New to real estate - getting into Multifamily in MKE

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New to real estate - getting into Multifamily in MKE

Adam Gerstmeier
Brookfield, WI · Member since 2016 · 2 posts · 4 votes

Greetings!

After years of reading books and listening to podcasts, my wife and I decided its finally time to move the ball forward and explore pulling the trigger on investing.  

Initially I am thinking a fourplex is an appealing property type, but I'd love to connect with some current multifamily owners to find out your personal experiences in this arena.  I have a young family, and my day job is pretty demanding, so I wont have a ton of time to personally put in sweat equity.  This means relying on good contractors, property managers etc.. to help with things which obviously adds a layer of complexity to getting good deals done.

Additionally, I've done some cursory reviews of MLS properties, and it comes as no surprise that, after some rough rental calcs and investment calcs, show there isnt too many properties that jump out and scream cash flow. Shows I have a lot to learn to find some BRRR and off-market properties to improve value.

If there is anyone with experience in the Milwaukee area willing to share some lessons learned I'd love to touch base.  I live here and grew up around here, so while familiar with the geography, have a lot to learn when it comes to the RE side of things.

Thanks in advance for your help and I look forward to contributing to the community


Best regards,

Adam

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Rebecca KnoxBusiness Member
Specialist · Milwaukee, WI · Member since 2014 · 1k+ posts · 1k+ votes
5y

Most 4 units and above sell off market. We just wholesaled two 4-units at $350k that appraised AS IS at $400k a couple of weeks ago. I'd suggest start connecting with as many real estate agents that are also investors and credible wholesalers but also property managers---property managers like PMI, Welcome Home Milwaukee and City Wide will actually also do the rehab portion. You might also consider single family buy & hold as many investors in our market like how passive they are after stabilizing.

Captain Save-A-Home LLC
WebsiteView Page
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  • Brock Mogensen
    Real Estate Syndicator · Milwaukee, WI · Member since 2018 · 1k+ posts · 907 votes
    5y

    I live and invest in the Milwaukee area.  Deals are definitely hard to come by right now but they are out there. Just need to look through lots of them.  Feel free to send me a message. Happy to help!

    1Reply
  • Matthew Meunier
    Real Estate Agent · Milwaukee, WI · Member since 2018 · 50 posts · 45 votes
    5y

    @Adam Gerstmeier Congrats on taking the first step to making this a reality, and posting on here to start the most important step for yourself; building a network. What a time to begin. I'll tell you from experience, remain patient. Most MFH deals are done off market these days. Anything that hits the MLS doesn't make too much, especially pre 1960 build. When someone has to factor in management with the high debt service, MKE has quickly escalated to a 5 CAP, no cash flow market.

    While you may stumble across one that shows promise, there's a lot of other feet clunking together to create a bidding war on the same deal! Finding a network of people who work off market deals, or partnering with others to put up cash offers will be the name of the game for 4 unit or higher assets. My focus with clients is MFH and few and far between have hit MLS in MKE that isn't in a super rough area or needs more capital than one may care to apply. Sweat equity in these types of properties will be your key to success. I've found success in the Cudahy and West Allis markets for MFH. I've also enjoyed great returns and findings outside of MKE county; Sheboygan County and the Fox Valley.

    Some other food for thought, the shortage of supply is nation wide. I listened to a great podcast today put on by Walker Dunlop who hosted Diana Olick and Ivy Zelman. They spoke of the MFH market, SFH and SFH Rental market, interest rates, and supply. Lots of discussion on the shortage, and how the amount of capital going into SFH developments by 2022 & 2023 will finally make a dent in the supply issue. Although a shortage will still be prevalent, lots of great discussion was had on how this benefits the SFH rental market. Those who can't buy a house or afford it will adjust and rent. Does that not speak BRRRR opportunity or what?!

    Be adaptive, network hard, work with multiple people, and consider strong investing partnerships. I myself am looking to do this more than ever moving forward, with a pipe dream of purchasing plots of land with enough walkability to build small SFH developments or a package of 2-4 unit assets and sell/manage. Best of luck on your journey, and reach out if you'd like to connect more!

    1Reply
  • David Mo
    Lender · Milwaukee, WI · Member since 2020 · 109 posts · 115 votes
    5y

    Hi @Adam Gerstmeier! I'm a local investor with a duplex in West Allis. You're jumping in at a crazy time right now where prices on the MLS are sky high and bidding wars are expected. @Matthew Meunier basically nailed it on the head in that you'll have an easier time finding a good deal off market, and to do that you'll have to network and get creative. In your situation where time is scarce, perhaps a partner or two with more experience and time will be beneficial. 

    Set your expectations now that you're going to get beat up and frustrated. I say this not to deter you, but so that your goal is that much sweeter when you achieve it. Good deals are just harder to come by for everyone. Make sure amidst your frustration that you stick with your numbers and don't end up "settling". Deals are still out there...just harder to find! 

    Best of luck, and feel free to reach out if you would like to connect!

    2Reply
  • Rebecca KnoxBusiness Member
    Specialist · Milwaukee, WI · Member since 2014 · 1k+ posts · 1k+ votes
    5y

    Most 4 units and above sell off market. We just wholesaled two 4-units at $350k that appraised AS IS at $400k a couple of weeks ago. I'd suggest start connecting with as many real estate agents that are also investors and credible wholesalers but also property managers---property managers like PMI, Welcome Home Milwaukee and City Wide will actually also do the rehab portion. You might also consider single family buy & hold as many investors in our market like how passive they are after stabilizing.

    Captain Save-A-Home LLC
    WebsiteView Page
    3Reply
  • Adam Gerstmeier
    OP
    Brookfield, WI · Member since 2016 · 2 posts · 4 votes
    5y

    All -

    Thank you so much for your thoughtful responses!  I'll definitely be reaching out in the near future, and I appreciate the insight you have all provided!


    Cheers,

    Adam

    0Reply
  • Ed Riggenbach
    Property Manager · Milwaukee, WI · Member since 2014 · 65 posts · 38 votes
    5y

    Hey Adam,

    Congrats on jumping in. I personally would suggest going after a Single Family Home or Duplex over a 4 unit. The more units a building tends to bring a more transient resident which causes more turnover and vacancy which can be some of your largest expenses.

    0Reply
  • Aubrey Tatarowicz
    Investor · Brooklyn, NY · Member since 2019 · 57 posts · 51 votes
    5y

    @Adam Gerstmeier Congrats on making the decision!

    There are definitely ways to get started passively if you don't have the time to put in the sweat equity.  I started by buying and holding single family homes that were turn key.  The property manager you work with is key if you want to avoid as much headache as possible.

    I've also invested in larger multifamily (apartment complexes) via syndication.  That is a great way for passive income, but when you invest passively this way, you give the control and business decisions to the General Partner/Sponsor of the deal.  Happy to chat about the different ways I've invested and the pros/cons I see in more detail.

    0Reply
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