All Forum Posts by: Mike Lauer

Hi B-Peeps,

I'm really excited about some news I got yesterday and wanted to share. After about 8 months of immersing myself in REI books, podcasts, and of course the BP collective wisdom, I found my first rental property deal. It's a SFR, 4BR 1.5 BA in an inner-ring Milwaukee suburb. It was really a perfect first purchase: it had been very well-maintained (including an over-the-top foundation repair), but needed a cosmetic update. It sat on MLS for a long time, and on the 3rd price drop we jumped on it. We closed in September, and some great tenants moved in on November 1.

The rehab was simple: new cabinets, LVP flooring, granite, and SS appliances in the kitchen. Refinished hardwoods throughout. Replaced all fixtures. Fresh paint throughout. 

Here are the purchase & cash-flow numbers:

Purchase: $111,900
All-in cash: $38,021 ($23k to close, $15k rehab)
PITI: $912/month
Rent: $1450/month
Cash-flow: $466 (after repair/capex set-asides)

I was hoping to refi with a valuation between $145-150k. Yesterday the appraisal came back at $163k! After closing expenses, I'll be getting $24k back out. I'll still have about $10k in the house, but making a nice 29% annual cash-on-cash return. With some partnerships I've formed in the past 6 months, I'll now be able to take this cash and buy TWO new properties! Needless to say I'm pretty stoked.

As all newbies hear early and often in their education, having a great mentor (or mentors), a great team, and a great network of other investors is all key to success. My agent @Marcus Auerbach has been amazing to work with -- smart, patient, wise, and truly invested in the success of his investor clients. The Brew City REI group, led by @Rebecca Holmes and @Nicole Pettis has been invaluable for getting advice and making connections.

Thanks to BP and this community for all you do, and for inspiring this guy to take the REI plunge!

Congrats and thanks for sharing your story. This is very inspiring!

@Harjeet Bhatti and @Jeff Dulla thank you! Very helpful. 

My partner and I are looking to pay cash on a property, rehab, and then do a cash-out refi as soon as the rehab is finished. My understanding is that with this "delayed financing," you can get the loan inside of the usual 6-month seasoning period that you'd see with a conventional refi. But I've also seen conflicting info about the rules on delayed financing regarding the value of the property. With delayed financing, will banks go off market value for ARV, or off the total cash invested (purchase + rehab)? I'm sure all banks are slightly different, but what's typical?

Bottom line is we're running our BRRRR numbers based on ARV, but don't want to get stuck in a situation where that isn't an option on the cash-out refi. Any insight would be greatly appreciated!

I've used Cozy for a few months now. My tenants love it, and it's worked very well for me. There is a 7-day gap between tenant payment and receipt of funds, but it's predictable and works out for me. They also have a maintenance request system that looks like it's easy to use. I haven't plugged into it yet but looking forward to it.

@Thomas S.@Dawn Anastasi@Michael Henry@Shawn Ackerman you guys thank you all for taking the time to share your thoughts (and wisdom!) on this post. This is really helpful having these perspectives and some real practices happening right here in town. Appreciate it! 

@Matthew Olszak thanks so much for your reply. Everything you said here makes perfect sense! I guess I wasn't thinking about building in some wiggle-room on this. This is really helpful. Thank you.

Hello!

I recently acquired my first rental property in a nice Milwaukee suburb. It is a 4-BR SFR that I think I can rent for $1400-$1500/month. Rehab is almost complete and I'll be listing soon, so I'm cramming on my tenant screening education.There are two basics that I keep running across: 1) Make sure income is at least 3X monthly rent, and 2) Make sure each adult-age occupant submits an application. What isn't clear to me is whether the COMBINED income of the adult occupants is sufficient, or if they EACH should have 3X rent minimum incomes. On the one hand, I'd want the security of knowing that if one moves out (divorce/breakup, job relocation, etc), the other can still pay rent. On the other hand, it seems a bit extreme to essentially require 6X rent for a family unit. Turning down a nice family with excellent combined income and credit history seems a little nuts to me. But I'm new so what do I know!

Any advice for this newbie landlord? Thanks!

@Michael Henry thank you sir!