Help Deciding: Milwaukee or KC

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Help Deciding: Milwaukee or KC

William S.
Rental Property Investor · Overland Park, KS · Member since 2015 · 492 posts · 234 votes

I could really need some help deciding what to do here.

I'm about to jump into real estate investing (rental properties) and am stuck between which city to invest in. I'm not interested in doing both cities, just one.

I'm originally from the KC area, but recently moved to Milwaukee. I do not know how long I will be in Milwaukee (move a lot due to changing jobs). Someday I may move back to KC, or I may stay put in Milwaukee. I don't know what the future holds.

I've been researching for several months and have a few pros and cons for investing in each city. Please feel free to add more.

Kansas City

  • Pros
    • A lot of deals that cashflow
    • Lower crime 
    • Lower property taxes
    • Lower house prices
    • House are more updated (better quality)
    • Heavy investor city 
      • Easier to find pm, team, etc
    • Increasing home values
    • Job growth
    • I have more knowledge on this area
    • More turnkey providers
  • Cons
    • Not local (currently)

Milwaukee

  • Pros
    • Local (currently)
    • Some knowledge of the area
  • Cons
    • Higher house prices
    • Higher property taxes
    • Higher crime (shootings!)
    • Old homes that haven't been updated
    • Haven't found many turnkey providers

As you can see from above it seems to be an obvious choice, however my current location (living in Milwaukee) could play a big factor in the decision. Thoughts? Help? Thanks!

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Mike D'ArrigoPro Member
Turn key provider · San Jose, CA · Member since 2010 · 4k+ posts · 3k+ votes
10y

@Sam SmithThat figure comes from the U.S. Census Bureau so it's fairly general and not necessarily current. Actually, the Kansas City rental market is on fire right now. Forbes ranked Kansas City as having the 4th highest rental rate increase in the nation at 8%. We sell turn keys in KC and are having absolutely no problem getting tenants, even in these typically slow winter months.

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  • Casey Kooiman
    Rental Property Investor · Milwaukee, WI · Member since 2016 · 90 posts · 11 votes
    10y

    Sounds like you are more excited about KC :) I would go for that IF you have people on the ground in the meantime.

    I've invested in Milwaukee, and I probably won't invest anywhere else anytime soon. House prices are pretty low, and rents can get pretty high in certain areas. You just need to know what areas to look at and what type of renter you are seeking. Knowing the market is really important in Milwaukee to avoid areas of high crime and lots of problems. I don't live in Milwaukee now but still have the properties. A maintenance company takes care of them in the meantime, and I can jet on down if anything major pops up.

    1Reply
  • Dan C.
    Milwaukee, WI · Member since 2013 · 384 posts · 109 votes
    10y

    @William S. - I invest in Milwaukee but I have lived in Kansas City and my parents still live there.

    It seems as though you are more comfortable in KC. Your future in Milwaukee sounds uncertain, whereas you will always have your KC roots, so I would go with that.

    Very generally speaking the cities are similar in the affordability and cash flow potential of rental properties.

    I have to call you on saying that Milwaukee has worse crime and shootings.  Shootings are so bad in parts of KC that it was the topic of Nightline just last month, and there was a recent documentary on how bad it is called "Kansas City Murder Factory."

    Having lived in both I'd have to say in the aspect of crime its really the same deal - both have some very rough areas, but in both the vast majority of areas are quite safe.

    0Reply
  • William S.
    OP
    Rental Property Investor · Overland Park, KS · Member since 2015 · 492 posts · 234 votes
    10y

    @Casey Kooiman

    How far away are you from your properties?

    @Dan C.

    We are trying to stay in the Milwaukee area long term. I have no career future in KC, where Milwaukee or Wisconsin in general is very good for my profession. In Milwaukee I have been looking at West Allis and the Northside. In Kansas City I have been looking at Grandview, Raytown (near Cerner). When comparing these areas I'm finding the Milwaukee homes are run down, more expensive, and have more shootings. In Kansas City, the properties are cheaper, up to date, and have crime, but hard to find any shootings.

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  • Casey Kooiman
    Rental Property Investor · Milwaukee, WI · Member since 2016 · 90 posts · 11 votes
    10y

    I'm about a 4 hour drive now. I would avoid West Allis (others might have different opinions). Don't know as much about Northside. 

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  • William S.
    OP
    Rental Property Investor · Overland Park, KS · Member since 2015 · 492 posts · 234 votes
    10y

    @Casey Kooiman

    Where are you finding cashflow then? Those are the only areas I can find... I use to live in the Eastside and have friends in Bayview but the numbers don't work there.

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  • Brandon Holley
    Lenexa, KS · Member since 2015 · 206 posts · 53 votes
    10y
    Personally I would invest where you are. Even though I love KC and the success I'm experiencing, I couldn't recommend investing out of state when you have the option of investing locally.
    0Reply
  • Dan C.
    Milwaukee, WI · Member since 2013 · 384 posts · 109 votes
    10y

    @William S.OK, I see.  So I suspect what  is happening is you are using the same price range for both cities, and for Milwaukee that is getting you rougher areas than the same price point in KC.  So while Milwaukee is a moderately priced market compared to many big cities, it may still be more expensive than KC.  For Milwaukee you will  probably need to increase your price range to get into neighborhoods you are more comfortable with.  I can give you some more advice via PM.

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  • William S.
    OP
    Rental Property Investor · Overland Park, KS · Member since 2015 · 492 posts · 234 votes
    10y

    @Dan C.

    I thought that may be the case. Price range is $55-$65. I can find deals in KC easily for that. I have even found a few in the $40s... Advice for Milwaukee would be very helpful for my decision. Thank you.

    0Reply
  • Dawn AnastasiPro Member
    Rental Property Investor · Milwaukee, WI · Member since 2013 · 6k+ posts · 4k+ votes
    10y

    I buy most/all of my properties <$40k so I'm not sure how you're looking.  The last one I bought is right next to a church and was $25,900.  It needed work, so if you're looking for something already fixed up, you're definitely going to pay in the $40k + range.

    Podcast Guest on Show #29
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  • William S.
    OP
    Rental Property Investor · Overland Park, KS · Member since 2015 · 492 posts · 234 votes
    10y

    @Dawn Anastasi

    As far as rehab goes I'd be willing to do very little (paint, etc). Thats it. No replumbing, structural issues.

    0Reply
  • Troy Owen
    Investor · Whitefish Bay, WI · Member since 2014 · 29 posts · 7 votes
    10y

    William, there are pros and cons to every market.  Some areas make it easier to succeed than others but I don't believe there is a perfect place to invest.  There are drawbacks to every geographic area, investment strategy, etc.  I like the idea of getting started locally when possible.  Looking at your pros and cons: there are plenty of deals that cashflow in Milwaukee.  Houses are older the closer you are to the City and they get newer the further removed from downtown you are.  I don't believe finding a PM, team, etc. in Milwaukee is any more difficult than any other city.  If you need help or contacts; I'm happy to help where I can.

    You also said in a later post that you are looking to stay in Milwaukee long term because you don't have the career options for your line of work in KC.  IF you invest in Milwaukee and are concerned about the crime you need to look into that further.  Just because the crime statistics are awful in Milwaukee, that doesn't mean every neighborhood or suburb is a high crime area. I believe there are some crime maps online which can help you decide which neighborhoods work for you.

    -Troy

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  • William S.
    OP
    Rental Property Investor · Overland Park, KS · Member since 2015 · 492 posts · 234 votes
    10y

    I have found some properties that will cash flow $250-$300/m in the Northwest corner of West Allis and a few in West Milwaukee. Would anyone be willing to give their thoughts on these areas? I would like something in a C+ / B area... There could be some possibilities in South Milwaukee or Oak Creek?

    0Reply
  • Jason Hawk
    Real Estate Services · Olathe, KS · Member since 2015 · 329 posts · 57 votes
    10y

    Hello William - feel free to connect with me. Love to help you regards to Kansas City area if interested!!

    0Reply
  • Mike D'ArrigoPro Member
    Turn key provider · San Jose, CA · Member since 2010 · 4k+ posts · 3k+ votes
    10y

    @William S.It seems to me that you're completely overlooking the most important part of your analysis. You're focused on the micro level without evaluating the bigger picture of the economic and demographic fundamentals of the market. You should be looking at whether the populations are growing, whether there is job growth and if income is growing. That tell you what the health of the market is. The start looking at price/rent ratios etc. Also, it doesn't make sense to look at the crime rate of an entire city. Every medium to large city will have good areas and bad areas. You have to know what those areas are and don't buy in the hood. The comparison char below might help you.

    1Reply
  • Account Closed
    Registered Nurse (ICU) · San Jose, CA · Member since 2014 · 496 posts · 332 votes
    10y
    William S. Kansas City is definitely the stronger market. I have heard good reviews about a company called USREEB. I may use them to get into that market sometime in the future. Good luck
    2Reply
  • Sam Smith
    Investor · Phoenix, AZ · Member since 2015 · 30 posts · 6 votes
    10y

    That vacancy rate seems high.  Any truth to that.  Have people been having a difficult time finding tenants?  You always have to factor in vacancy in your number and it can be significant.  Your cash flow is negative during vacancy.

    0Reply
  • Mike D'ArrigoPro Member
    Turn key provider · San Jose, CA · Member since 2010 · 4k+ posts · 3k+ votes
    10y

    @Sam SmithThat figure comes from the U.S. Census Bureau so it's fairly general and not necessarily current. Actually, the Kansas City rental market is on fire right now. Forbes ranked Kansas City as having the 4th highest rental rate increase in the nation at 8%. We sell turn keys in KC and are having absolutely no problem getting tenants, even in these typically slow winter months.

    2Reply
  • William S.
    OP
    Rental Property Investor · Overland Park, KS · Member since 2015 · 492 posts · 234 votes
    10y

    Thank you all for the comments. Still not a clear decision for me yet. Maybe I can get more specific in comparing the areas of each city and get some feedback? I wish this was a clear answer...

    Price Range: $50-$65k

    Rehab: Only minor cosmetic work...

    Milwaukee:

    Thurston Woods

    McGovern Park

    West Allis 

    Kansas City

    Grandview 

    Raytown

    Independence

    0Reply
  • Jason Hawk
    Real Estate Services · Olathe, KS · Member since 2015 · 329 posts · 57 votes
    10y

    From experience, if you find a good house and solid neighborhood Raytown, Grandview, and Independence is a good option. We currently have couple properties in Independence and the returns are great!

    0Reply
  • Chris DawsonPro Member
    Real Estate Broker / General Contractor / Property Manager · Kansas City, MO · Member since 2010 · 395 posts · 425 votes
    10y

    @William S., its hard to argue with @Mike D'Arrigonumbers.  Investors are always suppose to be numbers people.  However, its sometimes easier said than done!  I think your inability to choose comes more from your fear of starting than from your fear of choosing the wrong market.

    There is money to be made in both cities.  That's really not an issue.  I think long term you already know KC is the best market for YOU to invest in because of the numbers and because of your family ties to KC.  

    My question for you is: Why must it be only one city or the other?

    Why not do your first deal in Milwaukee to learn the ropes so you can be on site in 30 minutes if something goes wrong?  Get the first time mistakes out of the way with a local property (or 2 or 3) and THEN you can start looking for your long term investments in Kansas City.

    2Reply
  • William S.
    OP
    Rental Property Investor · Overland Park, KS · Member since 2015 · 492 posts · 234 votes
    10y

    @Chris Dawson

    This is a good idea. The only problem is Milwaukee properties cost more (higher price, plus some rehab needed) and have shootings in the area... Is having two or three shootings in the area normal, or am I being paranoid? The areas in KC are not the greatest, but there are no shootings.

    0Reply
  • Gino PassantePro Member
    Professional · Milwaukee, WI · Member since 2013 · 52 posts · 25 votes
    10y

    west allis is safe

    0Reply
  • William S.
    OP
    Rental Property Investor · Overland Park, KS · Member since 2015 · 492 posts · 234 votes
    10y

    @Gino Passante

    I agree.. Thats where I would buy but more expensive and in need of rehabs.

    0Reply
  • William S.
    OP
    Rental Property Investor · Overland Park, KS · Member since 2015 · 492 posts · 234 votes
    10y

    Thank you everyone for your help. KC just makes more sense for me. I will now be seeking to purchase in the next couple of months.

    0Reply
  • Nathan Schoenborn
    Self Employed · Milwaukee, WI · Member since 2015 · 135 posts · 45 votes
    10y

    I agree with @Chris Dawson. You've received all the answers you need. There's no secret answer that will give you the magic formula.  Even if you pick the wrong city, your mistakes are where you learn the most anyways.  So time to just do it.

    0Reply
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