All Forum Posts by: Joshua Martin

Hey gang, 

  Was hoping for a little advice with this subject. I've been practicing deal analysis and scouting a 4 unit multi-family to house hack sometime in the next few months, and had talked to a lender just to start a conversation about where I'm at and financing and all that. In any case, what I came across yesterday was an interesting property: asking 80,000 right on the edge of Washington Park in Milwaukee, not the most desirable area, but not bad either, with new signs of life and homeowners buying for the great value. This particular property was listed ambiguously on zillow as a 4 unit, but then digging around and google street maps revealed that it is in fact a 6 unit property, on a standard city lot, a 4 unit up front and a duplex perpendicular to it right behind it. Really a beautiful property with the 4 family in great shape and rented and the duplex needing renovation (I'd live there and do that).

So my question is this: can you attain residential financing, like an FHA, for a property like this? Will certain lenders do it? Or in virtue of 6 units (only 4 of which are functional), is it simply commercial property? I can't remember what thread I read it on but I thought I saw someone say that they got a conventional loan on a similar property. Really I just want to know if they bank or lender will laugh at me?

  Anyways, still pulling hard numbers for my analysis, but I'll post that when I get there.

Thanks in advance.

JTM

Thanks for the responses everyone, and I'll keep scoping the Milwaukee market! 

JTM

That definitely helps. Thanks Corey. I'll be listening to that this afternoon. The podcasts are awesome, I just haven't made my way through all of them! 

Best.

JTM

Hey gang,

  So I've been studying the market, educating myself, and following the actionable tips that the guys recommended on the podcast, one of which was talking to a local lender (or a few), and so here's where I'm at. 

  First of all, I don't make that much, so my initial buying point is also not that high (fortunately I'm in Milwaukee and not Chicago of SF). Running those mortgage calculators I suppose I'd qualify for a loan up to about 120k, and I'm spending the rest of this year paying down debt (not that much, I'm already about 1/2 way), and saving for a down payment, but the question is what to do.

  I'm considering, this time next year, one of these two things:

1. Following Brandon Turner's advice and buying a multifamily, but this leads to the related issue and the question of this thread, where to buy? The multi families in my price range are not in very desirable areas of the city, and while I'd be okay with living there (because it's a house hack), I wonder what advice people have about buying cheaper properties in shotty areas? The ones I've been looking at online all need crazy cosmetic work, but if you can get them cheap enough it still seems like a deal. For 200k I could jump to better areas, but again I don't qualify for these loans - plus, it seems like the lenders want 20% down on multi families for first time buyers, and though I have high savings goals, I don't think I can pull off 40k in a year, haha. (My lender is checking into FHA for me though, maybe that's an option).

 2. Live in flip. But this seems like it'll just be a slower process since you have to wait two years to avoid capital gains taxes, and again, I probably can't buy in great areas, but certainly better areas.

 The main question, again, as I sort through the various options and continue to learn over the next year, is where to save? I need to pick a market right, how do you choose?

 Thanks in advance.

JTM

Hey Devon,

  I don't do wholesaling, to be clear, but just a few things I've observed:

  Several quests on the podcast have said that if you find deals, the buyers will come. So if your deal analysis is solid enough, and you know it's a steal that anyone would be lucky to have, then an investor will take it. 

  I live in Milwaukee, and a friend of a friend happens to be the guy who owns the Milwaukee branch of the We Buy Ugly Houses franchise. He said he'd introduce me in a week or two, so I can ask questions similar to the ones you are, but he also told me he was a really nice guy and so you could probably just try calling one of those signs and chatting them up. If you know the type of house someone is looking to buy then that can narrow your prospective range a little bit, e.g. singe family 3 bed, 1 bath. 

  Other than that, the other seasoned wholesalers on the podcast all say that they actually work with very few buyers, generally. So if you get one or two and then know what you're looking for, you're probably alright.

  I'd probably be doing the same at the moment, but I'm still education myself about deal analysis before I go driving for dollars. I still just don't know if I have a deal. Where did you study up on that?

  Don't know if that was helpful, but best of luck, and be in touch my fellow Milwaukean.

JTM

Hey Jerryll,

  First I'll tell you I'm no expert, but I've been considering some of the same deals in my area, and for me they may not be the best way into the market, for a few of the following reasons:

  1) 'Historic home,' at least in Milwaukee, WI, doesn't seem to mean a whole lot. Nearly all of the homes in this city were built between 1880 and 1920, so I think 'historic home' is just a designation that certain homeowners have applied for even while their homes are not all that different from their neighbors. 

  2) These properties in my area are city owned, which in my calculation means a lot of fingers getting pointed at you. I may be wrong about this, but if I was going to buy from the city I'd field that question on BP and see what people had to say about it, and how their experience was.

3) Lastly, about the particular deal you're talking, I guess more particulars would be needed. 1/4 of ARV would be great if all you need to do is refinish hardwood floors, but if you need a roof, new windows, cabinets, plumbing or electrical work, paint all around, siding, tuck pointing and I have no idea what else, you could be approaching market ARV just putting your repairs in!

  I've been looking on the local city website lately and while you can get houses on there for 2,500 -10,000 (no joke), some of them need 40-60k in repairs, and then when you consider the area, it's not much of a deal at all.

  Anyways, hope that helped a little bit, and I don't mean to be a naysayer. If it's a legitimately historic home, has some Greene and Greene woodwork all over that house, and you can get some real money for it afterwards, rock on.

  But maybe one short term solution to your question would be taking a contractor through the place with you? Do you know any good tradesmen? 

JTM 

Hey Cody,  

  Cool to see another newbie with a similar plan (or lack of a plan ;) 

I've been going back and forth and still just reading and learning and reading some more about what avenues to go, but Brandon Turner makes a compelling case for why a multi-family should be your first investment, and I think I'm he's convinced me. Check this out if you haven't already: https://www.biggerpockets.com/renewsblog/2013/11/0...

The multifamily seems compelling because, first of all, if I find a cash-flowing property (even marginally), I can get paid to live there where building up equity in the house, and two, I can continue saving money like a mad man for down payments on whatever other investments I'd like to make.

  I've also been looking at foreclosures and 'board-ups,' but as I think through it, they might be too much for rookies, even someone with the willingness to put in the 'sweat equity.' First off, in my area, abandoned homes are in rough parts of the city, and while buying them for next to nothing seems appealing, I bet there is a long list of head aches in dealing with these types of properties; some need extensive work, and after you've put that in, say a roof, interior and exterior paint or repaired siding, broken or non functional windows, etc, etc, etc, will you ever get it back? Basically, being the novice that I am and the current difficulty of estimating repair costs I'm going to stay away from that at the moment. At least until I read both of J. Scott's books.

  Anyhow, I don't want this to get too much longer. Best of luck. 

JTM

Thanks for the responses everyone. I mulled them all over, listening to more of the podcast in between my original post, and also came across that book everyone talks about on the podcast, Rich Dad, Poor Dad. That was game changer. I also met with an old family friend who I knew (but only vaguely knew) owned properties. I don't know if he's a 'big time' player in the area, but he and his wife have some 50 properties, so I think I might have found something of a mentor as well. In short, I'm totally in. Thanks for your feedback everyone, and I'll see you on the forums.

JTM

Hey guys! 

  This site is awesome! As is the podcast! I've been listening for several weeks, as well as ordering and reading the books everyone talks about (amongst them, the preeminent, Rich Dad, Poor Dad -- a real game changer). In any case, thinking about goals, I'm hoping to wholesale two properties by years end, and purchase a house within a year (March 1st of 2017 being my target date). I'll keep listening and learning, and enjoying all the resources our friends at BP make available.

 And if I can ask one question on here, is there a particular book people would recommend for wholesaling? That just deals with this topic? I understand the concept and how the exchange happens, but I'm still totally clueless about particulars, such as the contract and addendum, potential deals and finding them, as well as the process of making an offer. Any help would be great, I'm just going to go cruise Amazon.

JTM