All Forum Posts by: Mike L.

Hi Joshua - what side of town are you going to work on? Are you a handy person capable of doing work yourself on a flip/BRRR deal? At a high level, the market here is a strong sellers market and folks doing flips/BRRRs here successfully have existing contractor relationships in place or do a lot of the work themselves since contractors are really expensive and in short supply and even then are having their margins squeezed by the high buyer demand. That said, there's a shortage of housing so as far as house hacking, a roommate situation may be your best bet to offset your mortgage costs initially until you get your feet on the ground and have a better feel for the area but even buying a single family house is highly competitive so you could always plan to rent one year to start doing more research to give you more time to find the best deal. I've lived in Dane County my whole life so happy to chat with you about specific areas you're considering, give you a feel for what things cost, etc. and connect you with lenders, realtors, etc.

@Colleen F.

I’d agree with @Suzanne Chan - good to ask up front if they anticipate any rotten decking but probably better pricing that way/easier to compare bids if they separate it out since no contractor knows how much rotten wood there is. Doing it that way will also allow you to compare the cost of the different pieces of the project including the per sheet cost between contractors. I had a roof where I knew the whole front edge was rotten so I had them include that in bid but left per sheet cost for anything else they found that wouldn’t be detectable until it was all torn apart.

@Brian Garrett

Yes I am - it’s a strong appreciation market with a diverse economy so cash flow is less but you can still find deals that cash flow so I buy as long as I like the location/property and can cover all my costs + capex and have a little left over. Inventory is low and we’re in a local housing shortage so price on old stock and making repairs has risen so much that I’m actually now contemplating new construction as an alternative. Happy to connect offline as its always interesting to hear stories of other peoples goals and how they’re using real estate to achieve them.

@Brian Garrett

In Madison WI you can probably get up to 8 smaller units in B class area - in surrounding smaller towns maybe 16 but depends on size/quality of unit - in A class neighborhoods there are new 4 plexes selling for 1M but those are larger units - in summary, in the city the range per unit is about 80-200K depending on size/quality/location.

@Quinton C.

I'm located in Madison, WI - it seems that almost all do not include utilities unless dealing with old properties where they can't economically be separated such as boiler heat in a 100+ year old building/house. Usually it says on the MLS listing whether the tenant pays utilities or landlord.

@Jack Medford - any chance you’ve thought about refreshing this data to see what impact the pandemic has had on Dane County?

if you're getting outbid by all cash bidders and can't afford to buy without debt, may want to consider going to sellers direct. If you can build trust with them and offer a fair price that may be an easier path to winning a deal if it's a competitive market with lots of cash buyers.

@Carmel Duffy

I’ve been advised by some veteran landlords wiser than me to never provide equipment like that due to potential liability if someone gets injured with your machine and to leave it in to them to do manually with a shovel or use their own snow blower.

A bit off topic but if you're offering a discount for tenant doing this I'd also consider doing that outside of the lease as a direct payment as opposed to a rent reduction as the value of your property is determined off of gross rents in many markets. If you give someone 100 bucks off of rent to mow and do snow removal and your market GRM is 10, that could reduce the perceived value to an appraiser by 100x12x10= $12000. If you keep it out of the lease it's also potentially easier to just stop paying than to start collecting more rent if tenant doesn't perform and you have to hire it out.

@Joe Splitrock

And further, when you own the account you can take away that signing authority, move money, close the account etc. as easily as you granted it if you think something inappropriate is going on. If the money is not visible to you then your main recourse likely involves attorneys.

@Joe Splitrock

I agree with Joe - if you use a reputable PM company I don’t think you increase your risk and can save yourself the time of writing checks each month. In my case I own the bank account but have granted check authority to the head of accounting at the PM company who reviews all checks before they go out. This does not negate the need for due diligence in terms of auditing monthly financial statements to make sure cash ties out and you understand what any checks written on your behalf were for. In the end, there’s risk regardless how you do it and if your legitimately worried about your PM trying to scam you I’d recommend finding another PM company that you feel you can trust. I’d focus more on which PM company you feel you can trust over the mechanics of how the money moves around.