All Forum Posts by: Marcus Auerbach

 I definitely count on appreciation (on top of cash flow) here in Milwaukee:

- Median home prices have gone up 5-7% every year for the last decade
- Home prices have doubled in the last 10 years
- Q1 has been up 11%
- Milwaukee is the 3rd most competitive market for renters in the US, according to data from Rent Cafe
- the catch? It's not easy to get something under contract!
- most of the sunbelt markets have turned red this year, I can feel the air getting thinner here as well, but so far we still get multiple offers on most listings
 look up Milwaukee market update on YouTube
click on the picture to enlarge

That's a win in my book. You got a free education! 

You should have made 10% and a good chunk of that went into your GC and HML. The rest is probably in rehab cost and purchase price. Profit is made on the margins, 2% or 3% in each category. Play with that on a spreadsheet, run best case/worst case on expenses. You see how razor thin your margin of error is. If you have 25 line items and you can squeeze 2k on each, that's 50k profit.

Also, flipping is a job and not investing. The day has 24h, so if you sleep 8 and work 8, you still have 8 more to work on your flip. And 16 on weekends.

To get good at flipping you need to do one a month or so. That is definitely a full time job! And heavily taxed.

That's why buy & hold is where it's at.

I don't think this has to be that complicated. But I would stay away from partnerships, most of them go sour sooner or later and I have seen too many fail. It is better to be in control. One of my agents specializes in working with OOS investors, he is personally an active investor with a good-sized portfolio and he also does some PM. He pretty much knows what works and what doesn't. So whatever market you decide on, that's the kind of person you want to find. One of the key things is that you have to visit and spend a weekend looking at target neighborhoods and investment properties, so you are on the same page on grade/quality. I would also suggest buying something that is in good shape, because managing work remotely is twice as hard as it is locally. Take a long term approach, for example to buy one every year for the next ten years. This makes it also easier to learn a new market over time, become acquainted with local laws and regulations and build local connections.

Welcome and congrats to your new role! BP has been part of our lives for so long, we are looking forward to see what's next! 

Huge fan of your home country, I had the pleasure of riding a motorcycle all the way down to Punta Arenas. Argentina was amazing! Chile was also okay :-)

It's not missed as long as you 1031 exchange it. But if you are happy with the property and it's trajectory, why would you generate work for yourself and exchange it?

@Tom O. you could also consider this: instead of paying off loans with CF, hold your leverage position steady. I have written about this quite a bit on another post. If you portfolio value goes up 3% and you have increased rents, you can just refi (or LOC) an equivalent amount of money out of your portfolio, which is cash free and you are free to blow in Vegas if you like.

Every ultra-conservative-Dave-Ramsey-type financial advisor will tell you to do the exact same thing with your 401k - spend 4-5% every year (presumably just under portfolio growth rate) and don't draw off the principal. You can do the same with RE. And then pass it on to your daughter stepped up. 

You can actually give some of the equity draws to your daughter now, so she does not have to wait..

 I'll save most of it for the RPA meeting tonight. Guests are welcome.

Because cash flow is not really the primary game in RE. Cashflow pays for your expenses, PM etc and if the asset is seasoned, it starts throwing off a little cash flow, but usually not year one. Look at the responses you got from very seasoned investors.

@Steve Balinski your numbers look about right, but I think you should adjust your frame of reference a little. Milwaukee median sales prices have been going up 7-8% every year very consistently, we have doubled in the last 10 years. Currently 11%. 

Cash flow is nice, but basically keeps the lights on until, but it does not move the needle compared to equity. If you want cash flow then buy or start a business. Real estate is just okay for cash flow, a business is literally set up for cash flow.

Look at this guy for example, he is local: https://moxiepressurewashing.com/

Almost no capital cost, little skills needed, no building needed, and only inexpensive equipment. Excellent marketing though! And he is raking it in!!

Quote from @James Hamling:

@Steve Balinski as your presenting things with no context of details such as asset class, tenant class, cap-x, appreciation etc., I have answers ready that match: 

1009 7th Avenue S, Saint Cloud, MN 56301

5bd, 2ba, 1680 sqft, Listing/Purchase Price $159,900 - Rent Range $1,830 mnth - Prop tax $1,852yr. 

1016 12th Avenue SE, Saint Cloud, MN
4bd, 2ba, 1,466sqft, Listing/purchase Price $226k - Rent Range $1,800mnth - Prop Tax $2,012yr

19 Mckinley Place N, Saint Cloud, MN

4bd, 3ba, 1,686 sqft - Listing/Purchase Price $169,900 - Rent Range $1,870 mnth - Prop Tax $3,100yr

1007 6th Street N, Saint Cloud, MN
4bd, 2ba, 1954sqft - Listing/Purchase Price $175k - Rent Range $1,910mnth - Prop Tax $1,874yr

Need I go on ?...... 

If a person is going to use tunnel-vision metrics of just looking at price sub $250k, rent's and prop tax and take 0 context otherwise..... 

Dude, how many PER-DAY do you wanna buy? Serious. 1 a day, no problem. 2 a-day, I got you! 

I can fire-hose these things...... 

James, are these student rentals?

Thanks, I had not seen that, but yes, it's correct. Redfin announced that in February, Milwaukee was the #1 market in the US up +20% but I would label that as a data glitch: last year Feb was quite low, which caused the spread to be bigger. When you compare Q1 for the 4 counties MWOW we are looking at 11% YoY. BTW - this is the median sales price, that does not mean that every house went up 11%. 

We have a chronic housing shortage and it will take a decade to fix and improve construction - at the moment the gap is not getting smaller, so we will need to see higher levels of construction.

The data does not show it yet, but I do feel the market softening a little bit: we are getting fewer offers on our listings. And more cash offers. I talk about this on YouTube. It makes sense that if the stock market is volatile and mortgage rates are high, it makes sense to repurpose capital.