All Forum Posts by: Joshua Martin

Hey gang, 

 So I'll try to make this post as detailed as possible with what I'm currently going on, and I thank you in advance for your help and guidance. 

 I've had my eye on this property for a while, and it has actually just been removed from the market (but this doesn't mean I can't make an offer). It is a six unit on one lot, a four family and a duplex behind. Here are the size and rents for the units:

 4 family:

1 3 bd @ $695 p/m

1 2 bd @ $645 p/m 

2 1 bd @ $525 p/m = $1,050 p/m

 Now the deal becomes interesting, because the duplex is not finished. I'll get to that shortly, but once renovated:

2 studios @ $425 p/m = $850 (but just call it $425, because I'll live in one of these).

Asking price: $79,900

What I want to offer and how I want to propose it:

Offer: 70k, 3k earnest money, seller carries 12k for 3 year term at 3%.

Renovation (this is fairly crude until I walk through with a good friend of mine who has been at this a while): 40k - I would also hope to save on some of this by doing much of that myself. This money I can borrow privately at 2%, undetermined term but I would hope to refinance once the property was up to par and rented out.

All in: 110k

So that I'm not misleading, I'll say here that the area is probably C-, right on the east edge of Washington Park for you Milwaukee natives, and that this could pose difficulties (or perhaps scare off many investors?).

Crude analysis:

50/50

Monthly rents $3,340

50% to expenses, 50% available for debt service: $1,670

 Debt service $611 (An estimate of trulia of 83.2k @ 4.125 amortized over 30)

Cash flow: $1,059 ~ Annual, $12,708

1% Rule: 

Purchase price (all in) 104k, monthly rents, $3,300 = 3.1%

And now, sorry this will get a bit longer, a slightly more detailed form (the best I can do at this point):

Gross monthly income: $3,340

Monthly Expenses:

Vacancy @ 8.3% (local property manager though this was accurate) = 277.22

Water & Sewer = $102

Management @ 10% (although I'll do it for the foreseeable future) = $334

Garbage? @ $15

Taxes: $197

Insurance (I have no idea how to get crude quotes) so, $75

CapEx @ 10% = 334

Total Monthly Expenses = $1,334.22 (of which I'd be currently paying myself the $334).

Available for Debt Service: $2,006

Estimated Debt Service: $700 p/m (rounding up a little bit - I know, still quite crude).

Cash flow: $1,306 @ $217 per unit.

In short, it looks to me like a difficult but good deal. Partly I'm wondering what I'm missing (because I have a hunch there's something), and I'm also a bit sketchy on the details of estimating various debt payments. The number I want the seller to carry, for example, and how that is 'typically' structured. 

It also looks like an education in investing, so I'm torn. Talking to a commercial lender about possibilities later this week. I'd appreciate anyone chiming in, particularly Milwaukee natives who might not like the area (but guys, keep in mind you have Washington Heights just to the west and the lovely Martin Dr. neighborhood just south ;).

 Again, thanks in advance.

Best,

JTM

Welcome! There's tons of great resources on BP! And listen to the podcast. I'm in the same boat at this stage, just learning everything I can while I'm saving to pull the trigger on the first deal. Good luck! JTM

Scott Trench Exactly. All of the above is why I'm saving up this year to purchase a 'house hack' with an FHA next year, and use the rest of the savings to buy my first MFR. Thanks for the post.

Welcome! Just ask BP any questions you have along the way, they're sure to answer in very detailed form!

Thank you very much for the input everyone. I know that for me, all roads lead to real estate, so it's just a matter of how I'm getting there. And I've decided that I'm going to give working as an agent a go. I'll learn a ton, and if it isn't work out well I can always reevaluate a year from now, go another direction, and chalk it up to a wonderful learning experience. And still, I'm saving money at my other job just fine, so hopefully I'll be an actual investor rather than a theoretical one six to nine months hence.  

Thanks one more time for the input everyone, you helped me weigh my options and make a more decisive choice. 

I'll be in touch. 

Best,

JTM

 Thanks Svetlana. And that's very interesting, I thought most people would say go the other route. I should clarify though, I do have a second shift job in a restaurant that I can definitely live on while getting settled. Nonetheless, your input if very valuable. Thanks again. 

Really I just want access to the MLS! But to get that in Wisconsin I need to pay several hundred dollars worth of fees! What's the go around?

JTM

Hey Gang, 

So I've been on here just a few months, but have been taking actions to get my own house in order so that I can make the move into REI. I've been reading on here on the time, getting involved, listening to the podcast, and reading the books everyone picks as their 'favorites' on the podcast, as well as choosing a real estate related profession to make the move in easier.

So, I've been going through the application process for the carpenter's union here in Milwaukee, WI, and also have been going through the real estate licensing course. For a while I was thinking I'd do both, but this looks a bit unrealistic, just giving the number of hours in a day. My basic question is this: since I am in more of a 'work to learn' stage, where would I learn more? I understand that choices are not irrevocable and I could later switch from the one to the other, but to you REI out there, what do you think would be the wiser choice: 1) work in a hot real estate market for a successful local RE brokerage, or 2) work in the trades getting my hands dirty and learning this side of the business?

  I understand that down the road if I'm flipping or buying, fixing, and holding I probably won't be doing much of the work myself (better to run it like business, time is money, etc.), but I think it might be valuable to meet contractors and learn the new construction aspect as well, potential building spec homes down the road and starting a contracting business. But I think working as an agent would allow me to make more relevant connections for investing, e.g. meeting other agents that work with investors, working with investors myself, learning the buying and selling process thoroughly, and perhaps some of the niches like REOs and short sales. 

  I'm a bit torn. If I had to decide based on what I might like more, it'd probably be getting my hands dirty. If it was based solely on where I'll learn more relevant knowledge for an investor, I tend to think it'd be working as an agent.

  Any input from anyone who's gone either of these routes would be appreciated. Thanks in advance. You guys rock.

  Best,

JTM

@Marty Johnston

My man! How you doing? 

We'll be living in Riverwest, and it's kind of a 'hip' spot if someone is looking for that, but I would be it's also less expensive that prime real estate downtown or maybe the apartment buildings on Prospect. 

I bet the Harley reunions bring good biz too.

Talk soon.

JTM

And one last unsolicited update: girlfriend and I just booked our first guest, two vendors for summer fest, good reviews, 10 days @ 45 per night. 75% of rent. Done. I guess I'll have to set aside some for taxes though, if I plan on doing this more, so take that out. I'll let you know how it goes. JTM

Adam Kozuch Hey again, Quick update. I was talking to my lady about this again last night, and she said that in Wisconsin you only need to report AirBNB as income if you let out for more than 12 nights in a year, in which case talk to AirBnB and they'll send you a 1099. That's what we'll be doing. Best, JTM