All Forum Posts by: Josh Scroggins

I read Brandon Turner's book on rental properties and he uses the example of buying 4plexes for 100k and getting 200 per door cashflow.  Where in the world does he invest that has places like that?

I'm curious about the terms of loans people get for fix and flips.  Particularly, what the down payments are and how much they cover.  What is typical?  How much cash is normally needed upfront?

Quote from @Nicholas L.:

@Josh Scroggins

does property management handle everyday tenant interactions?  yes, of course - they screen, they collect rent, they handle general service calls.

but, as the property owner, you are ultimately responsible in deciding what to fix; how many bids to get, and who to go with, for bigger jobs, like Capex; what to do when tenants fall behind in rent; whether to evict, and how to run that process; etc.

this is the heart of supposedly 'hands off' out of state investing. it's just not as simple as doing nothing and getting a check every month, especially with older houses in more challenging neighborhoods.

 Thank you.  That's about what I expected, but wasn't sure yet.

That's excellent insight.  Thank you.  Sadly, we only have about 30k to invest somewhere.  250-300 is just outside our price range.  We are trying to find something that will work and get us started to scale up.

Quote from @Nicholas L.:

@Josh Scroggins

reread the post of @Marcus Auerbach.

you can find properties like that in Pittsburgh too.  they seem good when you haven't seen them... but they require you to be very hands-on in order to manage the tenants, and also ready for major capex.

built in 1885.

Totally makes sense and I did read the post a few times.  It was good food for thought.  He mentioned what happens when setting aside only $120-150/mo.  I was figuring on about 500/mo just for maintenance and capex because of the age of the property.  $6k per year seems like a lot to set aside each year, but maybe I'm still figuring too low.  I certainly have no experience to base this off of.  I've read one book, listened to some podcasts and had a few conversations with some people who have done this much longer than I have.  Right now, all I can do is guess.  You guys have the real life experience, so I'm trying my best to glean what I can from this place.  In your experience, do property management companies not handle tenants?  You mentioned needing to be very hands-on with tenants, so I'm curious.  I have never even spoken with a property management company yet, so I have no experience with that they do or don't do.

I only wanted to share how I got to those numbers, since you said you were skeptical I was finding duplexes that cash flowed like that.

On a side note, I just realized that my original numbers were using 10% maintenance, not 15%.  That was giving me a property cash flow of 735 between the two units.  With the extra 5%, cash flow drops to $630 ($315 per side).

Quote from @Nicholas L.:

@Josh Scroggins

i have to ask - i'm not familiar with the Milwaukee market, but i am skeptical that you're finding duplexes that cashflow $350 per side with today's rates.  can you post the rents and expenses that are yielding that?

having an agent and a lender who are investors is definitely an advantage.

have you totally ruled out anywhere in Oregon?

Here's just one example property.

3005 W Saint Paul Ave, 3007, Milwaukee, WI 53208.  Selling for $119,900 right now.  I did numbers assuming we could talk them down to 100k with closing costs covered.  May not be possible, but it's how I ran the numbers.  25k down, 1500 closing costs, 7.5% loan over 30 yrs.

According to the real estate agent, rents for comparable properties in the area range from 900-1300.  I figured numbers at 1050 rent per side.  10% property management, 15% maintenance (min $200/mo), 10% cap x, vacancy of 5.5% (the city average), $1000/year insurance, property taxes that were listed...  Tenants pay utilities.

Hope that helps.

I'm looking to invest out of state, but will be waiting 3-6 months to build up a little more cash reserves.  Right now, I'm looking at Columbus, Milwaukee, and Boston...but am heavily leaning towards Milwaukee because of two things...first, there are tons of duplexes there and the cashflow is great (even after figuring a higher than normal maintaince)...like $300-$350 per unit.

The other main reason I'm leaning towards Milwaukee is that I already have two great guys there to build a team with.  One is a lender and the other is a real estate agent.  Both are investors themselves and have lived there all their lives.  They have both been incredible so far and I like the idea of working with them.

My question on here is, what roles are the most important to your team and what order is it best to aquire those people?  I'm planning to interview property managers in Milwaukee this week to get a better idea of vacancy rates, maintenance costs, etc.  I'm hoping that those managers will either have their own contractors or be able to refer one.  What else do I need?

Also, when do I need a CPA and do I need to get one there or can I use one where I live?

Thank you all for the great advice.  Investing out of state is pretty scary for me, since I can't check up on the property myself.  I'm going to have to be trusting a lot of people to fill in some big gaps in my knowledge.

I live in a place where the rent to mortgage ratio just doesn't work.  I'm heavily leaning towards investing in Milwaukee.  I've already found a great real estate guy and lender who are both investors and renters.  What I'm missing are a couple of other key people for my team there.  I need to find a contractor and a property manager I can trust.  Given that this is an out of state investment strategy, the property manager is likely the most important person for my team.  I'm about 5-6 months out from having enough for the 25% down payment I'll need for an investment loan on a duplex there to get started.  Any tips from out of state investors or people who invest in Milwaukee that might know some trustworthy property managers and/or contractors?  Thank you!

I'm blown away to find people here in this area with such great advice.  Thank you!  Would this be the right place to give some more details about our situation and get some advice, or should I move that to another forum?