All Forum Posts by: Peter Falk

I know some lenders don't do HELOCS on primary or rental property at all. I'm sure you can find some lenders willing to do a HELOC on investment property, but if you have similar equity in your primary home, using that is generally always cheaper (less risky loan in the eyes of lenders putting a lien on your primary home). I definitely agree pulling funds out as needed in a HELOC is a much better idea than getting a whole new cash out mortgage at MUCH higher interest rates unless you have some great opportunity in mind for the money (where the higher rate to get cash would still make sense in the big picture). Historically speaking, rates still aren't all that crazy, so some may be mindset, but hard to give up the cash flow based on 3% mortgage rate!

You could also look into Madison, WI.  Madison and Dane County continue to see population and job growth (home to UW Madison, lots of biotech, state government).  In general, a stable appreciation market with decent cash flow (obviously more cash flow on paper in c class areas).  There are a decent amount of property management companies in the area to consider as well.  Happy to talk more if you decide this market area becomes a higher priority for you.  I will say though that in general, prices are higher here than other parts of the state (Milwaukee, Beloit/Janesville) but also likely higher rents to go with that, and not sure what your real estate taxes are like, but I know WI is a lot higher than some areas like Kentucky (in Madison/Dane Co., we pay around 2% of purchase price/market value annually in real estate taxes) and also will have snow removal costs to budget for in the winter.  Lots to think about for sure.

I recall working in brokerage during the recession ('08 era in WI) when pre-foreclosure sales (short sales) in WI and REO sales (bank sells after foreclosing and taking ownership) were much more common. Short sales were very slow to get approved and frustrating for buyers and sellers. In our market, if a bank ended up taking ownership back, they would typically always list it on the mls. I would generally advise buyers that unless they want to take on title due diligence and more risk on condition when bidding against the bank at a foreclosure auction/sale, to just wait and Offer on homes that the bank has already foreclosed on and you can negotiate inspections/tour the home, get clear title, etc. At least in our market, foreclosures remain low.

In WI, court records can be searched on CCAP (foreclosure action/judgements, etc) and assessor search by address shows any delinquent taxes (all useful if you want to try to get a feel for seller motivation of a specific property).

Investment Info:

Single-family residence fix & flip investment.

Purchase price: $243,000
Sale price: $379,000

We moved here after selling our previous live in slow flip which took around 5 years (spent the last year or so relaxing before selling). We were able to redesign this dated ranch (including flipping the basement staircase around to make room for a huge pantry) and sell it as a modern Ranch into our heated sellers' market.

What made you interested in investing in this type of deal?

Sold our last live in flip and needed a place to live, so picked a home in a good neighborhood knowing we could come up with some plan to update the space.

How did you find this deal and how did you negotiate it?

Was on the MLS

How did you finance this deal?

Conventional financing

How did you add value to the deal?

Renovated everything inside and added a basement rec room and full bath.

What was the outcome?

Successful sale and bought another outdated home nearby to update and eventually sell. In our long-term live-in flips, so far we have been able to meet our goals of making at least 30% return on our money spent on improvements (the strong sellers'market/appreciation during our holds has also helped!)

Lessons learned? Challenges?

We loved being able to more easily relocate things with this Ranch floor plan and full basement (so could move plumbing around, etc. much easier than working with our current 2 story home where you have to really plan to make sure you can connect up with a drain line, etc. running up from the basement--as an example there had to use a laundry chute as a chase for water/drain/and electric to move laundry from the basement to the 2nd floor).

Did you work with any real estate professionals (agents, lenders, etc.) that you'd recommend to others?

Bought and sold the property as a principal as I am a WI real estate broker (with the Stark Company)

Investment Info:

Single-family residence fix & flip investment.

Purchase price: $243,000
Sale price: $379,000

We moved here after selling our previous live in slow flip which took around 5 years (spent the last year or so relaxing before selling). We were able to redesign this dated ranch (including flipping the basement staircase around to make room for a huge pantry) and sell it as a modern Ranch into our heated sellers' market. We sold to move onto a longer-term renovation project we plan to be in for 10 years while our daughter is in school in a great location. In our long-term live-in flips, so far we have been able to meet our goals of making at least 30% return on our money spent on improvements.

What made you interested in investing in this type of deal?

Sold our last live in flip and needed a place to live, so picked a home in a good neighborhood knowing we could come up with some plan to update the space.

How did you find this deal and how did you negotiate it?

Was on the MLS

How did you finance this deal?

Conventional financing

How did you add value to the deal?

Renovated everything inside and added a basement rec room and full bath.

What was the outcome?

Successful sale and bought another outdated home nearby to update and eventually sell.

Lessons learned? Challenges?

We loved being able to more easily relocate things with this Ranch floor plan and full basement (so could move plumbing around, etc. much easier than working with our current 2 story home where you have to really plan to make sure you can connect up with a drain line, etc. running up from the basement--as an example there had to use a laundry chute as a chase for water/drain/and electric to move laundry from the basement to the 2nd floor).

Did you work with any real estate professionals (agents, lenders, etc.) that you'd recommend to others?

Bought and sold the property as a principal as I am a WI real estate broker (with the Stark Company)

I'm in Madison, WI and been a few years since I had a Sec 8 tenant (in a duplex).  I assume as a federal program, it's similar in all locations, but we had the program managed by a few local resources (Community Development Authority for Madison properties and Dane County Housing Authority for communities around Madison.  We (and I assume everywhere) have a local housing inspector with those programs tour the property to make sure it meets basic safety standards (handrails, smoke alarms, etc), and they also reinspect annually, so before you get ready to lease to a Sec 8 tenant, would talk with the local dept. for a list of their most common failed items to make sure it'll pass.

You also sign the rental paperwork that Sec 8 uses and know some local landlords didn't love that aspect of being told what lease form to use.

Yes, I would talk with the Sec. 8 case worker as they may decide to take the tenant off the sec 8 program for drug issues, etc.  It also makes no sense why the attorney would think you can't evict for breaches of lease other than non-payment of rent (disturbance, property damage, etc).  

I completely agree that if as long term tenants don't know current market rents, would show them similar places if needed and kindly say that you have a mortgage (I assume) based on current market value you had to pay (or just say you do) and you need current market rents (or much closer to it) to cover that.  I also agree if they are good tenants, it is worth a little back and forth on maybe settling at a much higher, but still discounted rent.  Good luck

Hi Brian,

Let me know if you find yourself wondering about Madison, WI/surrounding area as that is my focus.  The city is big enough for multiple property management company options and a mix of investment options (student housing with UW Madison, huge demand for affordable housing, stable economy with biotech, hospitals, gov't, Epic Software and a growing population).