All Forum Posts by: Keith Schulz

Hi Becki,

I live in Verona (just southwest of Madison). I would question if you could really get $1250 for rent in Randolph. The population there has actually declined over the last 10 years, so I'm not sure the rental demand is that strong. I have no doubt as you get closer to Madison (or Sun Prairie on that side of town) rental demand is extremely strong and vacancy rates are low, but Randoph is 40 minutes out from Sun Prairie. 

I'll give you an example of rents, appreciation, and demand in the area. I own a duplex in Arena (similar to Randolph about 40 min west of Madison, but Arena has experienced some growth), and I own a duplex in Verona. The rents in the Arena property were $835 back in 2000 (property built in 1997), and the rents now are $1010 (1.2 times 18 years ago). The property in Verona is much smaller and older. In 2000 it was rented for around $625 now it rents for $1040. (almost 1.7 times 18 years ago). The property value in Arena has gone up maybe 20%, where the Verona property has about doubled. The only reason I keep the Arena property is its one of the nicest rentals in town and it's fairly new. So, it's pretty headache and maintenance free. 

All this to say, you might want to consider the location a bit more for a long term investment rather than just looking for a cheap house. I'm not saying don't do it, I'm just saying make sure you consider all factors and if your numbers long term are realistic. 

Hope that helps.

Hi Kyle,

It depends on what you are after as to what locations you should pursue. If you are willing to cover a broad area from Milwaukee to Madison, I'm not sure why you'd focus specifically on one zip code. I'd focus on finding a good deal. The good deals are few and far between in the Madison area lately, so being flexible in location can certainly offer some benefit. From my experience many areas of Milwaukee have been much better cashflowing than Madison, but I like the Madison market better from a long term stability and appreciation perspective. It  all depends on what you are after and what your goal is though. 

Hi Tom,

I'm currently in the middle of a flip in Verona and I have also found it's hard to find affordable available help. You might try Myron Gingrich at Gingrich Construction. 

https://www.homeadvisor.com/rated.GingrichConstruc...

Hi @Nicholas Rice,

Welcome to BP. I'm in the Madison area as well (Verona). A construction background will definitely help you in the real estate business. Madison is a tough market to find great deals lately. However, they are out there occasionally if you look hard enough and if you go a little further out of town. Also, I think its going to be a great market for the long term. Best of luck. Feel free to reach out if you need any help in the local market. 

Micah, 

Try Summit Credit Union, Capitol Bank, or Waterstone Mortgage. If you want specific contacts at each place send me a private message. 

Greg, 

Welcome to BP. It's always good to see more people from the Madison area (I'm in Verona). This is a great place to learn. I think its great you are getting your license. I was an investor first and that evolved into an agent/broker. Good luck, and give me a shout if I can help with anything.

Yes, I've done it several times using a HELOC on for a down payment on the next property. As long as the HELOC and your new loan don't exceed your maximum DTI ratio you're good to go. I actually just closed on a purchase today in which I used the HELOC on my home to pay cash for a flip.

My favorite banks in the Madison area are Capitol Bank, Summit Credit Union, and UW Credit Union. Send me a PM if you want some names.

@Nicholas Hanson Welcome to BP. Your in the right place to learn. Believe it or not I'm a former mechanic too (turned mechanical designer/real estate broker) and started with my first duplex at 23. I was born and raised on the west side of Madison and now live in Verona. I also recommend the house hacking methods to get started. I lived in half of my first duplex and rented the other half for 3 years (tenants paid more than half my mortgage). Then I bought a single family house and rented a couple rooms to friends (which paid 3/4 of my mortgage). These methods are a great way to get started. 

Like you said affordability in Madison is a challenge right now. So many people have jumped into the investment game with the hot market that I feel like they are paying ridiculous prices for investment properties. My last two deals I've found off market (private seller, and foreclosure auction), so keep your eyes open for things not on the MLS too. Best of luck on getting started!

Something to think about... Why are these companies targeting investors for turnkey properties? When most of the nation is currently in a sellers market, wouldn't it make more sense for rehabers to sell to retail buyers? They should be able to get more money on the retail market right? Why would their preference be to sell to buyers 1000s of miles away? 

3 of the houses I sold this year (one my own flip, and 2 for seller clients) had out of state buyers who wanted to submit an offer sight unseen. All 3 of these I told them they'd need a representative here to physically see the house in person if their offer was to be considered. I wanted them to know exactly what they were buying. In every case, I had a local retail buyer willing to pay more.  

Ultimately, if you decide to sell one of these turnkey properties, is their a retail market for it at the price you are paying? If so, why would the rehabber rather sell to you at a distance?

@Jason Monroe I agree, some of it could have been avoidable. Which is why I shared my story, and why I blame myself more than the others involved. I just don't want others to make the same mistakes. I'm 6 years past that, and it was nothing but a learning experience in history now. 

I honestly don't remember at this point what all I did as far as due diligence on this property. Although, I do remember spending some time checking on permits and asking other investors about the companies involved, etc. 

The management was a 3rd party that had bee hired by the rehab company, not the rehab company itself. I do think this was the key break down area. I should have hired a new manager from the start and shouldn't have given this one a second chance after the first tenant.

Based on this experience, I will only invest locally. I'm not saying everybody should follow my way, but I'm more comfortable if I can physically lay eyes on a property and have more involvement in management of the property.