All Forum Posts by: Nate Martin

I was having lunch with a very savvy real estate investor who has so many balls in the air it was incredible. 

From what I gathered from our conversation he has over 20 rental doors, multiple air B&B's, he runs his own window installing business that is continuing to grow, and just bought land and is going to be breaking ground on a new multi family property. 

Not only that, he owns a 2 laundromats, and a car wash and is looking to expand into storage units in 2021.

Here is where it gets crazy for me, he told me that his wife does all the paperwork... and they do everything old school. Stamps and letters style. He says she gets mad at him when he buys more stuff because that only means more paperwork for her to manage and keep track of. 

I want to be of service to them, they are clearly running a great operation, and I understand if they have a system that works for them I don't want to get in the way of their method, but he said that the cost of stamps are killer.  I figure I could help them transition into the 21st century and take some things off their plate so they aren't up to their eye balls in paperwork. They don't fear technology or anything, I just think they managed to scale without getting the proper systems in place until after it was too late. 

So fellow bigger pocketers, what type of software do you guys use to manage multiple projects, to make sure all your bills are paid on time, to make sure all your contractors are paid on time, and make sure that you get rent collected when it needs to be? I'd like to offer them anything just so his wife see's him buying more things as a good thing instead of a bad thing, so they can focus on spending time together as a family and not so much time worrying about their business. 

Any insight on what software you could recommend would be great! Thank you so much! 

@Mahmuda L. Make sure to check with your property insurance to see if you would somehow get dropped from coverage if you knowingly let Tennants start an air B&B in your unit.

@Curtis Mears that was the first thing I saw too. My eyes immediately went to the junk in the 2nd or 3rd picture and there's stuff like that in almost every photo. Reshoot your property after you remove all the clutter. I'm in Milwaukee and I know that the market is different but we have listings where they hire an interior designer and professional photographer and ask for less per month for rent. People are visual creatures. They need to be SHOWN what the space is for. You are showing your prospective tenannts the space with a bunch of crap... expect to get crap results.

Investment property available. Very nice family owned. Currently rented @ 700 a month with a 4 year tennant. House in good condition. Looking for a buyer. Motivated seller. Please PM me for details. 24TH St.  and Melvina St. Listed @ 34900

I purchased a home through a land contract in August of 2017 for 90k and was paying the seller's mortgage up until January of 2018. I closed on it in January. The taxes for 2017 were escrowed into the mortgage  that I was paying, and was paid in full in 2017 by the mortgage company. What tax liabilities do I need to be aware of? I live in Wisconsin. 

Awesome! Thanks for the post! =)

- duplex land is not a bad place to be! Your priorities are in this order: 1.) risk mitigation, 2.) cash flow, 3.) growth and 4.) net worth.

Here is why I personally like 2 fam better than 4 fam. 4 fam are often smaller units, one or two bedroom. Smaller units make for higher turnover, more management and higher expenses. 4fam will not appreciate as well as SF or 2fam. When you want to sell it your buyer will be an investor, and expect a discount. 2fam can be found with 3 BR and 1.5 BA, which makes for long term tenants, lower cost, less management. Snow and lawn is often done by tenants. A quality 2fam can be BRRRR-ed just like a SF. And when you sell a 2fam to an owner ocupant your buyers will pay full retail.

Focus on one thing and get good at it. There is nothing wrong with 10 or 20 duplexes. If you want to trade up later you can still do a 1031 into a larger appartment complex. And on that note - we are building so many brand new and very cool appartemnt buildings these days - I am glad I don't own a 40 year old cheaply built 12 family that has to compete with a 2018 facility!

These are all excellent points. I'll do my best to mitigate my risk and focus on cash flow in 2018. I'm trying to shave things off my budget so I can have a runway of cash by this time next year to throw at another investment property. I just get so jazzed up when I read about real estate and listen to the podcasts I just want to jump in and take action. I'm ambitious but inexperienced which is a bad combo right now haha. I never considered single families to be something you could rent out.  Will broaden my scope with that in mind now. 

When I was renting my old place was On Jefferson St. I lived there for 4 years and watched that neighborhood go from having no apartment complexes to an entire metropolis of space to rent. Going down from Brady street to where it turns into Water street is claustrophobic now considering how tight they packed all those units in. I always wondered where all that money came from where they were able to put so many people to work and get those buildings up so quickly.

The student loans range between 3.1% and 6.5% that total just under 24k. I would imagine a refi would be around 3-4.5%. I have decent credit around 700 and the loan I just closed on was for 4.5%.

The property on my street all have the same basic setup. Duplex, 2 car garage, skinny drive way, fence, and concrete slab for parking. I'm missing the concrete slab and the fence. The previous tenants were parking on the grass next to the garage and had another car that the lower tenant had sitting next to the garage that had weeds overgrown all around it for a total of 3 cars.The previous owner allowed this to happen. When the lower tenant moved out he removed the car that had the weeds overgrown all around it. The upstairs tenants laid claim to one garage spot, and had 2 cars parked in the grass still.

When I inherited them we were right at the cusp of the winter months and I found out that there is absolutely no over night parking on my street in the winter.  If I made them park on the street it would have forced them to park on the next block over and walk to the house. Everyone on the block has fences up with the exception of mine and my neighbors so they couldn't cut through someones yard after parking their car on the next block over to get to the house. Not that they would want to trot through someones yard after a fresh snow fall but even if they wanted to take a short cut through someones yard the option to do so isn't there.  It was a fight I wasn't willing to pick so I just let them continue to park on the grass.

The point is if I put a slab up on a street that has no winter parking during snow months, I could potentially charge more for a parking space. Right now there is only room for 2 cars in the garage, unless I allow the new tenants to park on the grass which I would rather not do. I'm not trying to be those neighbors, or that landlord. Besides the fact that it looks trashy, I don't believe its legal to do so in Milwaukee anyway. 

So a concrete slab I think is a good idea because I could keep tenants happy and I could pitch the slab away from the house to prevent water from seeping into the basement during spring.

There are a few things I'd like to do but I'm not sure what the smartest decision would be. 

I've got student loan debt of about 25k. With a HELOC or a cash out refi, I could wipe that out and save more money every month by not getting dinged on the student loan payment/interest.

I could potentially use the remainder to fix up the property to increase the value of the house right away and see if it sells in spring.  Here are things on my list for the upper unit:

Update the kitchen.

Put a concrete slab for tenant parking.

Or I'd like to use the HELOC/ cash out refi to get into a 4 plex or more. More doors means more cash flow, but that also means more costs upfront. I'm not sure if that is too ambitious considering I'm just starting out, but multi-families and commercial real estate is where I want to be. In order to scale I can't hang out in duplex land forever and expect to make enough money to be able to subsidize my current income.

If I took out a cash our refinance loan and found another unit to live in I could rent out the upper and the lower of my current unit which would mean that I still could break even with my tenants, or even start making money off of it.  The thing about Milwaukee though is that property taxes are very high. I was not expecting that. I could probably lower my rent by 200 bucks if I was in a different city. I am considering outside of the Milwaukee area for 4 plexes and am currently reading the Long distance investing book that bigger pockets just put out. 

I don't think I will be lending any money out. I'm too "green" to be able to do it safely and the whole original intent of this property was just to get rid of my rent expense. Now that I've gotten used to the idea of other people paying my bills for me, I want to get more out of it, but I want to be able to make a smart, calculated, risk adverse move that will get me in a better situation than I'm in now so I can eventually make real estate my full time gig. But of course I want to do it in a smart way so I don't loose my shirt.

Solid advice. The main reason for buying the property (besides it being a great deal) is to not have a house payment and to have tenants pay for the mortgage. When I purchased the property in August, and moved into the lower unit I did have tenants upstairs. They were 3 people paying 735 a month on a month to month lease (well below what this neighborhood rents for.) It cost me about 235 dollars a month to have them in the unit, plus I had to pay for the water bill. It did not cash flow at the time, but it was still less than I was paying per month when I was renting. 

I raised the rent on them by 140 dollars, which I didn't think was unfair considering rents are about 900-1000 in this area, and they were paying 735 since 2015 but they moved out in December. I am a little bit bummed that they moved in the dead middle of winter, but their previous lease didn't state they couldn't move in winter. When I purchased the property I probably should have had them sign another lease, but lesson learned.

When they gave their notice, I did put an ad out on craiglist and zillow and made some flyers for the gerocery store, hospital and college near by but I didn't have any luck finding anyone interested. I get it. No one wants to move in winter in Wisconsin. I instead decided to tear out the old carpet and refinish the hard wood floors and plan on moving upstairs once its done and rent out the lower because its in slightly better shape than the upper. There are more cabinets in the lower unit in the kitchen, and every room has a celing fan. The bathroom has nicer lighting fixtures. Nothing too drastically different, but all those little things add up to make it look nicer in my opinion than the upper unit. I can fix the upper unit at my leisure. 

Once it warms up and people start looking for places again, I'm confident that I can rent the lower for 975 a month. It will cash flow for about 60 dollars a month even with me living in it. (property taxes are insane in my city) 

Getting to the point, of defining my goals more clearly: 

This property is supposed to be used to cut my living expenses (previously paying rent) so I can save enough money in 2018-2019 for a down payment on another duplex or 4-plex. Ideally, I'd like my next property to be closer to work so I can ride my bike to and from work and just buy and hold this property. (again suggested advice from the set for life book)

I work in Hospitality Management and although its a fantastic job, I still have that entrepreneurial spirit that just wont shut up so I basically want real estate to be my long term exit strategy from having a boss. 

Buy and hold investment is what I'm pretty sure I want out of real estate. 

If I find another deal that was as sweet as this one, I can move into that unit and start the process over again. This property will definitely cash flow if I'm not currently living in it, but considering I'm already planning on taking a HELOC out for the 7k, I was thinking it couldn't hurt to take the max. amount out right away just so I have the cash on hand for the next deal. My brother is a knowledgeable real estate investor with over 10 years of experience so it will only be a matter of time before something else crops up. (that is kind of why I mentioned hard money lending because he knows people that are always looking for money for deals and he wouldn't set me up with someone that also wasn't experienced.)

How long does it usually take to be approved for a HELOC after closing? If its less than a month I wont worry about it but if its a long process a sweet deal may pass me by if I don't have the money to throw at the next deal.

Taking the max out on a HELOC will reduce my 60 dollar cashflow too. So that's something to also consider.

The great thing about real estate is that there are SO many options. The bad thing about real estate is that there are SO many options! =)