All Forum Posts by: Peter Falk

Ned,  in regards to your comment:  what at an egregious government over reach re Koble vs Marquart

Any chance the legislature will address this?

The WI Supreme Ct accepted to hear this case and know that the WRA and Apt. Associations are offering their arguments against the initial outcome of the judge ordering the landlord to not just end their unenforceable lease (due to illegal clauses in WI) at the tenant's discretion, but to also pay the tenant back all of the rent they paid during the lease.  

With most areas of WI struggling to keep rent affordable, court rulings like that go way too far in favor of the tenant.

If you are selling a vacant single family home, I would think a buyer looking to live there would most likely value it more than an investor would, so if your marketing is more focused on attracting investors as an income property, I would also market it/list it as a single family home.  Stoughton has been seeing growth as buyers expand out from Madison in search of better affordability.  

Either way, if selling quickly is your primary goal, you could lower the price to a very aggressive list price and let buyers compete and see what comes out for the highest and best Offer terms. Good luck.  

Hi Dan,

You may have found their info. by now, but some local Madison investor groups are the AASCW (Apartment Assoc. of South Central WI) and WiscoREIA Madison.

We have done some long term live in fixer uppers (gutting kitchen, baths, finishing basements) while living there several years and then selling and getting the homestead capital gains tax exemption. We bought livable places, just dated or with floor plans needing some changes, so had no issues with conventional financing at purchase. If you need a place to live anyway, building sweat equity that way is a great bonus, and if you decide not to sell but want access to that increased value/equity, can always do a HELOC or cash out refinance.

If you want to buy a dilapidated place at time of purchase, and fix it up, you may want to talk with local credit unions who like to hold loans in house, on options for purchase and rehab loans and then move that into long term traditional financing when done, depending on how much of a fixer upper you end up buying.   

Becoming a CPA with a focus on real estate, certainly sounds like a good career option to consider.

Welcome to Madison or the Madison area Dan,  If you want to live more affordably, would definitely consider owner occupying a multi unit (1-4 unit for conventional financing).  If it's older, you could move around and fix up different units over time which should keep you busy for awhile.  Madison has been seeing a lot of commercial apt. construction, so if you want to work within the rental industry, I bet some local property management companies could use some help.

Hopefully property taxes are comparable, but can be a sticker shock depending on where people are coming from, so be sure to run a realistic budget.

Madison/Dane County is also pretty Tenant friendly, so when you start doing leases, be sure to use good current leases (from your Realtor/WRA, or a local Apartment Assoc.).  You can also learn a lot from the Madison Tenant Resource Center to see their advice to Tenants.

Good luck and happy to talk further if any specific questions come up in the Madison area.  

Another quick way to get a feel for what people are paying for the rental income on 1-4 units is to look at the Gross Rent Multiplier.  You can take the sale price/annual rental income or monthly income to get a range of multiples that people are paying for rental property ($250,000 property/$2,500 per month rental income = 100 x monthly rent paid or 8.3 x annual rent paid.  

Big outliers could mean the condition is very different than typical or rental income may be way below market rents with buyers bidding the price up based on raising rents to market rate. Location also can vary with more troubled areas usually seeing a more enticing cash flow number or lower GRM paid.

In Madison, WI it is usually very hard to find a property selling for less than 10x gross annual rents and many areas see more like 13x gross rents.  

The pictures and lay out do help a lot.  With it walking out to the pool and hot tub agree that area will get a lot of use and guests should find amenities like a fridge, plastic cups, bar to set stuff on/sit at, and sink all useful.  

Other than cosmetic updates, it looks a little dark if all the existing lights are on, so would consider adding some more lighting to brighten the space up when needed (maybe dimmable LED wafer lights).

Sounds like a fun house to work with. 

If people aren't staying a long time at the property, doubt they will haul drinks down to the basement to set up/stock that bar, and suspect they will just make drinks/set all their stuff in the kitchen (especially with the pool in the summer), so wouldn't worry too much about it if you remove it to use the space differently, but don't think it's a big deal if you leave it.  If left, I personally would not spend a lot of work on it, as I doubt people will sit at the basement bar.  If you start getting renter requests for an updated bar, than maybe could  consider it, but I think it'll go largely unused.

Our home in Madison, WI came with a 1970s wet bar in a finished basement rec room which we kept (removed the sink as it leaked) but never use the bar as everyone during parties stays upstairs (even when we had a kegerator and beer on tap down there).  If you keep it, could do some things like add a popcorn machine and some bar games (darts, etc).

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.