All Forum Posts by: Rob Myers

As others have said, something isn't right with the condition of property, amount of rent or engagement of your PM.

For reference, I listed a 3Br/1Bath unit in a duplex in Milwaukee County on Tuesday.  I had over 10 inquiries in 48 hours of posting and will be signing a lease today.  This is after raising the rent $100/mo from what the previous tenant was at.  That said, I did spend time reconditioning the unit and it's in great shape.

I wanted to jump in and share one more data point for the OP.  I have three properties in West Allis.  My units have never been vacant for more than 3 weeks.  The controlling factor for my vacancy is whether I personally do the turnover which takes more time or have my PM hire the work out directly.  Every time we list a unit for rent, we typically have 8-10 applications the first week.  Surprisingly, more interest for one BR units and less for the 2-3 BR units.

Each neighborhood has a "normal" expectation for rent and condition of the unit.  I'm guessing one of those two items are off or you have a PM issue (or both)

I have a few rental properties in West Allis.  When I have a vacancy, I usually fill it in about a week.  I agree with a 3x income and that hasn't been hard to find for me.  Take a harder look at what is causing the lower credit scores - there is always a story.  Sometimes it's a hard season of life and others its a basic lack of financial responsibility.  If you can figure out what caused an under 600 score it's easier to take an educated risk.  

For me, my free time is worth more than the $35/hr a handyman charges to fix odds and ends.  By the time I load my tools in my truck, diagnose the problem, run for parts, etc it often takes 2-3 times as long as someone who is equipped for this work.

I will try to handle turning units between renters because it's a good opportunity to engage my teenage kids and pay them $x/hr for painting, cleaning and maintenance and teach them something about hard work in the process.

I have a 3br single family property in West Allis that is currently renting for $1150/mo.  $1200 seems to be on the upper end from what I have seen but that all depends on location.  Based on the way the single family house prices have increased in the area, I'm probably going to put it on the market when my current lease is up and put the proceeds into another 2-4 family property.  

I bought this particular single family house a few years ago for less than half of what you are considering paying.  At the time that number it made sense for a single family rental.   I wouldn't buy the deal again at current market price for a single family rental.  $ for $, the returns are better on a similarly priced duplex.

I had similar concerns starting our 529s early on. Are you going to have more than one child?  I convinced myself that having too much on hand and paying a penalty on the earnings was a very small risk since we have 3 kids and I am able to move funds between accounts without a penalty.  1 out of the group may not go but that means 2 and 3 will be sufficiently funded.  Worst case, I can take what savings is left and pursue continuing education for myself or my wife.

I'm confused - typically zoning is tied to the property, not the building.  Is this on two lots?  What is the property zoned as?  If residential, you should be able to get standard financing.

You will find a lot of helpful first time investor advice on this website.  Keep reading, listen to a few podcasts, etc and you'll learn a lot.  

In regards to Milwaukee specifically, I would suggest you research and determine what specific area of the city you are interested in and focus really deep. Research comps and know what similar type properties have sold for in that area over the last year. Figure out what your purchase price needs to be to make your numbers work and stick with it. As an example, I put in about 8-10 offers on MLS listed properties last year and didn't have a single one accepted. I often found myself 1 of 10+ offers on many of these listings and would come in just short. The listing agents will offer you a chance at a best and final offer, but don't get caught up in the hype if your offer is already at the top of what works for you. It can be discouraging, but stick with what you know is going to work. Work to find sources of off market deals to improve your chance of success.

Good Luck!

Sherwin Williams SW 7029 - Agreeable Gray

It's a very neutral gray that can almost look off white.  It pops well with painted woodwork.

I have a couple duplexes in the same area you are looking at and can share a few of my numbers for what it is worth.

1.  Your insurance number is about double what you should be paying if not owner occupied.  Look for an independent broker relationship if you don't have one already.

2.  Purchase price - there are better deals out there.  Seems like you might be overspending a bit for the area.

3. Capex vs repairs. I'm around 12-15% for both. Your numbers are a little conservative depending on the condition of the property

4.  Water is a touch low.  I'm averaging $100/mo for a duplex.

As far as returns, I aim for $150-$200/door.  Done right, you should still be able to find this in your target area.  Good luck!