Los Angeles, CA · Member since 2014 · 18 posts · 7 votes
Hey all,
I'm from Los Angeles and have been looking at out-of-state markets. Both Madison, WI and Grand Rapids, MI are interesting me because it seems that I can buy a quality multi-family in my budget of 70-110k.
Is there anyone from Los Angeles that invests in these markets? I would love to pick your brain for some guidance.
Also, is there anyone in either of those markets that is willing to impart some local market wisdom?
San Leandro, CA · Member since 2014 · 14 posts · 9 votes
12y
hello Ravi ,
I too recently invested in the Milwaukee metro area. Totally agree with Lucas you'll find a higher return in Mwaukee but in a lower class neighborhood. Good luck with your investments. I'll be happy to share experience with you.
Los Angeles, CA · Member since 2014 · 18 posts · 7 votes
12y
@Lucas Wagner would do you mean by tough market? Do you currently invest locally?
@Ramon Jenkins I was actually looking at it being a college town as a positive. My thinking is that it'll always have demand due to that. What's your opinion on that Jenkins?
Real Estate Investor · Madison, WI · Member since 2013 · 31 posts · 6 votes
12y
@Ravi Chaudhari Yes I do, and I do it because it's local for me (convenience mitigates the loss of returns for me). I have 2 duplexes on the edge of the city of Madison. There isn't a lot of quality inventory for your price range and I have found that getting over the 1% rule is doable, but anything more than that is difficult. I'll speak a little to the college town part as well since I have done research on residential real estate in downtown madison. The market there is even more difficult to get a good return on than the outskirts of Madison, it's honestly pretty fierce and the prices are going to be double at least (more likely triple or quadruple) of what you're looking to spend.
San Leandro, CA · Member since 2014 · 14 posts · 9 votes
12y
hello Ravi ,
I too recently invested in the Milwaukee metro area. Totally agree with Lucas you'll find a higher return in Mwaukee but in a lower class neighborhood. Good luck with your investments. I'll be happy to share experience with you.
Los Angeles, CA · Member since 2014 · 18 posts · 7 votes
12y
@Lucas Wagner I will keep that in mind. I did notice that my budget was a little too low for any of the downtown properties. If I were to increase my budget, lets say to 200K, are there any good buys or would you still steer me away from that market? Honestly, I don't mind trading in some cash flow if there is a decent chance of maintaining/appreciating the overall property value. I'd rather make a safer long-term investment than chase the highest yield.
Real Estate Investor · Madison, WI · Member since 2013 · 31 posts · 6 votes
12y
are you looking to buy outright or are you willing to just put 25% down and finance the rest? You could really extend your money if you had the 100K in cash and financed the other 300K.
For 200K total you should be able to find a number of duplexes on the west side of town or the east side of town that will gross you over $2,000/month.
Los Angeles, CA · Member since 2014 · 18 posts · 7 votes
12y
@Lucas Wagner , It would be a total of 200K with financing, not in all cash. With that budget in mind, are there any particular neighborhoods I should look into? I appreciate the advice, by the way.
Real Estate Investor · Madison, WI · Member since 2013 · 31 posts · 6 votes
12y
Sure, in Madison I would look at the west side of town, that's where I've had the most luck finding leads. Having a local realtor hunt down specific properties for you may be a good idea. PM me if you'd like the name of the one I used, he's very good.
Buy and Hold Investor · Alexandria, VA · Member since 2013 · 180 posts · 48 votes
12y
Downtown Madison is a tough market because there are a lot of new buildings that went up recently or are going up soon. Everyone wants to live in those, not the crappy old houses that you are probably looking at. All the students and Epic employees want to live in the newer places.
Then there's the City of Madison and their inane tenant laws. Madison is a very tenant-friendly city. The outer suburbs might be better with a more stable tenant and not as tenant-friendly laws.
I lived there two years ago so am familiar with the area, though I haven't invested there.
Investor · Twin Cities, MN · Member since 2009 · 163 posts · 40 votes
12y
Are you planning to visit either of those cities at least once per year? Do you have a reason to visit there often (family, vacation area you like, etc)? From my own personal experience, it's hard to have out of state properties and not visit them at least once a year to make sure repairs are getting done and property management is doing its job. For us, it just became too difficult to break away and see those properties so we decided to invest where family was and we would visit there every year anyway.
Investor · Taylor, MI · Member since 2014 · 9 posts · 1 vote
12y
@Ravi Chaudhari I wanted to ask, why Grand Rapids, MI? It is a decent market, but for your budget it's very possible to buy TWO multi-family units in the Detroit, MI area. I live and work in the Detroit suburbs and I see multi-family units for sale all the time in your price range. (In fact, I saw one pop up for $45K in a nice area yesterday).
I would say that Detroit is a better market since you can still find really great deals. We also have a lot more inventory here then in Grand Rapids. Some properties may need more fixing up then others, but the potential is there for great returns on your money.
I live just outside of Grand Rapids, MI and own a few place in one of the suburbs. There is and have been several construction projects to convert old warehouses to apartments which has been a nice addition to the market, but the demand for places to rent downtown and the surrounding one mile radius is strong. The expectation is that you would have greater cash flow and no appreciation the further you get from the center of downtown.
Some area's to look into if you have some cash to burn is the suburb of Grandville, Jenison, and Wyoming. A lot of new higher end retail going up meaning more demand for retails.
My two cents but be prepared to be lower than 2% on rents and purchase prices.