All Forum Posts by: Richard J. Kalnitz

My name is Rich. 

I am currently invested into real estate in the Dubuque IA area. Currently I and my business partner own 2 town houses, one is a 4 bed 2 bath. The other is a triplex, all units are 2 bed 1 bath. 

I was an electrician for over 20 years with my last electrical job being shop foreman for a custom electrical control panel shop and UL 508 specialist. I left that job to join Roche Tissue Diagnostics where I repair medical instrumentation across the Midwest. 

Now call me crazy, but currently I have been having a great time investing in most peoples nightmare, old, cheep, houses. The buildings we invested into so far have been built in the 1800's. They needed a lot of work and we have been able to get them at a price that allowed us to afford the repairs. Evan took an online class and learned how to replaster walls and yes I do mean old school plaster. Turned out not to be too hard, it is a lot of work but looks so good when done. 

Anyway thinking for a bit we will continue on this path and look for more old houses but, of course, the price has to be right vs the amount of work that has to be done. 

This has become challenging due to an increased interest in the historic district in Dubuque due to revitalization plans that include 18 million dollar investment into the historic downtown area. 

Investment Info:

Townhouse buy & hold investment in Dubuque.

Purchase price: $32,000
Cash invested: $65,842

4 bed, 2 bath townhouse built in 1885.

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

We were looking for an investment property for quite a while in Dubuque Iowa. My business partner, Chad lives close by in Galena Illinois but Galena had some challenges when it came to rentals so we started to look at Dubuque. In the prosses of that research we found out that the historic downtown area had a revitalization plan in place with a pledged 18 million dollars in funding and the city had a proven track record with the Millwork District revitalization already a success.

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

This was listed on the MLS. The listing was aging and the building did not qualify for traditional funding due to foundation issues disclosed by the owner. This meant that the house had verry few interested buyers and those that were interested needed cash to close. Our agent was pivotal in the prosses of negotiation. He pretty much gave us the price we shouldn't go over in order to make the deal work in the market and that price was 67% less than asking.

How did you finance this deal?

This deal was purchased in cash, with my business partner and I splitting it. We than split the rehab costs as well.

How did you add value to the deal?

First we tackled the foundation issues. My partner Chad had experience with the foundation issues we were facing, he pulled a permit and releveled the floors with new supports. We then applied for and received a grant from the city for lead abetment. We took a course on how to plaster and repaired and replastered the walls. We had a brick restoration company tuckpoint all the exterior brick and seal the foundation walls. A new roof and some new windows were installed.

What was the outcome?

The unit is now rented and that tenant is our manager for the other half of the townhouse that we purchased in 2024. That side is a triplex. We did the purchase and rehab budget based on an ARV of $128k however the neighborhood has exceed this and the building is estimated to be worth 250 to 300k. When we first finished the exterior work we had the best looking building on the block but now a lot of the buildings next to us have been redone so we are now considering investing more in curb appea

Lessons learned? Challenges?

So we allowed the current tenant to move in before any work had started because he was going to help with the work. This put us immediately on the radar of the housing department. We were asked to fix a lot of things of course but the issue was time. The inspector had no appreciation for the fact that decades of differed maintenance can not be corrected in a few short weeks. Contractors were booked months out. We wound up in court over the extended time line and luckily we were granted extension

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

Mike Kilcoyne, Realtor with Keller Williams Dubuque Iowa (563) 231-1841. Hands down, this deal would not have happened without Mike. Highly recommend and he loves showing and talking about buildings, especially the historic ones.

Investment Info:

Small multi-family (2-4 units) buy & hold investment.

Purchase price: $115,000
Cash invested: $71,114

Triplex with two units rented and third unit being rehabbed.

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

Multi-family and BRRRR. The units are under market rent and need rehabbed giving plenty of room for forced appreciation.

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

The agent that helped us purchase the other half of the townhouse called us immediately when the listing came through. We negotiated it down due to current condition and the fact that the owner was out of the country and needed a quick sell.

How did you finance this deal?

Montage for investment property through a conventional bank.

How did you add value to the deal?

We are still in the process of this as the city has been a little difficult to work with. The third floor apartment was occupied by a hoarder and had some issues. As a contingency of sale we required this unit to be vacated. We immediately started the rehab of this unit only to have the city inspector say that the bedrooms were too small and the bathroom celling was not to code. We have a modification filed. We also tuckpointed the entire building and are putting on a new roof.

What was the outcome?

We are still in a dispute with the city on the third floor unit but after speaking with a lawyer we expect to win that issue. The building is still being worked on but recent comps in the area seem to indicate we are in a good place financially. Several other building right next to us have been going through rehabs as well and the whole neighborhood is really looking nice.

Lessons learned? Challenges?

The biggest lesson learned would be the issues with the city housing inspector. When he stated that the third floor apartment was not rentable I was ready to pack it in and sell it. The restructuring he said would need to happen was way out of budget. The inspector did admit that there was a variance on file for this unit but he stated it no longer applied. He also said there was no grandfather cluse. Talk to a lawyer, he was wrong on both account and we pointed that out. Most issues are now sol

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

Yes. Mike Kilcoyne
Keller Williams Midwest Partners
(563) 231-1841 mobile

Have not posted about this property in quite awhile. It took a full year to close on it from the date of the original post. There was some complications with the sellers marital status that took a year to clear up. We have now had the property for about 1 year and have done some work to it. As you can see in the picture we had the half we own (the left half) tuckpointed. We also were able to get a grant for lead abatement from the city. It has been occupied by a friend of my business partner for the last 8 months who has been helping out with some of the work. I will admit to the fact that we have been a bit lazy with the rehab of the unit because of the ultra low purchase price ($32,000.00 cash) and low holding costs. We have the other side now under contract and that side was divided into 3 two bedroom apartment's years ago. We are closing on it at the start of the new year. Two of the three units in the other half are rented out and our current tenant in the other side is interested in moving into the vacant unit. This will alow us to finish the interior renovation on the original unit we purchased and get the rent up to market value. I am trying to break out of some bad habits we are falling into. We need to get better at planning and carrying out our plans in a timely manner. Just because our holding costs are low we can't keep letting ourselves be lazy about getting things done. The purchase of the other side will keep our feet to the fire. This side has tenants already occupying it. The costs are a bit higher now and due to a higher purchase price banks are now involved. Got my first sticker shock with the cost of insurance at the level the bank wants us to have for replacement of the building. The current rents are well below market value on the other side but to get them there some renovation will be needed. We want to set a precedent of being professional so we need to be professional. For the numbers people here are the numbers below.

1017 unit (5 bedroom 2 1/2 bath) purchase price $32,000.00 cash, renovation $80,000.00 = $112,000.00, ARV $183,000.00 expected rent $1500.00

1015 Tri-plex (3 two bedroom apartments) purchase price $115,000.00, renovations $55,000.00 = $170,000.00 ARV $205,000.00 expected total rent $2100.00

These numbers are still estimates based on research and local expert advice. As real numbers come in I will try to update.

Hi Jonathan. In 2019 taxes were $646 for the year. Rontometer has median rent for this address and type of house at $1300. Our agent is an investor as well and he believes it would rent for $1500. We also talked to a few local management companies who tell us to list it at $1500 to $1600. We will be renting it out after rehab. Our numbers were run with the rent at $1200 and purchase price at $40,000. 

Got our first real estate investment property under contract in Dubuque Iowa. A nice 3 story townhouse. Now we need to get the rehab started, right after closing that is. We got the property for $32,000.00, needs about $60,000.00 to $70,000.00 in rehab. After repair value should be $126,000.00 to $133,000.00. Close to Millwork district a rehabbed area of downtown and right near Central Avenue where the city is going to be investing $18,000,000.00 in redevelopment.

Hi everyone. Thanks for all the great questions and information. Feel free to reach out to me with anything.

Jonathan Klemm we have been looking in Dubuque IA because of it's close proximity to my investing partner Chad's house in Galena IL. Also my daughter lives there and I'm in the area often. We like some things about the Dubuque area as well. One of the main areas we have been looking in is the old downtown area that has been going through a major revamp and has managed to attract some young professionals as well as some fantastic new small business. I'll post an image of a revamped area of Dubuque below.

Kristina Reiter nice to meet you. I hope you will have a long and prosperous real estate investment portfolio. You are in the right place to learn from great people. Have you joined the Dubuque area Facebook REI group? (see Luke Hoffmann post above). I hope we will have a chance to talk about all our great deals over many years.

Hi everyone.

Crystal Smith I will put Peoria on my list. Thank you for the recommendation. I was in Peoria for a few days for work not that long ago. Stayed at the Pere Marquette Hotel, nice place.

Mark Ainley I will keep an eye out for the date and time of your webinar. 

Luke Hoffmann we would love to connect with you and other investors in the Dubuque area. Chad my investing partner lives in Galena Illinois so he is not far from you. I will also check out the REI page on Facebook.

Thanks everyone for all the replies. Tony Angelos we are new to real estate investing and will defiantly check out the Straight Up Chicago Investor podcast and website. If you have some Facebook pages or meetup group suggestions I will defiantly check them out. Thanks for the information and advice. 

Bryan North we certainly hope to keep updating everything here on BP as we get started. Currently we have connected with a agent in Dubuque that has two properties for us to look at. Both have been unoccupied for around 15 years. One was last used as a duplex, but was originally built as a single family home. The rear portion of the building had a previous fire and the fire damaged part has been without a roof for some time. The other property was originally built as a side by side duplex. Both properties are old construction (1800's) but are in a part of town that has had a number of higher end remodels and restorations in recent years. Thanks for your interest.

John Warren thank you for the connection. I will get in touch with him. As a new investment team we are looking to connect with and help out as many people as we can.

Once again thank you everyone for the replies. We hope to keep contributing to the BP community. 

Hi, allow me to introduce myself. My name is Richard Kalnitz. I'm a medical instrument technician currently working for Roche Diagnostics and living in the Fox Lake IL area. In addition to that I am a Real Estate investor working with a partner named Chad Trautsch who is the owner of a computer and IT services company in Prairie Du Chien Wisconsin. We are cash investors looking for distressed properties. We have no fear of property issues like foundation, roof, tuckpointing, windows, ect. For us it is all in the numbers working out, not the size or scope of work needed. Our goal is to rehab properties for cash and put them in rental portfolio. Ultimately refinancing them and moving on to the next project.

We have been looking in the Dubuque IA area for property to BRRRR but are willing to consider other areas too. We would love to hear any thoughts or recommendations on great areas near us to invest in or even a specific property to check out. Thanks in advance for any help or just saying hello.