All Forum Posts by: Scott Schultz

Gota love the north country. I looked at Superior and Ashland a while back, when I lived over in Rhinelander (still 3 hours away) you have to know your market well in those areas. but are fantastic if you can find the right combination. I have had great success in small and tiny communities in northern WI. Personally I really Like Rice Lake, I think that town has a ton going for it. but Im a long way from there now, maybe when my kids are done with school in a few years I will spend a summer buying a couple and developing a team in the north west part of the state. I do Like Ashland/Bayfield, the Swim to Madeline Island is awesome, did it in 2013  

Where in Northern WI, most of my portfolio is in Oneida, Lincoln and Langlade counties.  have a great Property Manager if you need one 

@Chad Nagel hook this guy up!!!

many small local banks will do a commercial note at 80% LTV in an LLC with no seasoning. shop around.

@Anthony Rosa When you say Pre fab, are you talking about Modular (built off site to UDC) or Manufactured (built off site to HUD code) most municipalities will not allow Manufactured, and many subdivision covenants do not allow any home to be brought in, they must be site built. generally the only savings with factory built homes are time, the cost is pretty much on par with site built vs equivalent Modular, Manufactured the same floor plan will be about 15% cheaper, but your resale will suffer dramatically, as Manufactured homes tend to depreciate over time.

I Just started building a Spec I will live in for a couple years and as soon as i prove concept and have my numbers verified (when complete) I plan to build another on the lot I own next door,  My calculated build cost will be $125/sq ft (for just main floor finished, that will drop to $85/sq ft with my lower level finished, thats with me doing a ton of work myself, for example, I am the GC (Licensed) , I am the HVAC Contractor (licensed) and I will be doing all the tile, finish work, cabinets, flooring, ect. and for my house I will do the lower level framing, electrical, plumbing, and finish work after occupancy. If I hired that all I would be in the $150-175/sq ft. I got my lots at tax sale, and sold 1 of the 3 in a row, I have also run into snags. like my sewer connection was 17 feet down, so I had to get a big contractor in to dig deep with steel plates to prevent soil from falling in, cost an additional $9K I did not plan for. Weather has been difficult as well, because Im not a production builder subs push me back to accommodate their regular clients. my foundation walls are up, and should be back filled this week with framing starting soon. fortunately in my location the value of the completed project is worth quite a bit more than cost, so I should be ok, but that would not happen in a C area. I would doubt the finished value would be even equal to the cost to build. much less have built in equity. 

@Cheryl Hewitt Regarding mortgage, you can get Conventional secondary market fully amortizing financing on 1-4 family, you will need 20-25% down, as well as 6 months reserves for each financed property. even with fully amortizing loan im not a fan of 25-30 years, my philosophy is if you cant get good cash flow on 15 years its not a good deal. again this is my philosophy, the great thing about real estate, there are a million ways to do it and all of them can work.   

@Cheryl Hewitt  Purchase discount, what I mean is how much below market are you planning to pay?  I never recommend paying market value for a deal, you should always have additional equity above purchase and closing the moment you close, and some additional value add down the road from you fixing a problem, like a rehab, or raiding rent to market value, or splitting utilities, or reducing expenses, ultimately increasing the properties value. keep in mind this is my philosophy, not saying that buying market value turn key is wrong, just its a much longer road. 

in your expenses I dont see Insurance, Dumpster, lawn care or snow removal, the $120 Misc will not touch even one of those expenses. Also is this basically a turn key at market deal? I dont see a purchase discount, i see the one unit rehab but how much more will it be worth after that unit is updated and rented?  Personally I am not comfortable with 25 year ammort. I always run mine on 15 year, I would imagine you are getting commercial financing, so you will be renewing every 3-5 years? be prepared for renewal in a down market at some point and the ability to maintain 20% equity even at the bottom of a market, this is where many investors have lost entire portfolios, not preparing for lower value times, and maintaining high debt, and your banker wont renew because you dont have enough equity based on the new valuation. 

I get you are busy, but I would never consider buying turn key, If that was what I needed to do, I would just invest in index funds, the value add proposition in buying a below market deal increases your return massively. For me I need great cashflow and equity on every purchase. Turn key is like buying a house someone flipped, you pay top market, and often is substandard quality. you are much better off buying a marginal deal that needs a rehab, and managing the rehab, at least then you have control of the quality you decide to use, and if you scale you can create uniformity to your portfolio.