All Forum Posts by: Michelle S.

Andy Yakesh from Century 21 can help you with this. He has given us great recommendations and helped us buy and sell properties.

We had very good luck with Andy Yakish with Century 21 when we were using an agent for rental purchases. 

Jason I sent you a message. Yes I plan to self manage. Yes I feel comfortable there at night. However I grew up not far from there and EC is a fairly safe area in general.  I have 1 friend and 1 coworker that rent in that Genera area. Not too much issue back there that I have heard. I would love insight you have on the area. 

Originally posted by @Omar Parks:

@Michelle S.

I'm in Eau Claire and it took me a while to buy my first rental and I would be more than happy to share my experience with you and let you know some of the people that I've worked with that have been a tremendous help. It is scary but not nearly as scary as you think.

 Thank you! That is very kind of you. 

Originally posted by @Garth Gissel:

I think your vacancy rate is a bit conservative. I use 8.3%. Or one month per year per door. also I think your cost to maintain is a little high too. If these units are only 10 years old they should be in pretty good shape and easy keepers. i have 100 yr old single family homes that don't take that much upkeep. I do the work myself when work needs to be done though. Point being I think your ROI could be higher then your figures. And as Curt basically said, the first one is the hardest.

My wife and I just purchased our first duplex last Sept. Our area is not on fire economically. We inherited one renter and had to get another. This unit is 30 yrs old and in good shape. Even thought we financed it we are positive cash flow $475 per month. Add tax benefits, Add equity, and hopefully some long term appreciation and I will take that all day long. 

Good Luck and I hope you go for it.

Thank you for taking the time to reply. We did use higher numbers to see a worst case scenario so you are right. The ROI could be quite a bit higher.

 We met most of the tenants in the units when we saw them. To be honest the majority are not tenants we would want.  Most of them are on a month to month. The unit that is almost flawless is in the worst area of the bunch. It is very nice though.  The rents on all units are too low. The deposits are several hundred below the rent.  Several have hard core smokers and pets. In all but one it would all need to be repainted to re-rent. I don't mind painting.  I do think we would end up starting over with new tenants once the rent was at a level below market but yet profitable. Also once it was metered and tenants became responsible for their own water, trash , yard and snow. 

The landlord and builder of these was there when we saw them all. He very clearly made it known he went with his gut on people and sometimes they didn't pay the rent. He was not shocked at all at the crayons on every wall and the stuff stacked to the ceiling.  Im sure an experienced landlord is not. 

I know we are biting the bullet and buying at least one in cash. We are weighing the pros and cons of each unit. I am heavily leaning towards the unit built in 2010. That is not a great street and but a beautiful until with a huge yard. The rent on that one is also too low but already set higher than the others. I'm leaning towards it as its the newest and flawless as far as repairs.  We are still not decided on financing part of a second unit. One might be just the thing to cut our teeth on and gain experience. 

I do know most people purchase homes with financing. We were pretty methodical after our very first home purchase and have purchased the last two with cash. It seemed to be a great tool to get a real deal with in those two experiences. 

Thanks you very much for taking the time to reply. Eau Claire is a growing area and that area of town is really getting cleaned up and revitalized. It is really the area hip with people  35 and down. Our budget can easily afford the property if no tenants since we are debt free and would be paying cash. I wouldn't want to but I could. if my math is right one side rented at 600 and the other side empty would cover the taxes etc. I feel it is pretty unlikely at least one side of the duplex wouldn't be rented.  At $600 for a newer duplex it is already renting lower  or the same than dumps in the area so that's a draw. 

 We can buy one unit in total cash so there absolutely safety there. I am leaning towards buying one in cash and getting our feet wet and then looking for more opportunities.  I could actually purchase 2 in cash but that doesnt leave me the safety net I want. 

Bumping this hoping for some insight! 

I used some more of the info on this site. I used 1.5% for keeping the property up and a 12% as a vacancy rate, and costs I expect to incur. Paying cash in full for just one of the property's gives a ROA of 4.1%  Is that worth it?

Im totally fine with purchasing one in cash. Its the mortgage that is the hard part on the second unit. We worked ridiculously hard to be 100% debt free. I need to separate the personal and business part of this. You are right. From the info give does this sound like a good investment?

From all the numbers run if I have a vacancy of 12% $2000 in repairs yearly per unit, no appreciation it is still just under 5% ROI with cash. Your right. Your right this freaks me out but we need to bite the bullet.

We have been toying with buying a rental for a few years as cash has just sat. We were ridiculously close but decided against a single family home purchase. The guy we work with owns rentals himself.  He actually bought one of the 5 duplexes in the area we are interested in and said he would have bought them all if he could have.  He came recommended by a coworker who has used him to build themselves a nice side income.  He is a good teacher and patient about explaining the ins and outs over and over. The contractor that built these units and managed them is selling and retiring. They units are all well built and under 10 years old. They are all in fantastic condition and have had long term tenants. 

The guy helping us jumped his rent up a good chunk after purchase as his tenants were no longer on any lease but a 30 day. He had 1 move and the other re-sign. He was flooded with applicants as they are far superior for the price. The previous owner was doing lawn and snow removal and paying for trash and water. He did away with all that as would we. We would raise the rent between 50 and 75 per unit and it would still be well below the areas rents for a  dumpy place. Rents for dumpy rentals are that price or quite a bit higher.With the small jump the rent it would be .9% of purchase price and still low rent for the area. We are not real concerned as these are newer units as far as massive repairs. They are well built and ready to go. The advice was to raise the rent just a bit and get rid of landlord doing lawn, snow and water to keep the current long term tenants. The advice was if you are getting new tenants to go up higher to hit the current area rents. The area is also becoming a very hip area with young adult professionals due to all the growth and fun things now in the down town area. 20 years ago I wouldn't have looked at that area. Both of us actually grew up close to it and that lower end was yuck! The city has sunk millions into making down town a nice place.  A bit further down the hill apartments are going for $1000.

One side rented would pay the expenses if we were to finance. The other side would be pure profit. We could buy one outright. We could pay in full for one until and put 25% down on the other. We are leaning towards the two that are next door to each other if we purchase two. They share a coin laundry in one building. The units could likely be had for less buying two. He really thought we could swing a better deal for all 4 remaining but I'm not willing to go in debt that far. I'm debt phobic and a novice! They are priced to sell.

I am a big safety freak. The idea of financing one unit has me panic a bit. Logically we have a paid for home and the deal would still leave us $60,000 in cash and non retirement investments. I have had the idea of financing with 25-50% down explained to me over and over and how you make a higher % on your investment and have less $ at risk. To me personally I'll take a lower % for less risk and debt. Our cash is making 1% do not doing a thing but making me feel safe.

The plan would be to sink the profits into the mortgaged unit  if we bought two and pay it off as soon as possible. If all goes well we would purchase another rental once that was debt free.

Our home is worth at a minimum $200,000 if one had to sell extremely fast.  We have no debt at all. Dh said worst case scenario we would sell our too big for us home( kids are grown) and move into one of the units if we bought both. I do see his point. However that is not ideally somewhere I would want to live as I'm used to privacy , woods and wildlife.

I'm hoping I can get some guidance from those of you more experienced. I have seen it in black and white and see the great potential but am still freaking out due to the possibly financing one unit. As far as actually being a landlord we have completely rehabbed a home and do have the ability to do some of these things. I also only work 2.5 days a week compared to my spouses full time.  So I do have time. 

I'm hoping some of you with experience can guide me a bit here. It all makes sense on paper. Looks great. I am cool with paying cash for one but freaking over financing the other.