All Forum Posts by: Charles Clark

Investment Info:

Small multi-family (2-4 units) buy & hold investment in Milwaukee.

Purchase price: $199,900
Cash invested: $25,000
Sale price: $288,000

First completed deal from analyzing to purchasing the property to adding value to selling for a profit. The strategy was to buy and hold for the next 10 years. My goal was to refinance in 2022, but the market jumped 44% since I purchased the property.

I purchased the property using a FHA, and put less than $6k as a down payment. Rents where $575 each, so monthly income was $2300, while debt service with expenses where roughly $1600 a month. Within 90 days of purchasing the property I was able to increase rents to $625 ($50 increase) each due to improvements made to the common area, landscaping, and any upgrades we could make while having 100% occupancy.

As tenants moved out, I was able to renovate 3 of the 4 units to ask and receive $750 an unit. Each renovation project ran between $4-$6k with a total of $18+k of improvements.

Original purchase price: $199k
Down payment: $6k
Investment: $19k
NOI (11/2019 - 09/2021): $9k
Sales Proceeds: $67k
Total Investment: $25k
Total NOI: $76k

ROI: ($76,000-$25,000)/$25,000 = 204%

Now, I am using this return to invest in a bigger project. I went from 4 units to 14 units in under 2 years. Pick a strategy, analyze properties, talk to everyone you know about real estate, and pull the trigger when you find something that makes sense to you.

Please reach out if you want to talk about strategy and how to act on your strategy.

Beleza!!!!

What made you interested in investing in this type of deal?

It fit my strategy of using my FHA and knowing there was room to raise rents after renovation of units.

How did you find this deal and how did you negotiate it?

I found the deal on the MLS. The price was right for the amount of rents that were being received and the possible growth of rents in the area.

How did you finance this deal?

FHA loan. I was able to get the loan but did not have the down payment. Received down payment and initial funds from outside investors.

How did you add value to the deal?

Found the deal, manage the property, and used investor funds to improve apartments and building.

What was the outcome?

Original purchase price: $199k
Down payment: $6k
Investment: $19k
NOI (11/2019 - 09/2021): $9k
Sales Proceeds: $67k
Total Investment: $25k
Total NOI: $76k

ROI: ($76,000-$25,000)/$25,000 = 204%

Lessons learned? Challenges?

Lessons learned is that you have to pull the trigger when you find something that meets your standards. And problems are going to happen no matter how much you prepare and you have accept it. It is the person who deals with problems who gets to dictate their income.

Did you work with any real estate professionals (agents, lenders, etc.) that you'd recommend to others?

I was the listing agent on the deal. Carly Stack was the buyer's agent and did an amazing job communicating.

@John Buffet

Great question and congratulations on moving towards your goal of buying an investment for your future.

First, if you choose to go with the FHA, you will limit your options. You will have to stay in the home for at least a year. So, technically you only have one option.

Second, if you are planning to purchase more investments beyond this one, I suggest purchasing a four unit if you can. More bang for your buck. I did this and that decision put me well ahead of the game. Now, I have 14 units in less than 2 years.

If you plan to just have a few properties then go with a duplex. It will be less of a down payment and less stress managing tenants. Buying a single family, is creating a liability and will make it harder to save for the next property. The true house hack is getting as many units with one loan. With a residential loan you can get up to four.

I hope that helps.

Obrigado,

Charles Anthony

@Nathan Barshinger

Milwaukee is a city that you can not put it in one category or box. Just like most markets if you run the numbers for a property and it works for you, then I would say, “you can find cash flowing deals in Milwaukee”.

Putting a team together to ensure you have the resources to accomplish your RE investment goal is the most important move for you to make if you want to invest in this city. Go Bucks!!!

@Brittany Stradling I hope all is well with you. 

I agree with a lot of what people are saying that there are multiple ways to accomplish what you are talking about. Slow and steady can multiple on you quickly if you are able to take advantage of the market. I was able to own and manage 14 units in a year and half because I used my resources around me and different financing methods. I brought my first property in Oct 2019 with a $10k investment from family and purchased a four unit. After having a conversation with my fiancé (girlfriend at the time) about her condo and equity, she realized she could refi her condo and pulled money out for a down payment to purchase a duplex. Finally in Oct 2020, we were able to get a commercial loan for an eight unit priced at $245k that was bringing in $4k a month, and our mortgage is $946 a month. The property was cashing flowing but needs some work. 

Because of this last purchased and the cash flow that is coming in, I was able to walk away from my 9to5 and focus on my RE career while purchasing more investment properties. Getting my real estate license made this choice easier, because with my license it becomes another income stream to use for my investments and paying for everyday life. Even though I was able to own and manage 14 units in under 2 years, it took a lot of preparation to be ready to jump on an opportunity when it presents itself. I analyzed properties almost 6 months straight before I had the money, loan approval, and the right property to close on my first deal. As in most places, Milwaukee, WI (where I have all my investments) has gems if you are willing to invest in areas where others might not want to invest. 

With you have the high-paying job as a resource, you could hire someone or get a trusted partner who can do the leg work of finding the property and running the analysis while you provide the capital for the deal. This will give you the leverage to scale, if that is what you are trying to do. With your access to a high paying job, you could find other people in your circle who want to invest and then you have your next deal with their money. The key to growing and scaling is OPM. Other People's Money. It is the only way to scale and to grow your business. Just like businesses use the stock market (OPM) to invest, you have to use the bank and other investors (OPM) to grow your RE portfolio.

I would like to finish off by saying, that being able to build a trusted partnership is the most effective way of growing quickly. I was able to get to 14 units because I partner with people close to me that had resources I didn't. I did not use any of my own money to close on any of my deals. I used OPM, but I had the knowledge and skills to put the deals together. Use your resources (your money) until you can use OPM to scale. I hope this helps you on your RE journey. 

Walked away from my 9to5 on 11/20/20. Acquired 14 units in Milwaukee since 2019, and have cash flow around $4k - $5k a month. Not a king's ransom, but it was enough to cover the income I was bringing into my household. My fiance owns her business (hair stylist) so she is holding it down until I am able to scale the real estate business and cover the remaining household expenses. I believe I will reach my $10k a month mark by the end of 2022. I hope by that time I will be able to start investing out of state. I look forward to engaging with anyone if they have any questions or would like to connect. I am definitely looking to partner with other investors to grow their business and cash flow. 

Beleza

Charles Anthony 

@Matt Walker Bom dia Matt, I hope all is well with you. I invest in small apartment/ mix use buildings. Anything from 4 units to 20 units. What about you?

@Chris John Great observation. I lived in Rio de Janerio for six months in 2016 when I was studying aboard. It was a program to teach Portuguese and international finance. That experience had a huge impact on me so I try to incorporate it into my life whenever I can. Obrigado por perguntar

Thanks for asking😉

@Bilal Williams To me any investment at the beginning is a home run. You got the property and you are cash flowing. Each property will build on the success of the previous property. Thanks for sharing your success story with me.

Last year, I created my first deal and purchased a four unit. My fiance and I house hacked a duplex, where the tenant pays the majority of our mortgage. And during this difficult time we were able to use an unique strategy to acquire an eight unit cash flowing 3x the debt service. Each of these properties were found on the local MLS, and two of the deals the properties were under contract and the deal fell through.

I am so pumped that I stayed true to my goals and analyzed properties everyday. It allowed me to be ready to jump on a deal when it one presented itself. Now, I am able to look over deals everyday and manage a portfolio of units. Yes, I am still working, but now I am completely working for myself. And, that feels good. This post is not to brag, but to share and maybe inspire the next person. A lot of stories on here have kept me going, so I wanted to pass it along. 

Obrigado (Thank you),

Charles Anthony