All Forum Posts by: Pat Parrillo

Nice work thinking this through before diving in.

You’re right: zoning is step one. No point in moving forward until you’re 100% sure adding a third unit is allowed. Even if it’s not allowed now, sometimes you can apply for a variance or special use permit, so it’s worth checking with your city’s planning department.

As for property value post-refi, here are a few key points:

• Appraisal will likely be based on income approach if you’re adding a unit. That means more rent = more value, even if there aren’t comps for a triplex.

• Since there are no similar 3-unit properties nearby, appraisers may blend the income approach with comps of other small multifamilies, which adds a layer of subjectivity.

• Cosmetic upgrades do help, but mostly in rent potential and marketability. They won’t drastically move the needle unless they bump your rent significantly.

• Talk to a local lender who’s done a lot of investment property refinances. They may have insight on how appraisers are currently valuing units in your area and what they’ve seen on similar conversions.

Is it worth it?

If zoning allows it, and you can rent the unit for a decent amount, yes, especially if you’re improving cash flow and forcing some equity. But if it’s expensive, the layout is awkward, or zoning is a stretch, it might not pencil out.

Congrats on your first investment property, exciting stuff!

Since the kitchen’s already in good shape, small updates can really boost appeal and help you rent at a premium in Kenosha. Here are a few budget-friendly ideas:

• Cabinets: Paint them off-white for a clean, modern look or just add black or brass hardware for a quick upgrade.

• Lighting: Swap out old fixtures for a modern flush mount or pendant, big impact for little cost.

• Backsplash: Peel-and-stick tiles (like subway tile) can add style without breaking the bank.

• Wall Color: A light neutral like greige or soft white brightens things up.

Clean and updated, beats fancy, for the best bang for the buck. 

The first, and most critical, step is to determine the property's After Repair Value (ARV). Knowing the ARV clarifies whether investing further is worthwhile or if it's best to exit now.

If the ARV is high enough, you have several viable options:

- Complete critical repairs (roof, foundation), incrementally update units, gradually raise rents, and potentially refinance later to improve cash flow.

- Alternatively, complete the repairs and sell at top market value, maximizing your return despite the short-term headaches.

However, if the ARV is too low and won't justify the $50K+ in repairs plus remote-management stress, You might be better offer selling now, even at a loss. Sometimes it's better to take the L sooner than later, learn from it, and move on. If the numbers don't work now, and they don't work in the future, better to get rid of it now.

Aaron, your strategy of leveraging equity through refinancing to pull out tax-free cash while maintaining cash flow makes a lot of sense, especially with the stability of W-2 income. Many investors use this "infinite leverage" approach to maximize liquidity and tax efficiency. However, interest rate risk is a key factor—if rates rise or lending conditions tighten, refinancing may not be as favorable. Having a backup plan, such as a HELOC or alternative financing options, could provide added flexibility.

With loans spread across 19 single-family homes, consolidating into a portfolio loan might simplify management and offer greater long-term stability. Since your goal is to subsidize retirement, it’s worth considering how much leverage you want to carry as you transition out of your W-2 jobs. Would you eventually scale down to fewer properties with higher cash flow, or continue holding indefinitely? Your plan works as long as cash flow remains strong and refinancing remains accessible—but are you confident that will always be the case?

If you haven’t already, take a look at the 18.6-year real estate cycle and where we currently stand. It could provide valuable insight into timing your refinances strategically across 3, 5, 7, or 10-year terms to hedge against market fluctuations and avoid unnecessary risk.

Investing in Milwaukee for the last 10 years I'm biased to recommend house hacking a duplex as the best way to start if you have limited capital. Milwaukee has the largest duplexes per capita ratio in the US. So let's of properties to choose from. By house hacking It lets you get in the game with minimal money down (3-5%), while also covering your mortgage and gaining real-world landlord experience. If you don’t like it, you can always pivot and sell, convert to a long-term rental, or move into another investment strategy with the equity and knowledge you’ve built.

Starting this way means you’ll go through every key step: finding a deal, securing financing, managing tenants, and understanding property operations, but in the lowest-risk way possible. Plus, owner-occupied loans get the best terms, making it an easy entry point. If I were starting over, I’d go this route again without hesitation.

For Milwaukee, look at Riverwest, Bay View, and West Allis as each have strong rental demand with room for appreciation. The key is finding a property where rents cover the mortgage or, even better, cash flow. Let me know if you want to talk Milwaukee strategy. Also, check out the Rental Property Association of Wisconsin. www.rpawi.org good networking with other investors and maybe even find a deal there. Has been a great resource hope to catch you at a meeting. Keep taking action and at the same time be patient :) 

I gave a presentation on this exact topic at the Rental Property Association of Wisconsin Annual Convention last year, and the key takeaway was that all rental strategies have their merits, but you need to know what you’re signing up for. Some can be passive investments, while others are full-fledged businesses.

Long-Term Rentals (LTRs) are the best starting point for most investors because they offer consistent income, lower management demands, and a truly passive approach. A 12-month lease means stable cash flow, fewer turnovers, and minimal involvement, especially if you use a property manager. Financing is also easier since lenders prefer predictable rental income over the fluctuations of STRs or MTRs.

Short-Term Rentals (STRs) and Mid-Term Rentals (MTRs) can be lucrative but require more hands-on management. STRs, in particular, are closer to running a hospitality business than a passive investment, with constant guest turnover, cleaning coordination, and regulatory risks. MTRs fall somewhere in between but still require furnishing and active tenant acquisition. If your goal is long-term wealth with minimal effort, LTRs are the best place to start, allowing you to scale without making real estate your full-time job.

Congrats on jumping back in @Torrean Edwards! That first deal after a break can feel like a big leap, but it sounds like a great opportunity.

On financing, seller financing, private lenders, or portfolio loans from local banks could be worth exploring if you want alternatives to hard money.

Excited to see how this deal goes for you.

Not a dumb question at all, but getting a $100K loan with no track record is difficult. Traditional lenders won’t approve it, and hard money lenders who offer this type of financing all the time look for experience, assets, or strong equity in the deal.

Partnering with someone who has financing or experience is realistic approach when starting. That could mean working with an investor willing to fund the deal for a share of the profits or starting smaller with a house hack or live-in flip to build credibility, or putting sweat equity into a deal with a partner to learn and build your track record. All of these come back to one important factor, you need to bring value to the table while mitigating risk.

Lenders, Investors, Hard Money, Partners will focus on experience and risk, so bringing value by finding great deals or managing renovations, can help you break in.

Keep refining your approach and connecting with the right people!

Welcome to Milwaukee, Chelsea! House hacking is a smart way to get started, and Milwaukee has some great multi-family opportunities if you buy right. Since you’re in research mode, getting familiar with neighborhood-specific trends will be key, some areas have strong rental demand, while others can be trickier to manage. 

Financing can make a big difference, and local lenders who understand house hacking and multi-family investing can sometimes offer more flexibility than big banks. Even if you plan to self-manage, having a solid property management contact early on is always a good move. Networking will also be huge in your journey. The Milwaukee REIA https://www.milwaukeereia.com/ and the Rental Property Association of Wisconsin https://rpawi.org/ are both great for connecting with experienced investors, lenders, and property managers. I’m a member of both, as well as an agent and investor, and they’ve been great resources.

Hope to meet you at an event soon and always happy to talk shop about the Milwaukee market or multi-family investing. Best of luck on the exciting journey ahead!

Hi @Adam Aero

It's good to have goals in mind. My first question would be why $275K? Is there significance to this exact number?

Knowing your current state comps is a great place to start and a real estate agent can help pull those figures quickly. 

If you’re below $275K, focus on high-impact upgrades like improving curb appeal (landscaping, fresh paint), refreshing the kitchen and bathrooms (new hardware, lighting), or adding energy-efficient features (smart thermostats, LED lighting). Outdoor spaces like a deck or patio can also boost value. I'd recommend starting with the lower hanging fruit than a large basement reno - if your comps are close but don't quite get you to your number.

Finishing the basement (with proper egress) could push you over the top, but confirm with an appraiser first to ensure it counts. Talking to an appraiser early is a smart move—they can guide you on what improvements will add the most value.

Don’t forget to fix any deferred maintenance and highlight unique features like tall ceilings or original hardwood floors.

Let us know how it goes, and feel free to ask more questions—we’re here to help! Good luck.