and things got infinitely better.  It set me back years.  Not just the years it took me to get to that point, but the years after of "rentals is a bad idea" conversation with the wife from the stress of that first place.

As for the capital, BRRRR. And congrats.

Not sure why this would suprise anyone.  Politicians are all about the "quick fix", consequences be damned.  They all want to spend our money, the only difference between democrats and Republicans are where the money comes form, and what to spend it on.  There is a slight difference in view lengths, dems look very short term, republicans TRY to look longer term.  hence the market trends on leadership changes.  But on this specific topic.  So, lower and middle class families now lose their best familial wealth building assest, the family home.  There will be more people losing the family home/farm because they can't pay the new taxes on their "windfall" luck that somehow the feds need a cut of, AND those that would normally sell it to put into THEIR business/home, sorry.  Seems like the best move would be for mom to refinance out the max before she dies, then not pay it off, just let it rot and have the bank claim it under this concept.  That said, isn't the 1031 in place because you don't get to claim that big down payment in a new business venture (RE property) as a loss in RE?  I guess if they let us write if off as an expense over several years.  Literally if I sold my non-re business, then started up a new one with the profits, I'd pay 0 taxes on it.

@Lizzie Carver:  Thank you so much, just a good set of checklist items to run down, this is very "mom and pop" location, so trying to learn what I need to do to "grow it up" a bit.

@Kyle Altenau: Thanks, I was assuming to go LLC, now I'm certain. This place has been on the market almost a year, well before covid, it actually just came off market, which is why I think I can get it at a lower price( I think he was insistent on not taking a paper loss). Also, I don't think the owner even did what I am doing, and asked some questions. I think he just said well, my restaurants are doing good, let's buy this building and try RE. There are actually almost no vacancies in the area right now, one small office space, which surprised me. This location has very little property management options, so it's mostly self land lording, and that's harder than people think.

Awesome, thanks.  This helps me at least get the ball rolling and move off of: "kick the tires" mode.

Hi all, 

I stumbled into a commercial mixed/use opportunity, but have no experience with commercial.  If you have the time, I would love some feedback on the deal, specifically my area's of concern with inheriting tenants.

Overview:  Mixed use with several 1 bed/studio apts, and 2 storefront spaces.  Current valuation based on local cap rates, and current rents is about 175K(per the bank I contacted about financing), purchase prices is ~120k  (I think I can get it for less.)  So, on paper, I have an "out" built in...however...this is a very rural area, so it could sit for a long time.

Additionally, on paper, it cash flows already with current tenants, and all expenses accounted for  ( 1 years worth of utils, taxes, etc. provided)  Plus room to move the residential up 10-15% over the next few years, and the retail are WAY below market, so more chance to move those up over the next 5.  On paper, it's a "can't mess up" deal.  the current owner got in a while ago, has some other businesses and it sounds like he just wants to pull his cash back out and focus on those other businesses  (land lording not his thing)

Now, here's the part I am unsure of.  All tenants are on month to month  (which is fine for the residential, I can deal with that), but SO ARE THE RETAIL.  and one is a 5 year resident and has established their business.  The other one is about a year plus.  This worries me, not sure why.   If I go forward:

- Do I need to go LLC, I do all my residential stuff in my own name, with appropriate umbrella insurance ( I know, ask your attorney, just want your "feel" )

- What about those month-to-month retail tenants?  Seems like they should be on a longer term lease, and if so, what kind?

- Currently, there is also a great deal of back end expense costs for the retails units that can be moved to the tenants eventually which is the first thing I plan to fix (shared utils, hate that), so I would incorporate that eventuality into any lease agreements.  I also want them to pay for any modifications/adjustments to the space they need for their business, subject to approval by me.

- Never done a commercial Loan, what to look for?  I've talked with a local bank I trust, and sounds like they are willing to help me out, but any advice is welcomed.  Due to the time to sell if required, I am pretty sure I want to avoid a balloon payment on the loan, my calcs assumed a higher payment with no balloon.

Again, thanks.  This would be a baby step for me, and a good one.  Longer term I have my eye on an Apartment complex in the area, and this would help me get there, and also a safer "learning" experience, I might just be over-thinking this.

Not sure what you're looking for, but I would find a investor realtor, or a PM that also does realty to start with. Second, I personally, would look at areas with "nice" duplexes in the 80-100k range, that need little work, and check the data in the surrounding 6-8 blocks. I'm not saying buy THOSE duplexes, but that would be a decent way to start finding the sweet spot areas Like I mentioned before. Then apply your model to find the gems, whether SFH, duplexes, or some of the nearby small MF 4-8 plexes, again, depending on what you're looking for. Of course, you gotta follow your systems, and not over pay. And again, don't count on appreciation as part of your "out", it's just so random in the past few years. you'll see comps for a $75000 property sell for <$50k, and another one a few blocks away for some reason pull in $105k. so you really got to, as Mr. Bradon Turner has said in many a pod cast "Make your money on the purchase", or similar. Pretty sure I butchered that. There are also true "B" areas in a lot of the border areas if that's what you'r after. Mostly Police/Fire owners, etc. Although less of that now that the city can't force them to live in the limits, of course you'll pay more.

That sounds a lot like the "we really don't want this small job right now" bid. 

I can tell you with Milwaukee, it's much more local that zip code.  There is often quite a bit of a difference in renter quality just by traveling 8 blocks in any direction.  So, whatever searches you do, you need to be discriminating.  cash flow is usually best in some of the C area's bordering D areas.  You can get a better quality tenant in the C areas bordering the B areas, but pay 2x for the property, and only get another $50-100 a month  Then again, a $40k duplex vs a $75k duplex's cash flow all depends on what updating you do, and all the headaches and turnover costs.  In either case, I would look to limit the "investment" to 5-10k max (the high end only if roof/hvac is needed).  Both area's will have duplexes available, a lot of hard working people, and a gradient of crime from "surprisingly a lot" to "surprisingly little" ("border" to "border" i mentioned above).  I would strongly recommend finding a potential PM that also does realty in the city and surrounding areas.  Personally, I am pulling out of the city and looking toward more "b" type area's just outside, or within but on the borders.  But i am looking to move toward more longer term tenants that will maintain the home a bit better.  Don't bank on appreciation.  it's all over the map these days.

I really like the Suze Orman summary of money.  In the end, the point if money is to help you feel secure.  

I interpret that as: If you get to the point where your income stream makes you feel secure, relative to your debt/risk level, you have "won"  And as others have stated, that finish line is different for everyone.

Depending on what you're looking for, I have had success with PorchLight Property Management.