All Forum Posts by: Mike Lauenstein

My wife and I bought a duplex to live in and rent out.  Within 6 months of moving in the city of Arvada rezoned it and would allow up to 12 units to be built.  We have always owned rental properties but know little about developing the property into apartments, town homes, or other.  Any suggestions on where to get started?

Investment Info:

Single-family residence buy & hold investment in Milwaukee.

Purchase price: $350,000
Cash invested: $130,000

Bought a house on the east side of Milwaukee, near UW Milwaukee to rent to students.

What made you interested in investing in this type of deal?

We had money from a previous deal using a 1031 exchange we used the money for the down payment on this property

How did you find this deal and how did you negotiate it?

Using my sister-in-law, we toured various properties. Most were student housing that was poorly kept up and far from where we wanted. In calling the selling realtor we learned that there was an accepted offer. We asked for the 1st right of refusal if the offer fell through and added our offer behind the accepted offer. The 1st offer fell through and ours was accepted.

How did you finance this deal?

Using money from a previous investment in a 1031 exchange we were able to make the down payment. We financed through a conventional bank with 20% down.

How did you add value to the deal?

Over 5 months we did a lot of work repairing walls and ceilings, adding bathroom and 2 bedrooms. Making a very nice student house or a great single family house with the potential of a 3rd floor apt.

What was the outcome?

We tell our son he lives in a much nicer house then we do. It turned out to be a nice house. The students did help with some painting and other work so they have some ownership and pride in the house. It cash flows nicely and we expect it will be a good long term rental. The important part will be how long our son lives in the are to be the property manager. If after he graduates he moves away from the area we will sell.

Lessons learned? Challenges?

Of course the renovations took longer than anticipated and cost more. I will buffer more time and money in the future. Also I had a friend work on the HVAC system. He quoted me $6,500 and said we would do most of the work. We did all the work except where we did not have the tools or expertise. He came back later and asked for more money. I will always ask for exact clarification as to what is expected of me and what the contractor will do - whether or not it is a friend.

Did you work with any real estate professionals (agents, lenders, etc.) that you'd recommend to others?

Claudia Graf, Shorewest Realty Milwaukee, Wisconsin

Investment Info:

Small multi-family (2-4 units) buy & hold investment in Wauwatosa.

Purchase price: $114,000
Cash invested: $50,000
Sale price: $250,000

Large duplex in a great neighborhood. Built in 1920 has many wood details.

What made you interested in investing in this type of deal?

This was our 1st home and bought as a house hack, before house hacking was a thing. We lived in 1 unit and rented the other which paid for our monthly mortgage.

How did you find this deal and how did you negotiate it?

We were touring the neighborhood, frustrated we couldn't find anything we liked. My wife pointed at the building and said, "why can't we find something like that duplex?" I looked at and said it is for sale by owner. We called on it and they had an accepted offer. We went away sad, but received a call a couple of days later when the the offer fell through. We paid asking but the seller said he liked us because he felt we understood the issues and work need on the property.

How did you finance this deal?

We borrowed $2,000 from our parents and put up the rest fort he down payment. We then used a conventional bank loan with 10% down (this was possible then many loans were 5% down).

How did you add value to the deal?

Over the years we added a new roof, painted the exterior, repaved the driveway, new kitchen and bath updates.

What was the outcome?

This was a long term rental that we owned many years after we moved out of the property.

Lessons learned? Challenges?

We m oved 1.5 hours away and it was difficult to manage issues that came up from a distance and being busy raising a family. I would always try to be close to the properties if I am managing.

Did you work with any real estate professionals (agents, lenders, etc.) that you'd recommend to others?

This was all done directly with the owner, but we closed conventionally at a title company

Investment Info:

Single-family residence buy & hold investment in Milwaukee.

Purchase price: $350,000
Cash invested: $130,000

Bought a house on the east side of Milwaukee, near UW Milwaukee to rent to students.

What made you interested in investing in this type of deal?

Had the opportunity to use money from 1031 to invest. We live in Denver which is very expensive, then looked at Milwaukee where our son is attending university. We found a house near school that needed work - perfect since we are very handy

How did you find this deal and how did you negotiate it?

My sister-in-law is a realtor and helped us find the property after one day of touring expensive and poorly maintained student housing. This was owned by a family whose parents had passed away. We did pay slightly over asking because the market was moving fast.

How did you finance this deal?

We had money from a 1031 investment that we used for the down payment. Conventional bank loan with 20% down.

How did you add value to the deal?

Spent 5 months and 50K renovating. We added 2 bedrooms and a bath and a lot of work to bring the rest of the building livable.

What was the outcome?

It is a very nice house for students or a family. It has the possibility to have a separate entrance for a 3rd floor apt.

Lessons learned? Challenges?

The seller would not accept any inspection contingencies. We did have an inspection so we knew what we were up against. We believe their concern was the entry way with lead lined floor with a decorative design. To replace the whole floor would need to be taken out.

Did you work with any real estate professionals (agents, lenders, etc.) that you'd recommend to others?

Claudia Graf, realtor - Shorewest Realtors

Investment Info:

Small multi-family (2-4 units) buy & hold investment in Arvada.

Duplex that has been rezoned for up to 13 units. Looking into how to develop.

What made you interested in investing in this type of deal?

House hacking. Have the tenant pay the mortgage

How did you find this deal and how did you negotiate it?

We moved from Madison, Wisconsin and worked with a realtor that is involved in real estate investment. The property was on the market for some time. The owner had passed away and the children wanted to sell it, we negotiated down the asking price and both parties were happy.

How did you finance this deal?

Conventional bank loan, 20% down

How did you add value to the deal?

Minor cosmetic changes.

Did you work with any real estate professionals (agents, lenders, etc.) that you'd recommend to others?

Rick Janson, Exp Realty. Is a real estate investor as well as a realtor.