All Forum Posts by: Peter Falk

I would also not automatically rule out looking at options in your area you can self manage as mentioned earlier.  It is hard to discuss local real estate markets even on the state level.  I am in Madison, WI where in general think you will find good appreciation and rental demand, but higher price points and am sure less cash flow than other WI locations.  So if you do decide to go out of state, would think about what product and neighborhood feel (class B, C) you want to be in.  Let me know if you end up with Madison/Dane County area on your short list and want to talk in more detail.

Assuming the leases clearly state a security deposit amount, the seller knows that the tenant will be wanting a refund when the lease ends (after closing) so should be an easy reminder that you need those funds credited to you at closing from them to refund to the tenant when needed.

If the seller spent the tenants deposit, at least the credit to you at closing comes out of the sales proceeds (seller just nets that much less at closing) and assuming they have sufficient equity should not be a big deal.  

Wisconsin has a 21 day timeline for landlords to account for any damages and refund the deposit, so if your State is similar, could also remind the seller of those statutes and that you can't just ignore these funds (like pro rating any rent the month of closing where you should be entitled to the portion from closing to the end of the month)

I agree with screening the Sec 8 applicant the same as all applicants for good housing history.  I simply view their Sec 8 voucher as additional income and try to make sure all else shows a quality tenant.  Unfortunately, my experience has also been they Sec 8 tenants have generally been rougher on property.  To help expedite the rental unit approval/inspection, you can also talk with your local housing provider that runs the Sec 8 program what basic items they look for and make sure you have those covered.
 

Congratulations on the duplex.  As you look to scale, just make sure to hold/build reserves for when repairs come up and take your time screening tenants as you will find a vacant unit is much less stressful than dealing with a bad tenant.

It sounds like the Title Co. was not aware that the tenant prepaid rent and just prorated the current rent for the month of closing, so agree if they had no knowledge of it, would not have ever gone on the settlement statement as a credit to the buyer and they likely will not do anything post closing to help obtain those funds.  I am guessing that the tenant may be short on funds to pay twice for Jan, until reimbursed by the old owner, so would first make your case to the old owner who has the funds you are owed and certainly hope once reminded of that will refund them.  It sounds like the tenant has solid evidence their check or auto payment was received by the wrong party.  

If the seller isn't responsive, then do like the idea of telling the tenant you tried, and see if they can get some free legal assistance from a tenant resource center.

It is a good reminder as closing approaches to ask the seller to keep tenants updated on the pending sale and when ownership is scheduled to change.

Hi Carlos,

I am in Madison, WI and we shopped around a lot when moving a few years ago and used Neckerman Agency (now McClone) who are insurance brokers.  Our actual carriers used to be Secura, but they seem to be getting out of a lot of insurance lines or pricing so high as to have customers drop off, and we just moved policies in Nov. to Hanover Insurance.  We have rentals, home, auto and umbrella with them.  I would at least recommend you have them shop a policy for you.

One thing we did note is that with hail damage to roofs, they seem to be decreasing coverage/increasing deductibles on that if ever needed.

You could start by reaching out to any local corporations that do assisted living in your area and see what they are looking for (location, space specs, etc).  My wife used to work for REM Wisconsin in accounting.  This was a few years ago, but at that time as I recall they were looking to do more long-term property leases over owning properties and doing pretty landlord friendly leases where they would do repairs and even pay property taxes.  My guess is that finding good staff in this industry remains hard to find.

Welcome Sean. I am not sure if you've been watching the inventory there much yet. I am in Madison, but set up a search in Sheboygan and Port Washington as we have some family in that area who thought could keep an eye on things and the entry prices are less (in Dane County the median MLS 4-unit sale this year is $603k with 31 sales and for Sheboygan Co. this year only saw 4 sales of 4-units noted, but a median price of $252k . From what I've seen, think you should have no issues finding something needing some updating to hopefully further build equity and push rents. Like in our area, most of what I see hit the MLS there goes under contract quickly, so would be nice if you can find someone selling off market. Good luck!

Hi David,

Glad you are considering investing in real estate. I am a Broker in Madison, WI as well as an appraiser and self manage some rentals. As an out of town owner, one benefit of Madison is that we do have a good supply of property management companies to consider. If cash flow is your main driver, not sure how well the Madison, WI market would stack up. I generally rule out most single family homes as viable rentals, as prices are pretty high relative to rents, so aside from some downtown neighborhoods, typically you do not find large areas of single family rental neighborhoods (a median sale price on a 3 bed, 2 bath home so far this year in Dane County on MLS sales data is at $430k). So to help cover expenses and see some cash flow would focus on multi-unit property. Even with multiple units, with current interest rates and a competitive market (prices have continued to rise even with higher interest rates) think the Madison market is a stronger long term ownership strategy, where the bulk of your return will come when you sell from appreciation in rents and property value. We are a growing market with low unemployment but you will see a lot of the rental income going to covering expenses and setting aside reserves. We also have pretty high property tax bills (around 2% of the purchase price/property value) that eat into a lot of the rental income. Happy to talk further on the area (we are large enough to offer options to focus on student rentals/UW Madison campus, and anything from Class C to A locations or suburban/surrounding communities) but to help you consider broad initial search, you could start by deciding how important cash flow is.

If your company goal is to buy and hold real estate and develop, I think that will keep you plenty busy and just skip flip projects.  If your partner is a contractor and wants to keep busy, that could be a different story, but I at least consider looking at long term ownership plans and flipping as very different businesses and a lot to learn on both, so not sure I'd risk losing money and time dealing with flips.  You can still get a feel for contractors working with on properties you plan to hold.  When developing, I'd first talk with the city building/zoning about what they want to see more of and where, and try a simple project that should be smooth sailing on plan approvals, saving you time and money.  Right now, in Madison the City seems very interested in adding apartments with infill apartment buildings going up all over, but if you are in Milwaukee am sure there is plenty there and adjoining communities to start with.