All Forum Posts by: Jack Medford

I buy and hold primarily in Milwaukee, Wi. The reason is the great cost to rent ratio, plus the abundance of multi-family properties. It is sort of out of market investing, as I live 1.5 hours from there. I only go to the city once every other month or so, but don't really touch the property as I have PM handle the day to day. 

Keep in mind, investing in Milwaukee (probably any market you're looking) needs to be handled with care. The neighborhoods can change very quickly, so connecting with locals is a must. This goes beyond just "putting together a team" although that is important as well. Talk with as many local investors as possible, and keep connected via any forums dealing with your market of choice. Also, beware of anyone selling you anything that sounds too good to be true. 

Take Milwaukee as an example. I've seen numerous wholesalers marketing duplexes that are $80k and below (some as low as $40k) and suggesting they need only a little spit shine and they'll give you over 2%/month in rents. While this is possible, 90%+ of these properties are going to be in the worst areas and you'll be dealing with 100+ year old properties that are in really rough condition. Guess what kind of tenants this will attract?

The point is, for wherever you are looking to invest, do your best to bring real value to the community. Don't just look at the numbers and make income assumptions on providing bare bones value. You'll be doing a disservice to the community, as well as yourself. 

Apologies that this turned into more of a rant then intended. I just spent some time reading through the recent Clayton Morris thread, and it got me worked up a bit. Here's a link if you're interested in seeing what happens when out of state investors trust the wrong guy. 

https://www.biggerpockets.com/forums/311/topics/689433-clayton-morris-morris-invest-house-of-cards-starting-to-fall

Probably depends a bit on your niche. As a buy and hold investor, I'm focusing on not being over-leveraged. All my commercial loans are on 5 year terms (sooner one will come due in 2023) which I believe gives me enough time to refinance out of if another recession happens in the next 18 months. Anyone with balloon loans coming due in in the next 24 months might want to look at refinancing. 

During the last downturn, nobody was lending, so you gotta make sure your debt isn't going to crush you. I'm hoping I've done that with mine, but time will tell. 

The article touches on an important point which is often missed when these situations happen. That is long term effect these actions will have on the city. Not only were these areas some of the worst in the city (from the sounds of it), but now they are years behind in actually getting improved. 

I hope for the city's sake that legit investors are able to come in and help clean up the mess left behind by Morris and Oceanpointe. 

I've been looking at Beloit a lot lately and even helped another investor purchase a SFH recently. My main investing partner has quite a few doors there as well. He just recently started a PM company with another investor to handle their growing portfolios, as well as help other investors in the area since there is not much in the way of great PM options.

The inventory is there along with renters looking for housing. Definitely worth a look. 

In case you'd like to reach out, the partner I eluded to is @Dave Corfman. Another investor worth asking abut Beloit is @Kole Kingslien. 

@Marcus Auerbach Thanks for the reply! That makes a lot of sense. I wasn't thinking about cost of acquiring the lot, just the construction part. 

@Taylor ChiuI can't speak for Merritt, but as someone considering a "move to Milwaukee" my sights are focused on the surrounding suburbs. There are certain neighborhoods within Milwaukee that I'm considering, but the suburbs have more appeal. I think this is what Merritt was talking about. 

@Marcus Auerbach amazing work as always with your analysis! I have a question though about one statement you made in your comments. 

"And you can't build in MKE below 350k; I have tried."

Is there something about the Milwaukee market that keeps this number so high? I've heard much lower numbers elsewhere in the country, which leads me to think there is something special about Milwaukee. 

@Jennifer Darby How attached are you to this property? I agree completely with @Michael Noto that property managers make or break you when dealing with out of state investments. If there are no good managers in the area it just may not be an area that works for you. Might have to consider exiting that market and concentrating somewhere that will work better with your needs. 

Agree with @Mark Bookhagen that it depends on your goals. If you're looking to grow quickly then CoC will be the better marker. Based on your report you'll be getting $921/month. If this amount of stable cash flow is what will push you over the edge toward your end goal, then maybe CoC isn't as important. Also, if you are just not comfortable then that is a personal preference. Some people just don't like it.

I personally focus on CoC return because I don't have a lot of capital, so I attempt to optimize for maximum CoC return while minimizing risk. A lot easier said than done of course.

How much do you know about Akron? Based on your meetup name, I'm guessing you are in Temecula, Ca which means this would an out of state investment. As someone who moved from CA and now works with a number of "turn-key" providers, I would suggest you know your area well. Milwaukee is where I picked to invest due to the amazing cost to rent ratios that can be found. However, neighborhoods can turn bad real quick so it has taken some time to learn where to avoid.

Also, you need to connect with people outside of the network provided by the seller. If you go into this with the expectation of full service management, only to find out that the management is sub-par, you are going to be in a tough spot. 

This presenter may have the best of intentions, but there are just so many ways a newbie can get screwed on this type of deal. If you're interested, I'd suggest trying to just get one of the properties as a starter. That way you can test the waters with just $11.25k out of pocket, as opposed to $40k. 

@Heath Ryans There are some ways around being a broker. You have to be a broker to do certain things, such as sign leases. You can still manage as a licensee, but just have to have the owner more involved. You can also start a PM company if you can find a brokerage willing to act as the broker on your behalf. It isn't the easiest route, but can get you started before becoming a broker yourself.

@Brad Larsen came up with a pretty complete list. The biggest pitfalls I've personally experienced come from accountability and availability. I've worked in PM companies ranging from mom and pop all the way up to operations which manage thousands of units in very wealthy neighborhoods. With both ends of the spectrum I've noticed issues with managers being so busy that they are unable to keep up with clients and tenants. 

A lot of PMs mistake growing the portfolio for growing the business. The portfolio is just one aspect of the business. It is certainly important, but if proper systems aren't put in place then the business suffers. Employees end up being hired not because they bring great value to the company and clients, but because they fill a role that needs filling yesterday.