All Forum Posts by: Pat Parrillo

Hey @Troy F.,

A cleaning provision isn't standard, but that doesn't mean it can't be done. Below is my understanding but recommend confirming all of this with an attorney.

Lease Terms and Updates: In Wisconsin, you can add clauses to the lease that spell out cleanliness expectations or even include a cleaning service if needed. If tenants don't meet those standards, it could be considered a lease violation. Just make sure any new lease terms are clear and agreed upon by the tenants.

Nonstandard Rental Provisions: You can add provisions requiring tenants to pay for cleaning services if they can't keep things up to standard. This needs to be highlighted in the lease and acknowledged by them.

Security Deposits: You can’t use their security deposit for routine cleaning, but if they leave things in bad shape beyond normal wear and tear, it’s fair game to deduct cleaning costs.

I’d start by having a straightforward talk with them about the importance of keeping things clean for health reasons and property preservation. When the lease comes up for renewal, consider adding a cleaning service option, with costs passed on to them if it’s needed. Similar to what Benjamin Aaker shared. 

Definitely check in with your lawyer to make sure everything’s above board, but these steps should help you handle the situation while keeping the tenant relationship intact.

Hope this helps!

 Smart idea staying flexible in this environment. Value add deals are where the numbers work the best on many deals now. Capital generation is always good with a flip, or maybe getting into a value add deal, leveraging hard money to  update the property, then re-fi and hold. Could be a way to get into deals with less money up front and get a long-term rental out of it. One idea that could align with your goals. 

Welcome @Torrean Edwards What are some of your goals with getting back into the Real Estate game? Buy and Hold, flips, etc? I'm focused on Longterm Rentals but any way to help let me know. 

Other comment is spot on. Find an agent and they can get you referrals to the other contacts.

Also, show them that you've done your research first. To each of your questions about rehab permit concerns, local landlord laws, property tax to rent, etc. Let people know what research you've already done and ask for validation and additional insights.

Everyone wants to do business with someone who's got skin in the game. Skin in the game doesn't just mean money, it means the time you've invested in research and education. For example, property taxes are available to the public. The Milwaukee Mill Rate for 2023 was $26.07 per $1,000 of assessed value (2.6%). How does that compare to the other markets you are considering? Rent is available via Rent-o-meter, zillow, etc. 

What did your preliminary market analysis show? What specific questions are you looking to confirm? The more general a question, the more general the response. 

Sharing a candid response to fast track your success. All the best!

@Dan Stelter I like the Author Mark Manson's outlook on life and getting out of your comfort zone. He's got stoic vibes in a real world writing tone. Being an introvert is relative. Everything is on a spectrum. There no binaries in life. You may be more introverted in some scenarios and more outgoing in other scenarios that you feel more comfortable. Play to your strengths while considering getting out of your comfort zone. This is something I can work on and I think most everyone can. Worth a look checking out his books / blog.  

 Hey Chen, 

I agree with the sentiment of your friend. Landlord-friendly, or at least more friendly than some other markets. Yes, a wide range of prices and decent cash-flow depending on where you're investing. 

Just like most markets Milwaukee has gotten pretty hot. So to manage expectations I'd say you should expect to be patient to find the right deal. When interest rates were lower there were more deals to be had and cashflow was solid with even a moderate down payment. I was buying deals every few months. Since the rates have gone up the prices haven't come down and I don't expect them too, at least not anytime soon. So finding cash flow day 1 rent ready deals has been difficult. There are value add deals which make more sense, but those are typically off market and you'll want to start building relationships to get access to those deals. 

I do feel Milwaukee is a great market, but it's starting to lean a little more heavily towards appreciation than cashflow in the more popular markets, in my opinion. Depending on what your cash on cash return goals are, or monthly cash flow they may be more moderate, but the appreciation is in your favor if you buy in the right neighborhoods and are willing to hold for several years or for the long haul. 

Rent increases were hot right after the pandemic and they've cooled down slightly but I feel they are still strong relative to the increase in price for the properties. Appreciation is still outpacing rent increases slightly I feel but it's in an appropriate ratio. All in all, Milwaukee is a good market. I recommend narrowing in on a few neighborhoods, getting a feel for prices and rent, and be ready to be patient. I think it's likely worth investing some time. Feel free to reach out at any time and happy to share more specifics. 

Hi Chen. Welcome! 

What has led you to switch your focus from Ohio to Milwaukee, WI?

What caught your eye about Milwaukee? What were you looking for in other markets that you couldn't find and you believe makes Milwaukee a better fit?

I've been investing in Milwaukee for over a decade, so I'm all for it. Just curious what led you from your initial search to MKE. Knowing these details may help us point you in the best direction.  

@Kendell Powell congrats on saving up $45K at 18! That alone is very impressive and you are already moving faster than the majority of people out there. You're drive and hunger is awesome. 

I didn't get my first rental property until I was 28. So you are ways ahead of where I was when I was 18, that's for sure. You've gotten good advice about slowing down. 

I'll phrase it in a slightly different way, cause I like golf, here's a golf saying that can also apply to real estate. Slow is smooth, and smooth is fast. Ultimately it's important to be accurate, consistent, and in a controlled pace in executing a task. 

The biggest piece of advice for the first property you purchase is make sure it's a good one! Sounds like common sense right? But it does take time and effort to make sure it's a good one. You'll want to understand the different areas to invest in and how to attract the best tenants, and operate the building etc. The reason this is so important is because when you pick the right property after research and due diligence you'll say hey this is great, let's do more! However, if you move too fast you could get into the wrong property, or area, or not take into account certain expenses, or get a terrible tenant and you may say this real estate thing is a huge headache and not worth the hassle and you may not pursue it with as much vigor going forward, or worse throw in the towel altogether. With your drive and determination you likely wouldn't throw in the towel even if it got really tough, but why not have the first one be a hit and be smooth and you love it and are excited to do more deals. 

It took me about 18 months to really study and understand the market I wanted to be in and what owning property truly entailed. That was back in 2015 and there are so many more resources out there now for you to learn much more quickly. I spent the next 18 months getting all my systems in place and getting a feel for real estate before I bought my next property. Then I bought another one each year, and then that turned into every 6 months and then that turned into buying a property every 3 months or so. That's what I mean about going slow to go fast. Get to really know the market and operations and then you can fly as you have systems in place, like you would in your current business. Even when you start to go fast you may slow down again, for example I'm itching for another property as I haven't bought one in about 9 months, cause there haven't been many deals that the numbers make sense to me right now. It could be a lot longer before I find the next right property, but if you find the wrong ones that's a sure fire way to set you back. 

So like others have shared, this is the time to study and learn and keep saving so when you find the first deal you can knock it out of the park! 

To answer your other questions I'm a huge fan and leverage. I like putting debt on my properties and the tenants pay down the mortgage. Also, debt helps you go faster. If you are looking to buy a $200K property that will still be some time before you save up for a cash purchase. If you can put down 20 - 25% you could own 4 - 5 properties that cash flow and tenants pay down the mortgage for the same cash outlay or you could have 1 free and clear. I'd take the leveraged position and multiple properties and diversity every time, but that's just me. 

Sounds like you've got some great resources with your Dad and Cousin. If have any more specific questions or seeking recommendations for good resources to learn more, reach out directly at any time. 

You're already in a great position. Go slow to go fast!

Agreed with the other comments about the higher risk with HELOC in this particular market. Fannie May is a good option for a lower downpayment. Otherwise, how updated is the current property you own? The market is always evolving and there may be good deals to be had near term or you may need to wait a while, depending on many factors like interest rates etc. However, since you already own a duplex and SF one idea is to invest in what you already own. Meaning you may be able to do some cosmetic or smaller renovations like bathrooms or kitchens in your duplex when the tenants turn over and those smaller investments can demand higher rents, so in the longterm you may have more cashflow from the duplex to help fund a future investment in another property while you wait for market conditions to change. Just one idea to consider.

Grace period of 5 days is common. Also, as others have mentioned communication is the most important thing. If they are communicating that they may be late and then do pay when they promise they will in my opinion it shows good intent. Things happen sometimes. If it becomes a pattern of behavior a discussion about when they receive their paychecks etc. may help if a tenant needs the rent paid at a certain date each month. That is just my opinion to seek to understand, offer some level of flexibility, and then if there is a pattern of late rent or missed rent swift action should be taken, but it all starts with communication with the tenant. In this case it sounds like they've been communicative.