Investing in Rentals in Wisconsin for Cash-Flow

[Kent Wolfhart]

Hello. I have been a long-time lurker here on BiggerPockets, and have learned quite a bit by reading forum posts and blog articles. A bit about my background: I am in my late thirties, work as a software engineer for my W2 job, and have taken some small business courses (accounting, law, writing business plans, etc.) and real estate investing courses over the past several years. As of yet, I have not done a single deal since I have chosen to thoroughly educate myself before investing.

I have approximately $480,000 of liquid capital, and approximately $310,000 of equity in my primary residence. My W2 income is quite decent for where I live in the midwest, approximately $110,000 per year.

I would eventually like to replace my W2 income with passive income from rental properties. In the Madison rental property market, it is fairly difficult to make anything cash-flow, as people are currently willing to overpay for investment properties. Milwaukee is supposedly a much better market for cash-flow investing, and one can purchase properties there for far less money than one can in Madison. However, I do not know the Milwaukee neighborhoods very well. Note that I do already have the PDF that Dawn Anastasi has put together regarding Milwaukee neighborhoods, and I certainly know to stay out of certain zip codes.

My question to the BiggerPockets community is this: If you were in my shoes, and you wanted to replace your W2 income with passive income from rental properties, what would you do? Would you do a cash out refinance or HELOC on the primary residence and then leverage yourself into several million dollars worth of multi-family apartments? Pay cash for several SFRs? Do something else entirely? Also, where would you invest?

Kent Wolfhart