All Forum Posts by: Nick L.

@Sam Erickson @Robert Taylor @Pari Thiagasundaram

Have any of you found an agent to take care of protesting assessments? 

I know in other cities there are attorneys or other people who will do this for typically 50% of the first year's savings. I want to do some protests myself this year and would like to use this kind of service if it exists.

@Mike Lamenta Most likely the plaintiff is not a mortgagee but the HOA. There is probably a mortgage in superior lien position.

@Mark Ainley Yeah it's a pain in the *** to find low voltage electrical guys. I can recommend you someone in the south suburbs of Milwaukee who might be willing to travel down. http://wpicommunicationsystems.com/ He does all my buzzer and intercom type work.

@Brandyn Dietman Great deal! I'll PM you some attorneys who can help with this for sure.

@Kyle McCorkel You could do it two ways:

1. Comp against other 2-4 units on a per-unit basis and adjust for differences. Most likely this is what an appraiser will do but it is less accurate.

2. Compare the NOI and cap rates against other small apartment buildings in the area (income approach). This is the way it is done for larger buildings and the way and investor would usually look at it.

The way I personally do it is to run an as-is analysis in Excel, then copy the tab and adjust figures to create one or more projected analyses (typically optimistic, pessimistic and middle). In your case a raise from $550 to $800 for $7.5k per unit is such an easy win that even your pessimistic numbers will look good.

If you have the $30k available to you, you can just take regular 1-4 unit residential financing as the units should appraise out as-is. If you need to roll the rehab into the mortgage, you will have to look for portfolio/commercial financing, or a 203k if you are going to live there.

@Philip Marsh

The price looks good but I have two concerns:

1. Operating expenses and financing costs are always high on small multis because there are not many units to spread fixed costs around.

2. You mentioned a 1031 from a flip. You need to hold, or have intended to hold, a property for at least a year before it is eligible for a 1031. Obviously most flippers are in and out in a couple of months. So you might want to verify what your accountant said.

@Edward B. Yes, real estate miracles do happen. It is very occasionally possible to find great properties with great tenants which can be bought on the 2% rule. I've done it myself, but I wouldn't count on lightning striking twice! The vast majority of 2% rule properties are Class D with a constant cycle of late rent, evictions, repairs and vacancies. 

Like @Jay Hinrichs said, rural Class D properties don't have inner city problems but they do have a tenant base mired in poverty, drugs and social problems. If they didn't, they wouldn't sell on the 2% rule.

A lot of people here are attracted to the idea of buying Class D properties in rust-belt cities like Milwaukee. The math seems so obvious... buy a cheap duplex for a pittance, rent it out for 2% or even 3% of the purchase price, and the cash will flood in! How can you go wrong?

Another good question is, why are those properties so cheap? At last week's sheriff's auction I saw a SFR sell for $12k that is assessed at $85k, and a duplex sell for $8k which will probably get $500 top and bottom. Are most people too dumb to buy them, or too savvy?

This recent article gives some nuanced and balanced insights into the grim reality of owning and renting Class Ds in Milwaukee. If you've ever been tempted by 2% deals, read this before you reach for your wallet and ask yourself if you really want to be a part of this world. http://www.newyorker.com/magazine/2016/02/08/force...

I love Buildium. PMing you now.

@Dawn Anastasi @Randy E. It's one of the ironies of the article that that place was Arleen's favorite. She would have stayed there if the city hadn't declared it uninhabitable and shut it down. So from her perspective the regulation actually harmed her.