All Forum Posts by: Marcus Auerbach

I have been watching FL for a while now as a case study for how a market could crash. The inventory especially in Southeast FL is absurdly high, especially when I compare with my market here:

     Milwaukee County, WI: 1,040 listings
     Broward County, FL: 18,448 listings

That's Fort Lauderdale. They have about twice the population of Milwaukee, but still an unbelievable difference. So far prices in Fort Lauderdale have not come down. Same for Miami. 

Residential real estate prices are "downward sticky" - sellers just don't sell if they don't get their price and just hold on to it until the market catches up over time. This was the big catalyst in 2008: they were forced to sell and that means they had to take the price the market was offering.

What could change the dynamic is the 500,000 Canadians who own a 2nd home in FL and are now questioned intensely at immigration. This could motivate many more to list and some of them to sell for any price.

It is important to understand that FL has had high inventory before Covid and a lot of people argue that is normal. I believe what happened is that OOS buyers sucked up all that inventory rapidly in 2021 and 2022, indicating to developers a huge market demand and I don't think they recognized it as a windfall and trying to meet that "demand" which has evaporated.

So now you have a huge amount of new construction in the pipeline. Plus a huge amount of 2nd homes for sale. So we have seen high inventory before, but the pace at which inventory is rising is new.

There is no universal answer on appreciation vs age. Home values go up with inflation plus any extra demand for an area. 

The importance is square footage is often underestimated. 

That brings you to cost per square foot as a metric - sometimes buying a larger home in a A+ area and remodeling it completely is a very good way to force appreciation.

Bad idea. Your instinct is to curb your risk by buying a cheaper property and going Section 8. In real estate risks go up with lower prices. The other way around, if you want to reduce risk, go a little up in price.

Many good comments here https://www.biggerpockets.com/forums/963/topics/1234351-out-...

Prices are very low in Cleveland - 139k median. While I can't speak to the demographic, investing at or a little above the median is a good idea and gets you into better quality investments with a lower risk profile.

John, while I agree with your advice to give yourself a decade, you are setting an unrealistic expectation for someone who wants to started in 2025. 

10 years ago was a VERY different market. We had 5 months of inventory, sellers were willing to negotiate, prices were just about half of where they are today (at least in Milwaukee). For me it was not about finding a deal, the biggest challenge was which one of the 17 deals I saw should I buy. The definition of a "deal" is very different today.

If I had to start over with 10k today I'd look for an easier path, probably online and find a way to make an AI make money for me. That's the frontier in 2025, not REI.

Forget looking for a mentor and work on your self-reliance. I am saying this as someone who was just as scared as you when I bought my first duplex in 2009 (Milwaukee real estate did not look very promising at that time)' The reality is nobody is going to make the decisions for you. Even worse, you wil get conflicting advice and that will paralyze you even more. So, ultimately it's your call.

Read some books (I used to say all you can find, but there are so many now) about REI. You can always post numbers here on BP - that is probably the single best way of getting feedback and you can tap into swarm-intelligence.

The best tip I can give you is instead of analyzing deals and never knowing how good is good enough, at some point: define your buy box. this will get you out of the maybe-zone into a pass/fail decision. Either it's in or out. That makes it a lot easier. 

Also make sure your buy box is realistic. If you are looking to buy a single family for 50% less than the best deal in the last 12 months in that neighborhood you are chasing a unicorn. Be realistic.

Finally, don't overthink it. It's not rocket science. Buy the best quality deal you can find in an at least decent neighborhood. Stay away from the hood, no matter how mesmerized you are by the theoretical cash flow on your spreadsheet. 

You don't need to make all your money on your first deal. Remember you are looking to build a portfolio, so buying a lower ROI, but less risky deal for the first one is never wrong!

Should be feasible. What you need to know is a realistic fair market value for an investor and that's a question for a local commercial broker. Make sure it's not a pie-in-the-sky price like "if a developer really wants it they will pay whatever I ask". 

In my market it would be solid if you can put 25% down and achive a 1.2 debt-service ratio or better - that makes it a no-brainer for an investor. But you are in a more expensive market, so there is probably a premium. Ideally, you acquire the RE with a 25% discount to that price, so you have some wiggle room on the sale and can offer a discount if you have to and still come out at least with a zero.

I completely agree with @Mike H. Year-long leases are for the bank and for the tenant. That's it. They do nothing for the owner. The irony is that a lot of tenants prefer MTM. We let them have it their way and while we do renew with increases in spring, we keep them MTM. We start with 1 year and most tenants stay with us 5+ years, but I even question why we don't start with a MTM.

Also make sure your lease is only 365 days and not 366 days by accident! 

For example from Jan 1st to Dec 31st. If you make it from Jan 1st to Jan 1st it is technically a more than 1 year lease, which puts it in a different legal category in many States, certainly for Wisconsin.

You don't. 10k is not enough to invest in real estate. You can't even BRRRR your way up anymore with 100k in capital in 2025.

And for all who said wholesaling, they forget to mention that close to 100% fail.

If you only have 10k what you need is cash flow and real estate is not very good at cash flow. Businesses are primarily designed for cash flow. Buy a camper, paint it black, put two college kids inside and sell coffee outside events. Or start selling stuff on TikTok. Or flip couches. Or put an AI to work..

Then you can start thinking about real estate

Generally not great for a flip, especially if you have to spend money on it. But you have to evaluate it in the context of the house and the deal - you are designing a lifestyle.

If you can bring it to market by June, I'd consider it. Buying a house with a pool is often an emotional decision and nothing helps more than the first day in the 80s and the idea of a summer ahead for the kids to enjoy. This flips 180 degrees a couple months later, then a pool looks more like another thing to take care of.

What interests you about Racine and Kenosha specifically? We also buy in the surrounding cities and not in Milwaukee, but I would not rank those tow very high. If you want to stay on the south side then maybe look into Greenfield, West Allis etc - plenty of dupelxes there