For those of you who work in the Milwaukee area, I find myself glancing and enticed by some of the city owned properties that could potentially be worth looking further into. There are many perks that the city is offering to help encourage buyers to fix up and revitalize the neighborhoods. I'm not interested in looking in warzones, but has anybody bought a property through the city that could vote for or against it? TIA-Kat
@Katherine Earle we buy and hold SFs in the suburbs for our own portfolio, but the cool thing about working as an agent is that I get to see all sorts of deals - and how they pan out - even deals I would never pursue myself; all the way from commercial deals to city owned properties.
On the positive: helping to improve a neighborhood or a street feels good and gives us investors a higher sense of purpose - nothing like neighbors thanking you for turning that ugly eye sore into a valued piece with soem curb appeal. And there are amazing properties available for very low prices - huge brick duplexes with big rooms and large windows, well worth the effort if you consider the structure and not the financial model.
That's the down side - you can't really aford to fix the property the way it should be done. The vaulation is just not there. One of the biggest issues for newer investors is that the great cashflow gets at some point sucked up by capex, pushing the bottom line into the red. So most will bandaid the property and keep milking it, until you can no more.
There is an economic floor, below which the long term buy and hold model does not work anymore, and you want to be mindful of that.
@Marcus Auerbach Thanks Marcus. That's kind of the impression I was thinking. I drove to one of the historic properties and I was drooling over the potential beauty of this home, but the neighborhood was questionable and there wasn't a garage which was a deal breaker for me. I'm in New Berlin right now which is a bit too rich for my blood at this point, but it got me considering Milwaukee more if I found a better neighborhood that had a bit cheaper homes. Any suggestions you might have for somebody looking at milwaukee for the first time?
@Katherine Earle plenty of good areas in Milwaukee - when you evaluate a neighborhood, on average what you pay is typically what you get. In other words, there if you want a quality neighborhood, sellers will ask a price that is accordingly. You have to decide where you want to be on that scale. We usually buy in the suburbs and betters chool districts, but some of my clients like Milwaukee. In your case the entire area south of I-94 is attractive: Milwaukee, West Allis, West Milwaukee, Bayview, to some extend South Milwaukee and Cudahay.
Thanks Marcus! I really appreciate your candidness. I actually think I'm going to find myself in the Fox Valley for personal preference of smaller towns over the larger urban areas (ready for a nice change after living in San Francisco, Phoenix and NYC all of my life). That being said, it doesn't mean I won't find myself in the Milwaukee area as I dive deeper into the world of Real Estate investing in search for deals!
A couple of podcast guests have done quite a bit in Milwaukee that y'all may want to reach out to. One is Dawn Anastasi. The other one I can't remember. Y'all may also want to reach out to Shawn Ackerman. He's done quite a bit in Milwaukee.
Just because someone has done quite a bit in Milwaukee doesn't mean it's been good things. Every week I receive calls from investors on this forum, most from out of state who have bought incredibly bad deals, mainly because they relied on what was told to them rather than doing their own due diligence. I live in Milwaukee and it's a shame to see these situations and the families who are renting properties in horrible conditions.
There are several upstanding investors that I know that have done city of Milwaukee rehabs using their funding incentives. They are in Brew City REI Club, and you are welcome to join that group if you are on Facebook and ask this question. It's been asked before so you can also search.
You may also want to look in to Milwaukee COUNTY delinquent tax sales https://county.milwaukee.gov/E...
I can't speak to Milwaukee, but from what I've seen of city-owned properties, especially here in Kansas City's Land Bank, is that they are usually dilapidated and it bad areas (when they aren't just vacant land). But there are surely a few good ones in there if you look hard enough I would think.
all 9 of my units are located in Class C neighborhoods in the City of MKE. Areas where long time owners are moving out for a variety of reasons. They are still good/solid areas than command top dollar rents (assuming the property attracts top dollar tenants). It is like investing anywhere else, you have to know the neighborhoods/the markets.
I've purchased 2 properties from the City of Milwaukee (tax foreclosures). Keep in mind that there are two requirements when purchasing City-owned properties:
1. You are required to take the Landlord class from the City of Milwaukee (not a bad class actually, but you need to attend in person, it's not an online thing).
2. There is a deed restriction that you cannot sell the property for a number of years otherwise you face a penalty.
If you are okay with these two things, then it's worth investigating.
City Owned properties are not always available to purchase by investors. Some are specifically ear-marked for Owner-Occupants only, so you need to read the listing carefully. Also, the City will give you a "scope of work" and you need to make sure you have proof of funds that cover both the purchase price AND the scope of work. If you don't agree with the City's scope of work, then you need to submit your own when you submit the offer. As someone else on this thread mentioned, some of the properties may cost more to rehab than the value of the property, so not every property is a good deal. Many city-owned properties are located in D-class areas, so keep that in mind.
In both cases, I'm glad I bought the houses I did. I rehabbed them well, and the tenants I've placed after rehabbing are both still there to this day.