All Forum Posts by: Tyler Herman

Hi BP!

My wife and I have made the decision to start transitioning from our current job/careers into a real estate-focused livelihood that has appealed for some time now.  As some background, we are currently house-hacking with a duplex in Riverwest and plan to add another 2-4 units next year, potentially more if the right opportunity is there, and continue to grow a rental portfolio into financial independence. 

My wife just obtained her WI RE Agent license and I will be getting mine by the end of the year.  Our hope is to work for the same firm so that we can operate as a team and work, learn, and grow together by leveraging our distinct skill sets.  As we grow our RE agent income, we will transition away from our current roles. 

Now the question - Is anyone familiar with firms that are particularly suited for this type of teaming approach while ramping up to Full Time status?

At the very start, we would realistically be able to put in about 20 hours per week, but after the first couple of transactions she would ramp up her time in RE.  I would transition later on as we replace more income as I am the primary earner and provide our health insurance.

Thank you in advance,

Tyler and Katie Herman

P.S.  Any other advice or hole-poking in our plan is welcomed! 

Hi Tim,

I used to work for a large mortgage bank where I handled HOA and Condo association dues and fees for the bank's REO portfolios with FNMA and FHLMC. After seeing thousands of statements from associations all around the country, a few things stood out.

First, every association is different. Depending on when the condo association organized, they have a lot of authority on when you as the owner may be on the hook for large amounts either through special assessments or from back expenses (which FNMA should deal with prior to sale, but be careful).

Second, associations use their dues in different ways - @ $125 per month, I would guess that most large projects are funded through special assessments rather than tapping into a reserve that has built up collecting $125/mo from each tenant.  I'd take a look at the last several years for frequency and size of the special assessments and update your figures accordingly.  Absence of SAs may indicate some are on the way, frequent SAs may suggest the board will want to re-budget and a monthly assessment increase is likely on the way - both eating into your returns significantly.  Also look at how much monthly dues grew annually in recent years, you may not like the pattern.

Lastly, see if you can determine how many other properties in the association are REO or active foreclosure. Wisconsin laws (generally, but subject to the condo's CCRs) limit the amount of back charges that an association can collect from a foreclosing entity, resulting in a loss to the association. If they have a lot of these properties, the only way to bring in funds to offset the losses to the association will be to hit the current owners with SAs or monthly increases.

Be careful with associations, the cash flow can be eaten up very quickly.

Tyler

Can someone post a link to the Milwaukee Meet Up page?  I did a bit of looking around on the site but am also pretty new here and don't always know how to find specifics like that.

I'd be interested in joining future meet ups as a new investor as well, but don't know if I could make this Saturday work for sure yet.

Thanks!

I'll parrot some of the responses above that the flexibility of a longer term (30 year) can help out a lot while still knowing that you can pay down the debt more aggressively if you choose.

One point I haven't seen yet is that you may have a different goal in REI than some of the other posters. The biggest question to me is what goals and timeframes are you working with - is your goal to have a certain number of free-and-clear units producing $XXXXX of cash flow when you retire completely in 15-20 years? Or is the goal to build up a real estate empire where recycling your initial investment over and over in the BRRR strategy is more necessary and you reach your cash flow requirements through volume instead?

Either approach, I think 30 year terms while throwing extra dollars against the principal is best, but maybe you hold off on paying down more aggressively until you reach your unit goal.  You can use amortization calculators to figure out how much extra you should pay each month to effectively make it a 15 year instead.

Once your desired # of units are there and you don't need to set aside dollars for more properties (or recycle your initial investments), pay down can get you to the free-and-clear ideal that you are aiming for based on your question.

Congrats!

...following this topic in hopes of some of those pictures coming in.

Welcome Shane!

It sounds like we are in a similar stage.  I can say that I've already learned a ton just on the BP Podcasts and by following the keyword search emails that Mindy suggested for "Milwaukee".

Tyler

Hello!

I am new to the world of real estate after making my entrance by buying a duplex in Milwaukee (in the Riverwest neighborhood).  My finace and I had been looking to buy a house over the last year or so and after looking at the numbers we decided there was no way we wanted to pay our mortgage by ourselves. 

We changed our search from single-family homes to duplexes and after several months of looking online, driving communities, and viewing properties, we finally made the jump into real estate.

We are already planning on more duplexes in the future, and I'm learning all I can from BP and other research to help us along the way.

Personally, I have an MBA from Marquette and have worked with Wells Fargo's default servicing operation for about 5 years.  Wells recently announced closure of my office (effective in November), cutting about 1000 jobs from the area.  I'm done working in the mortgage banking world, but think my experience around default servicing gives me a lot of knowledge about certain areas of the Real Estate industry.

I'd love to keep learning from anyone here, and will be digging more into BP for ideas and tips.  Please reach out and say hi, or if people are local I'd be interested in hearing about local opportunities, bouncing ideas, or just meeting some fellow RE investing enthusiasts, whether you are a newbie like me or an experienced investor who may have use for an MBA mind in exchange for some knowledge.

Tyler