All Forum Posts by: Steven Story

So everything is going along smoothly, you have your property criteria, your analyzing your head off and finding potential deals on the 2-4 unit multi-familys you are so comfortable with now...and then...you come across a property that throws a wrench in everything.  I came across a 8 unit apartment complex...in my target price range...and now I don't know what to do.  Do I change up my criteria and investigate this bigger property.  8 units means more tenants, more expenses, and more labor intensive property management but it also means more rents.  Has this ever happened to anyone else (I'm sure it has) and what has been your experience when you have come across a potential deal that you weren't looking for?  I don't want to get fancy but opportunity is opportunity.

@Brie Schmidt you mentioned on twitter that MKE was a "high touch" market when referring to finding a good PM. Does "high touch" mean "high maintenance" as far as maintenance of the building as well as the tenants?  Could you elaborate? I know you're not busy buying half of Milwaukee or anything ;) (JOKE) Thanks in advance for all your help here on BP!!! 

@Matt R. @Brent Seehusen 

What about the flip side of a down economy or recession?  Properties get cheap, more foreclosures which means more people needing a place to rent.  I of course understand property you already hold will lose value.  But if you are positioned correctly with a nice chunk of capital, could you snatch up some good deals and have a good renter pool to sift through to find good tenants?  I don't know because I've never done it, but it seems when everything is going the H-E double hockey sticks in a hand basket is the best time to get in and get in for cheap.  Kind of counter intuitive, or not? What do you think? 

@Matt R.

Absolutely. Hemet used to be all retirees, Moreno Valley too. Times have changed. There are still decent parts, we have friends who are school teachers who live there, but there are the not so nice area's too. My father-in-law who lives in Milwaukee and is helping me look for properties out there and he has forgotten more about Milwaukee real estate than most people will ever know. He is definitely tuned in to that area. I'll send him Redfin listings that look good to me and he will say "overpriced" "bad area" etc etc. He is an invaluable resource and I wouldn't feel comfortable investing out of state with out him. I'd really like to get something going in Southern California too but I might have to look at SFR's just because of the scarcity of quality affordable (based on my position) multi-family's. Have to adjust my strategy to fit the market you know. I defiantly believe there is still money to be made in So Cal just have to find a different way to go about it. I'll stop picking on Hemet though haha!

@Matt R. well I only have one kid so far and she is 11 months so I'm not sure where she would prefer but probably would hope I picked Hawaii or Fiji or somewhere ridiculous.  Pretty sure she wouldn't say Hemet, but hey, Dad has to start somewhere!  

That is an excellent idea however the only way I can live in a four-plex is if my wife kicks me out of our house...which sometimes isn't out of the realm of possibility. (Joke...mostly) When I was about 17 years old one of my friends Dad's friends who was in real estate told me I should buy a duplex and house hack it (he didn't call it house hacking but the concept was the same) and as I wise 17 year old I promptly ignored that advice, I had different priorities back then, surfing, playstation, you know important stuff.  Now as I look back I wish I had done that because it's an excellent way to get into investing and starting out that young I might be retired by now instead of 33 and googling real estate acronyms so I can understand what people are talking about! Thank you for the tip though I think it's a great idea if there are new investors out there looking for a way to get started! Cheers!

@Ciprian L.

Thank you @Matt R., I still am looking locally as well.  I've been in touch with my local real estate agent and I am actually meeting with a loan guy tomorrow to discuss financing options and other stuff loan guys would know!  I'm definitely not writing Southern California off, I look at properties in areas like Hemet, San Jacinto and Riverside everyday.  My biggest obstacle with investing out here initially is finding the type of property I want in an area that doesn't require kevlar collect rent.  Another challenge is having the capital to put down to secure the property and have enough left for all the contingency factors I must take into consideration.  Maybe this loan guy will have some different financing options that will open my eyes and provide opportunity.  There are definitely multi-familys that cash flow, at least on paper, in my general area.  For instance I found a 4-plex, in a good area that would cash flow but its listed at 600,000 dollars.  A bit more difficult to put 25% down on that and make everything work.  If I was a more seasoned and savvy investor I probably could make something like that happen but I'm not there yet.  It's much less daunting to get my feet wet on a 60,000 dollar duplex and learn the ropes that way, even if it is remotely from another state.  I'm sure there will be a learning curve but hopefully I'll develop the relationships and the team members I need to make that endeavor successful.  I definitely don't look as out of state investing as "passive" and I know I will need to stay involved and on top of my properties, even if there are in another state. I feel like I've started a California vs. Mid-west investor war on this thread haha.  I do believe that there are opportunities everywhere if you are willing to do the work to find them.  

@Ali Boone I am leaning more and more towards a turn key property and I am finding some good people here on BP to help me out with that.  I think turn key, in my particular situation, is looking like the way to go.  Still requires due diligence of course, nothing can replace that!  Thanks again for all your input! Cheers!

@Hersh M. @Dawn Anastasihas a much better perspective than I do on the Milwaukee market as she has been in the game, and has quite the portfolio. I checked out her website and she has multiple properties. I imagine that a few years ago there were better deals than today but I'm still finding cash flow properties but they might not be as good as they used to me but to me they seem good. As I said I'm not looking as much for appreciation but for cash flow and to build some equity. Maybe that's a mistake?

@Hersh M.-- Yes it seems like Milwaukee real estate has leveled off, but it doesn't seem to have the massive value swings that California has had.  While you don't get as much appreciation, it seems like its a little more stable, which for me, just starting out, is attractive.  Right now I'm focusing on cash flow and building up some equity.  Appreciation would just be gravy so I'm not counting on it as much.  As for the 1%-2% rule, I'm definitely finding deals that meet that criteria and I'd be happy with 1%.  I'm using pretty conservative estimates for rents but even then most of the properties I'm looking at are closer to 2%.  I'm using Rent-O-Meter but also checking rent comps in the neighborhoods using Zillow.  I'm also basing my analysis on buying at a 20% discount with 25% down which decreases the mortgage payment substantially of course.  I'm sure once I buy and really get in the game there will be a learning curve and things will adjust, but hopefully I will be in the ballpark of my original numbers and still have some cash flow.