All Forum Posts by: Peter Falk

Tim,  I agree that at this time would just think about what living situation you prefer, as your plan is to live there for at least some amount of time....commute time (if you have a good idea where you may be working), do you want a larger yard for garden, dog, etc., prefer a newer home (as downtown Madison with older housing stock, you can run into various surprises still with knob and tube wiring popping up, old plumbing--I personally had to break out basement flooring and replace an old clay drain line with pvc that had cracked and constantly got tree roots in it), move in ready or ok doing some level of updating/rehabs and if you'd be up for a multi-unit.  I'm a realtor/appraiser/property manager in Madison as well and do hope the market becomes a bit more balanced by the time you are looking to buy.   It's just a very low supply of inventory with very strong buyer demand (so prices continue to see upward pressure and inventory sells very quickly, so no accumulation of inventory).  Once you have a vision of what you'd like in a property, can see what a realistic price range is based on sales/active listings and then see if that looks feasible based on what you think your income will likely be.  If you aren't familiar with the area much at all, nothing wrong with renting while you get your job figured out and decide what parts of Madison (or surrounding communities) you like.  

Hey Bredell, I'm in Madison and happy to chat more sometime. Assuming you want to invest locally, I'd say keep doing what you've been doing to find off market wholesale deals and if one makes sense reach out to lenders. As you know, Madison like most any market it seems, is seeing super low inventory (on the MLS) and high buyer demand for single family homes (last week I was amazed to hear of a property out in Cross Plains (small community about 20 minutes from Madison) getting 30 offers and got bid up WAY over asking) so with so many people competing for homes they want to live in, always found if you want rental income you really have to get into multi-family units. That said, if you find good deals on single family could do very well flipping in this market or wholesaling as you've been doing.

All been said before, but the cheapest way to get your first property is to owner occupy and live in one of the units (for conventional 2-4 unit loans).  

Good luck, Peter

Matt, you can ask to review the current leases to make sure no unique clauses, but if a typical month to month lease, the 28 day notice prior to the next rent paying month works.  This would not be an eviction, just the landlord opting to end the lease with property notice (works both ways as tenant can end with property notice to landlord anytime they want), so I can't think of anything the tenant could argue against.  I'm also pretty sure WI covid ban on eviction action for non payment ended in May, 2020 and there is no statute prohibiting evictions in the winter (aside from the unique temporary covid ban).  In your Offer you could ask for the right to market the property For Rent at the higher rents and see if you get any good applicants.  If the current tenants are good, could also ask if they have an interest in the higher rents and end their lease with proper notice and sign your new lease with them.  

I'm not a lender, but my basic knowledge is if you want to get a traditional mortgage, you can owner occupy one unit in a 1-4 unit building as an owner occupant and buy with less than 20% down (with FHA could do 3.5% down, but will have to pay private mortgage insurance, but also get better interest rates as an owner occupant-generally about 1/2 a % better and some of the rental income should be able to help you qualify as well). That said, to get a mortgage, a lender will definitely need to see income, so maybe you could look into positions with a local property management company, lender, developer to learn more about the market and investing while having stable income. If you go into sales or starting your own business, most lenders will want to see 2 years of income from that, so a more traditional W2 job will get you qualified for a loan faster. If you want to hold these long term, definitely would try to figure out long term bank financing at our current low interest rates.

That's a lot to think about.  I'm in Madison, WI.  We have a growing tech industry (increasing millenial population), popular retirement destination (per Money Magazine #1 in 2020) and a large college town (UW Madison) and government (Capital of WI).  However, it's overall a more expensive market than many other WI markets.  That said, with demand, have seen decent appreciation (a campus area 3-unit recently sold from long term owners who averaged 7% appreciation per year on top of cash flow).  That said, cash flow may be pretty lean initially, but should be able to see rent increases each year (although taxes and other expenses will go up as well).  Within the city, like most larger markets, rougher areas show greater cash flow on paper, but may result in more economic loss if you run into more evictions for non rent payment/turn overs.  If you are investing out of state, I'd consider going with a stable area where you will hopefully get long term tenants.  Real estate taxes are I think higher overall in WI (I'd estimate them in Madison at around 2% of assessed value, which would likely be adjusted to your purchase price) so if you find a similar market with lower real estate taxes would obviously see better cash flow.  Madison does have a lot of parks, well funded schools, etc., so maybe get what you pay for, but overall think it's a pretty high tax rate city, so something to think about if you are open to investing anywhere.

I would talk with a local WI lender about options, but maybe the friend in CA could just get a loan and buy as their vacation home (better interest rate and probably lower down payment options) and you could assist with management and down payment funds and do some form of ownership agreement. I know the best terms for loans don't coincide with owning as an LLC.

If you get stuck doing new base cabinets to move a sink or add a dishwasher if none is existing, you could replace just those and paint the existing upper cabinets (with new hardware) if they are in good shape and in a good design.  I did that to save money and it turned out well (did dark base cabinets and off white uppers).  If you learn basic tiling skills, as others said, you can also do a basic subway or other tile backsplash without much spent for materials for a look that might stand out among the competition. 

The title company handling the title work on the sale of the property you are selling may also have some intermediary recommendations that they frequently use.

I don't have a good option.  I've been told many insurance companies don't like insuring vacant houses.  My agent said they'd just do a 6 month minimum term and not credit anything back if cancelled earlier when we last talked about this awhile back (Ryan Waite with Neckerman Insurance in Madison, WI)

Mindy, I can email you WI approved residential and commercial offers to purchase for broker/agent use.