All Forum Posts by: Lucas Musil

 Thanks for your advice on this.  Are you saying $4000-$5000 per year?  or just after initial purchase? I think I may be allocating too much money towards maintenance and capex in my figures.  I am ready to buy something but I also want to make sure it is not a bad move because I've drastically miscalculated something. I am allocating roughly $3500-$4000 per year for these expenses even for a house like I made the example of. On the other hand I don't want to pass up something because I have the monthly expenses so high that everything looks like a loser... 

I am trying to understand the best way to figure out the most accurate way of calculating costs of maintenance and capital expenditures.  I am thinking it could be 2% for one and 15% for another by seeing what condition the property is in, when things were replaced last, tenant you have in there, ect.  The area I am investing in has a median household income of $95,000 and an above average median credit rating.  I will also be more strict about the tenant screening process and will require 1 month rent as a deposit (figure $2000 for an easy number).  Tenant will be responsible for lawn mowing and snow removal, ALL utilities including garbage.  I also have many connections with plumbers, electricians, landscaping crews, painters, carpenters, flooring guys, drywallers, ect.  I am trying to paint a picture so that when answering this question it could be relative to my situation.  I understand its never a perfect situation, things always go wrong or not as planned.  However, I would like to see the range of profit each potential investment property has and take that in to consideration when analyzing the deal. 

Example below:

Home Facts: 2000 Sq. Ft. 3 Bed 1.5 Bath and Finished lower level with detached 2 car garage, home is on half acre with city sewer and water, built in the 1980s.

Location: SE Wisconsin

- Roof replaced in 2010 

- Water heater replaced in 2020

- Windows/Siding replaced in 2007

- A/C and Furnace replaced in 2022

- New flooring in the house 2022

- Concrete driveway 

The example above I feel like $2200 a year would suffice for Capex and maintenance, I understand it can very based on what kind of tenant you have. Let's say you got a good tenant that is a bit handy and takes it upon them selves to do some little stuff that the landlord should handle.

On the other hand, if the example above was different and the last time everything was replaced was 2000 what would you plan to put aside for Capex? Say your tenant doesn't destroy the place but you have above average maintenance costs what would you set aside for maintenance costs then?

Thanks for any advice or recommendations you may have. 

 I don't know why I didn't think of this myself!  Thank you for the advice Tim, much appreciated. 

My question is how do you calculate market rent in a specific area?  The area's I am looking in can drastically change within a 15 minute drive.  I am currently looking at single family and 2-family homes in the suburbs that surround Milwaukee. 

I have come up with a process myself but...wonder if I am missing something!

1. I look at what a similar apartment to the home (same amount of rooms/baths/sq. ft.) on Zillow, MLS, Rent.com, Apartments.com, FB market place, Ect.

2. I look at what other homes in the area are renting for (same amount of rooms/baths/sq. ft.) on Zillow, MLS, Rent.com, Apartments.com, FB market place, Ect.

3. After I look at what they are being listed at for rent I look at each of the posts to see how many views, contacts and saves the listing has. 

4. After doing this research I see how many applications each one has (if displayed).  Then check back to see what is and is not still on the market. 

5. I take the number I came up with and verify it by seeing which ones are off the market quickly.

FYI - The BP calculator does not work well for the areas I am looking in

What am I missing?  How can I improve this analysis?  What would you seasoned investors do? 

Appreciate your response and insight.  I'd need to understand more about buying the type of property your talking about.  When referring to the land scaping and cleaning I was specifically referring to getting a property ready to be rented after a purchase.  I have no problem hiring out to do that also though. I wasn't referring to a weekly thing, more of a situation where I need to get something ready to be rented after purchase.  I was also trying to put in perspective as to what I am willing and not willing to do, as well as what I am and am not capable of.  

I do see where you are coming from with just hiring out to do it anyway, even if I would be willing to spend the few hours.  Some of it has to do with pride in what I am doing and wanting to have a hand in bettering the property.  Maybe it doesn't make sense to think that way and just look at everything from a spreadsheet stand point. 

Thanks for getting me thinking more I value your response.

Instead of saying the only area I know, I should have said I wanted to be close to the property I own.  I am in Waukesha county (SE,WI).  Being new I feel that it might be important to see what's happening and know someone to help with a situation if it comes up.  

3. I do not consider myself handy - I am willing to pay to have something fixed or updated over doing it myself.  My thought process behind this is I'd rather it be done right and handled immediately, then me trying to figure it out.  

4. I am in no position to spend much of my time rehabbing - My current career is very demanding of my time throughout the week, I understand buying property, managing property, looking for property, ECT. is demanding of my time also.  However, the things I mentioned I would be able to do while still in my office.  If anything was needing rehab or fixing like the response above I would rather hire a professional. 

5. I am open to some sweat equity with landscaping and cleaning (a few long days of work) - I usually take off 2 days a week depending on what my schedule is.  I could spend this time making a properties curb appeal nice when just buying it as well as deep clean it and get it ready for rental.

My financial goals are to keep growing a portfolio of multifamily units as of now.  Are you asking for a number of what I want to make per year?  Are you asking if this is just a retirement fund and I just want to build equity with no cash flow?  Are you asking for a 1-10-20 year income plan?  

Again, I appreciate your time and help with this.  You seem to be a big part of this community and a master of your craft.

Thanks for taking time to respond Joe I appreciate your help!  Any advice on how I could better ask the question to get a response from you that I could use? 

What approach would you take with this situation?  Looking for someone to give me an example of how they would start into building a large long-term multifamily rental portfolio.

Current available liquid ready to invest $100k plus an available $250k in equity that can be pulled out of current home.  Current income is very stable as I have been in the same business for almost 10 years.  I currently have an income range of $400k-$500k.  I have ZERO debt besides my current mortgage and a few auto loans. 

Keep these in mind when responding:

1. I ONLY want to invest in the area I know which is most of Wisconsin.

2. Open to managing personally with my fiancé OR hiring a management company (beyond 10 units wouldn't consider managing personally)

3. I do not consider myself handy 

4. I am in no position to spend much of my time rehabbing.

5.  I am open to some sweat equity with landscaping and cleaning (a few long days of work).

Thank you in advance if you take the time to respond!  Any and all advice welcome!