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All Forum Posts by: Daniel Hanson

Daniel Hanson has started 10 posts and replied 193 times.

Hi all.  I'm beginning early investigation of a potential 8-unit multifamily on Milwaukee's Southside and curious what people can tell me about prevailing/ average cap rates in the nearby area which I could use to set offer price.  It is in the Polonia neighborhood.  The property itself is (8) units, all single bedrooms with included laundry and private exterior entrances.  Tenants pay all utilities except water & sewer.  Wood construction.   The pro-forma listing for this property is at 9.73% cap rate, but I will be re-calculating that based on a few different estimates.

Post: Brrrr SF vs Multi-family

Daniel HansonPosted
  • Investor
  • Waukesha, WI
  • Posts 199
  • Votes 97

@Joseph Walsh - looking at your purchase calculation, it appears you've calculated the mortgage payment as if 100% of the $120k purchase price is financed.  My guess would be if you recalculated assuming $24k cash down and a mortgage of $96k your cashflow numbers would improve.

Post: Should I use a 401K loan as a down payment for a rental property?

Daniel HansonPosted
  • Investor
  • Waukesha, WI
  • Posts 199
  • Votes 97

@Monica Young

I actually used a 401k loan as part of the down payment on my first property.  It worked quite well in terms of the actual purchase, but the specific property really couldn't support the high payments, which I should have figured out in the analysis stage.

The short 5-year term of the 401k loan led to high monthly payments which made it difficult to cashflow initially on the property. So just make sure the deal supports giving you cashflow at a comfortable positive number even including the high 401k loan payments. If I were to do a 401k loan again, it would only be in a situation where I have a short term payback, like a flip or a BRRR or a cash purchase with later bank refinancing, and not for a straight buy-and-hold.

Post: Ready to invest in property.

Daniel HansonPosted
  • Investor
  • Waukesha, WI
  • Posts 199
  • Votes 97

@Richard Moore - it may also be the agents you are talking to.  I've never had to be pre-approved or even been asked about financing before an agent will show the property  (maybe that's a Milwaukee thing now that I think about it...).  Generally I've gotten started talking to either the listing agents for specific properties that are interesting, or the agents who advertise on those listing pages.  Those are the ones who are out there promoting themselves and are usually happy to show a property and get you as a potential client.   If you find one that works well for you, make them a buyer agent and take some of the risk out of the relationship for them.

Post: Milwaukee - REIS Property Management- thoughts?

Daniel HansonPosted
  • Investor
  • Waukesha, WI
  • Posts 199
  • Votes 97

@Brandon Leong yes- feel free to pm me- I've got 2 at the top of my list that did well in interviews. Now just need to buy that next property and test them out.

Post: 4 Family Analysis ~ This is a bad investment, yes?

Daniel HansonPosted
  • Investor
  • Waukesha, WI
  • Posts 199
  • Votes 97

Hey, Josh- I agree with the overall assessment that it is a bad investment at those prices vs. rents.  However, on a four-plex you may have the ability to do a conversion to direct metering for utilities, pulling the majority of utility costs away from your owner costs.  Probably more likely on an 8-unit or higher, but just to be aware that the possibility exists for future analyses. 

@Ryan Parnow

One of the calcs I have started doing (didn't initially do it)  is the return on equity calculation, using just cashflows plus appreciation (excluding mortgage paydown).  @Pearce G. hinted at it in his post above.  Basically you are looking at your equity in the property that currently exists, and you have a choice to either reinvest that equity in the property that you already own and get the returns you predict in the next year, or take that equity and invest in a different property with a different return.  Choosing to continue to own the property or keep it at it's current level of equity is an active choice to receive a certain level of return.  For example, in my own investing, I had a house that was our former personal residence.  Even though it was cashflowing $400/ mo, there was $85k of equity, so the pre-tax ROE was only 5.6%.  In this case I chose to sell and invest the proceeds at a higher return.

One other thing to look at, and it is a shot in the dark since we don't know if you already did this- if you've owned some of these places 10 years and the rent hasn't gone up, would it make a difference to your cashflow to raise the rent to market rates?

Post: Breakdown this loan offer

Daniel HansonPosted
  • Investor
  • Waukesha, WI
  • Posts 199
  • Votes 97

@Anthony Portugal

Most of what I would say has been said above.  One thing I aim for with the bank is to request to not have Property Taxes escrowed by the bank, instead to save that in my own checking account throughout the year.  Every month I accumulate for the annual payment, but it's in my account, on my terms.

Post: Greetings from Milwaukee Wisconsin

Daniel HansonPosted
  • Investor
  • Waukesha, WI
  • Posts 199
  • Votes 97

Glad to see you posting, @Nick Knox

Post: Purchasing a 5 plex in Milwaukee, WI

Daniel HansonPosted
  • Investor
  • Waukesha, WI
  • Posts 199
  • Votes 97

There is at least one specific local bank lender in the area that will do 10% down loans on investment property, although perhaps not owner-occupied .  I can share their contact info if you PM me, just don't want to spam them by posting it here.