As Real Estate resources, we are passionate about educating our clients about the power of real estate, and how you can use real estate to leverage your cash and your financial future. We have over 20 years of combined property investment experience, with our portfolio of properties only increasing. We have a number of trusted and experienced lenders and contractors that have helped us grow our real estate portfolios.

All of this to say; we are here to educate you and help you create and grow your financial flexibility through real estate. This page contains past classes we have hosted, examples of the different types of investment properties, articles, and really, whatever we find to be educating and interesting when it comes to investing in real estate. We have worked with repeat clients for the last 10 years, helping them with 1031 exchanges, fix and flips, and short and long-term rentals.

INVESTMENT PROPERTIES

PERCH REAL ESTATE


The Wealth Generators of Real Estate

Appreciation

Time is on your side when it comes to your property investment! You buy and hold, your property will gain value. Or, you can buy, fix, and flip the property to add immediate resale value. Whether you are looking to make quick cash, or buy a property and forget about it for a few years, there ARE options for your timeframe and input investment, or lack thereof.

Cash Flow

Also known as passive income! This is your income on the property minus total expenses. This is cash in your pocket every month, and add more properties for more income!

Leverage + Loan Downpayment

Relatively low investment of cash for a large asset. You can find a deal as low as 3% downpayment on a house, and with our trusted lenders, you can expect a deal right in your price range.

Tax Benefits

This would be a conversation with your CPA, BUT real estate purchases can offer large tax incentives!

Types of Real Estate Investments

Fixer Upper

What is it?

Buy a run down home for cheap that needs updates. Put in the cash and work to rehab the property and then sell it for a potential profit.

Pros:

  • Potential large return on investment

  • Don’t have to deal with renters/the rental process

  • Usually the cheapest house in the best neighborhood

    Cons:

  • Requires upfront capital and capital gains tax when sold (this can be leveraged/worked around though!)

  • Working with contractors (Find, Hire, Manage)

  • Timing of when the property is ready to sell can take time and be pushed back depending on setbacks, contractors

    House Hacking #1

    What is it?

    Purchase a home as a primary residence and find renter(s) for your spare rooms. Or buy a small multi-family property (duplex, triplex, quadplex), live in one unit and rent out the others.

    Pros:

  • If done effectively, this method can mean you live for free while others pay your mortgage.

  • Low involvement, as this is similar to a long-term rental strategy

    Cons:

  • Giving up some privacy living with others.

  • You are a landlord and responsible for repairs, vacancies, and other tenant issues.

The numbers of House Hack #1

Initial investment in 2019:

Purchase price: $490,000

Financing: 5.1% down, 30 year Conventional at 4.375%

Initial Investment: $25,000

Monthly cashflow while living there:

Average monthly income: $2,600 ($1,900 AirBNB + $700 long-term rental in one room)

Mortgage: $2,500

Cashflow: $100

ROI:

2021 Property Value: $610,000 ($120,000 increase in 2.5 years)

$48,000 per year

Monthly cashflow now

REFI 3.499% and remove PMI

Average monthly income: $4,400

Mortgage: $2,091

Cash flow: $2,309

House Hacking #2

What is it?

Purchase a home as a primary residence and live there for a year. Then go find another primary residence and place a renter in your home. Essentially, rinse and repeat! *Vacation homes are another option to use and rent out the remainder of the year. 5%-10% down payment vs. 20%+.

Pros:

  • Purchasing a house as a primary residence allows a much lower down payment (5%) as compared to an investment property (20%-25%).

  • Powerful strategy with cash efficiency, and gives the potential to acquire multiple properties over time.

Cons:

  • Moving to a home every year or so.

  • Takes time to grow your portfolio

The numbers of House Hack #2

Initial investment in 2016:

Purchase price: $420,000

Financing: 30 year Conventional at 3.75%

Initial investment: $21,000

Monthly cash flow (first 7 months):

Average monthly income: $600 (rented one room upstairs while remodeling basement unit)

Mortgage: $2,360

Cash flow: -$1,760

ROI:

2021 Property Value: $750,000 ($330,000 increase in 5 years)

$66,000 per year

Monthly Cash Flow (moved out after 7 months):

Average monthly income: $3,600 (upstairs tenants $2,100, downstairs tenants $1,500)

Mortgage: $2,360

Cash flow: $1,240

Short-Term Rentals #1

What is it?

Purchasing a property with the intent to use it on Airbnb, VRBO, or other nightly rental platforms.

Pros:

  • High cash flow, typical numbers are much higher than long term rentals.

  • Third party tools like pricelabs.com run algorithms to capture highest nightly rate.

Cons:

  • High involvement, you are in the hospitality business.

  • Upfront costs- furnishing, coordinating cleaners, and replacements as needed.

  • You pay the utilities.

The numbers of short-term rentals #1

Initial Investment in 2018:

Purchase price: $337,000

Financing: 20% down, 30 year Conventional loan at 4.75%

Initial investment: $70,600

Monthly cash flow (Year 1)

Average monthly income: $2,975

Operation expense: $600

Mortgage: $1,841

Cash flow: $534

Monthly cash flow (Year 2)

Average monthly income: $3,501

Operation expense: $700

Mortgage: $1,705

Cash flow: $1,096

Monthly cash flow (Year 3)

Average monthly income: $3,562

Operation expense: $700

Mortgage: $1,849

Cash flow: $1,013

Monthly cash flow (Year 4)

Average monthly income: $4,080

Operation expense: $700

Mortgage: $1,646

Cash flow: $1,735

Short-term Rentals #2

What is it?

Furnished Finder is a platform traditionally used by traveling nurses booking 30+ day leases. Post pandemic, traveling professionals use the platform too.

Pros:

  • Premium rate for furnished rental.

  • Less wear and tear on your property.

  • Ideal tenant- book months in advance and mainly working or exploring during lease.


Cons:

  • You are in the hospitality business.

  • Costs- furnishing, coordinating cleaners, and replacements as needed.

  • You pay the utilities.

The numbers for Short-term rentals #2

Conversion cost:

Furnishings: $4,800

Rental platform: $89

Online contracts: $80

Timeframe: 3 weeks

Long term rate 2021:

2 bed/1 bath rate: $1,925/month

Utilities + HOA: $213/month

Monthly cash flow: $1,762

Traveling nurse rate 2021:

2 bed/1 bath rate: $2,400

Utilities + HOA: $130

Monthly cash flow: $2,270

ROI:

($2,270-$1,762=$508) x 12= $6,000 increase in cashflow compared to long-term rental.

Long-Term Rentals

What is it?

Using a property for long term renters (at least 30 days, typical lease is 12 months). Their rent ideally pays for your mortgage, maintenance/capital expenses, and provides monthly cash flow.

Pros:

  • Consistent and known amount of income.

  • Renter typically pays utilities.

  • Minimal interaction with tenants.

Cons:

  • Turnover- finding new renters.

  • Maintenance costs.

  • You are the landlord unless you outsource and pay a property manager.

The numbers for Long-Term Rentals (in Milwaukee)

Initial investment in 2019:

Purchase price: $149,000

Financing: 25% down, 30 year Conventional loan at 4.375%

Initial investment: $38,459

Monthly cash flow:

Average monthly income: $1,920

Property management: $154

Mortgage: $793

Monthly cash flow: $973

ROI:

2021 Property value: $180,000 ($31,000 increase in 2.5 years)

$12,400 per year

Cash flow per year: $21,288

BRRRR

What is it?

A fix & flip + long term rental=BRRRR

Buy

Rehab

Rent

Refinance

Repeat

The numbers for BRRRR

Initial investment in 2012:

Purchase price: $141,000

Financing: 3.5% down, 30 year Conventional loan at 4.75%

Initial investment: $7,188

Monthly cash flow while living there:

Average monthly income: $825 (rent for half of duplex)

Mortgage: $1,061

Cash flow: $-236

ROI:

2021 Property value: $610,000 ($120,000 in 2.5 years)

$48,000 per year

Monthly cash flow now (10 years later)

Average monthly income: $3,300

Mortgage: $1,276

Cash flow: $1,774

Loans and Financing

Standard Agency Loans

Conventional

FHA

VA

30 year fixed

Lowest rates

Lowest fees

Bank Loans

Portfolio Loans

Bridge loans

HELOCs

Doctor Loans

Investor Loans

Stock loans

Commercial

Small business

Private Equity Funds

Bank statement

6-9% rate

30+/- days to close

Outside the box

Hard Money

8-12% rate

Most flexible

Expensive in fees

Quick to close

No vacancy required

Accessory Dwelling Units (ADUs)

Knox example

Benton example