Hello all - new to BP and happy to be here. Looking to do some networking and also start some brainstorming. Fairly long post as I am trying to add some value for you (the reader), so here goes:
Background: I have been in living in Denver for the past 9 years, but will likely be re-locating back home to Milwaukee this summer (new job for girlfriend). I will be selling my house, so will have $100k-$150k to invest long term, and potentially another $50k-$100k to invest short term. I'm confident I will leave Denver with at least $250k, but the ranges above are presented as I like to maintain a fairly healthy cash reserve, especially for future "life events" (remember that girlfriend?). I don't have any debt, and my girlfriend will either sell her condo here in Denver to pay off her debt, or continue to use the monthly rental income to contribute towards her personal debt payments.
Strategy: The long term money will ideally deployed into cash flow rentals (minor renovations are fine) with the plan to snowball into future properties, with the short term money either for a flip (time permitting as I work a fairly demanding job as a CRE lender) or just put into a few mutual funds, as it will likely need to go into my future primary residence to support my girlfriend and our future family.
Goal: Build a portfolio of rental properties so I can "retire" by 45 (I'm 33). From there, either focus on the family, or continue my CRE career as a full time investor. Maybe both!
ADVICE? If you were sitting in my seat, how would you best get into the business while seeking to maximize the return on cash I have available to deploy? Would love to hear what worked for you (or what didn't).
What I Can Offer You:
1) I am currently employed as a Commercial Real Estate Lender, so I can help offer solutions/ideas to help you obtain financing for your projects. I am not talking about originating those loans myself, but can help with brainstorming a structure that banks will actually like. I have worked on projects as "small" as $1M, up to $100M+ and billion dollar bank group syndications. All product types - multifamily, retail, office, hotel, industrial, storage...the list goes on.
2) House Hacking Advice: I house-hacked bedrooms for years, it's how I paid for my renovations. I also currently self-manage my girlfriends rental. Happy to offer advice or just have a conversation.
3) Deal Syndication: Obviously I am a bit nervous to make my first investment, but I'm open to the idea of a syndication. Let's talk!
4) Relationship - I have been very successful as a CRE Lender, and I have done so by being an enjoyable person to work with. This should be fun, let's have fun.
Other Help Needed/Questions:
1) Team Building - if you have a recommendation for an agent, PM, handyman, etc. I would greatly appreciate any suggestions.
2) Networking - Say hi! Send me a DM! Let me know if there is something you may need some help with, my goal is to add value.
3) Deal Leads - (duh) Recommendations for small multifamily sales brokers? Meet-up clubs? Local websites? Are YOU looking to offload properties?
Thanks for reading!
Hey Jordan, and future welcome to Milwaukee! Summer is def the best time to experience the city, and you'll quickly learn all it has to offer and areas you want to invest. Definitely follow the Milwaukee forums here and also join Brew City REI Club if you're on FB.
With that said coming in with that amount of cash to invest can go a lot farther than your former city. Obviously your goals are your own. But specific to what you were asking if I had that money starting out here at one time, and to achieve your early FI Goals, I would:
1) Purchase a duplex to house hack while you get familiar this summer
2) Buy a second duplex going into winter when you have a better feel for target areas.
3) Purchase a third duplex or decent SFH depending how much you have left and keeping enough in reserves.
Quick way to 6 units and personally prefer duplex’s over 4 family’s ATM. Now like Denver (and most US) Milwaukee market is very competitive so that will be your big challenge.
I have some contacts for contractors and handymen, as I am a property damage appraiser for a major insurance carrier and work with plenty of contractors daily. Also can use my customers claim repairs as a way to see their work before hiring for my own needs haha (customer hire them, and if they are good I save their info).
Feel free to reach out with any questions, I’m always up to talk real estate!
Hey Anthony - thanks for the response, as well as the suggestion for the Brew City REI Club. Any particular reason why you like duplex's over 4+ unit buildings? Something specific to the market or just personal preference? I've done a number of 4 units at my day job (as well other large projects), but open to all suggestions of course.
Also - any suggestions on where you might think to be a good place to look for a house hack duplex? We're both young, active, no kids, so somewhere near nightlife/entertainment would be desirable, understandably at a higher cost. It seems like a lot of the old neighborhoods I never had a reason to go to 10+ years ago are now becoming more popular (ie Walkers Point, Brewers Hill, Riverwest) for this type of strategy? That being said, we would be flexible on location.
My reasons behind preferring duplexes is mainly due to availability and cash flow. 4 unit buildings have been hard to come by, and anyone in a decent area is hard to find for a reasonable price compared to duplexes. 4 units between 200-250k need a lot of work or in non so great areas. If a nice 4 unit pops up it tends to be around 350-400k. Rents might be 800-950 per unit at that price point.
Now, if I had the option between a 400k 4 unit that rents for $3.6-3.8k/mo VS two 200k duplexes that can rent for between $1050-1250k per unit (both my duplexes rent for $1237.50 when averaged out, and were purchased for 185k and 189k in same neighborhood). I’d take the duplexes because more rent potential, easier to rent, less tenants complaining about each other, easier to sell, less turnover as it feels more like a home than smaller apartment, and various other personal reasons.
As far as where to house hack, like you, me and the GF are in same position. kidless and enjoying going out somewhat often still. I settled on an area called Nash Park as its close to Wauwatosa which has its own nightlife, downtown, trails and parks and only a 15 min drive from DT MKE. It was a bit cheaper than Washington Heights which has soared past 4 years.
But if I had to pick areas near all the cool bars, restaurants, parks and other fun things I’d go with any of the following: Bayview, Lower East Side, River West, Walkers Point, Washington Heights, Wauwatosa near North Ave or its Downtown, West Allis. And none in a particular order.
If you do want to get a little more cash flow and prices that aren’t mid 250k+, West Allis, Kops Park, Nash Park, Enderis Park is a nice west side area to look close to Tosa.
I live and invest in the Milwaukee area. I think leveraging a partnership model in your scenario is the way to go. Milwaukee is a great cash flow market. You can find solid returns in the $1M-$3M deal size.
@Jordan Smith welcome home! I currently have a house hack in West Allis and if I were in your shoes, I would start by pulling one off in Milwaukee. That way you can get the ball rolling while you spend some time learning the various neighborhoods and where you want to stay away from. Networking is really important!! Reach out to some realtors who invest themselves and see if you can form a partnership since you have limited time. Best of luck, and feel free to reach out if you would like to connect!
Thanks @David Mo . I have a friend who lived in West Allis for the last few years, he seemed to enjoy it, though I can't recall exactly where he lived. Good idea to start connecting with some agents. I'll send you a connection, and of course let me know if there is anything I could help you with.
Look forward to connecting!
@Jordan Smith Not sure what happened, I swear I posted to this topic already. Anyway, I got a little time, let me try to address some of the things in your post.
Your background looks solid, your strategy is sound, and your goal is in line with what a lot of people are looking for in REI. Id personally recommend having the girlfriend sell the condo. Cash is king in real estate and while you can use private money, when your starting off its hard to find friends and family who would just throw down 100k. Id also say that it doesnt make much sense to try to manage an out of state portfolio of 1 unit with no intention to grow it.
My advice and I'll tie this into your needs: Just get out there and start networking. Find local REI meetups, get on facebook groups, reach out to people, etc. Put networking above everything else and do it in a way that it doesnt create a burden to people. As you network I think you'll find what you need and are looking for. My only other piece of advice is dont get bogged down with analysis paralysis and having to hit a home run on your first deal. Im a similar age as you and been doing this for ~5 years now, full time for about 3. Ive worked as a realtor (David Mo is actually on my team along with 2 other agents), as a contractor/project manager, done flips in 3 different states, built a rental portfolio thats up to about 15 properties right now that I self manage, I have a 5M dollar adaptive reuse office to apartment conversion in downtown MKE, and even started lending privately and funding other peoples deals. Some things I enjoy more than others and its really allowed me to focus on what I do like and what I am good at.
We should connect though, Id like to talk more about your CRE experience and maybe theres a way we can work together.
@Adam Gollatz Hey Adam thanks for the advice. I'll send you a DM, would love to hear your story and about what you have going on.