Investing in Madison WI

12 Replies

It is my understanding that in real estate investing, there are always opportunities to invest regardless of the market. That said, I am trying to figure out what opportunity may be available in the Madison WI area. the rental market is very strong here, 3% vacancy rate. the rents are high, property taxes are high, and very few "deals" that I can find regarding SFH or Multi Family property. The sales price is high and when adding expenses, etc. cannot find much at the 1% rule let alone anything close to that without being in a "D" neighborhood. Does anyone have experience investing in Madison? Any suggestions or ideas? My goals are to invest in 4-5 SFH then pivot to multi's (2-4plex). Thanks!!!

@Douglass Belt   welcome from someone nearby in Milwaukee!

Madison is a very nice place to live.  It has a lot of amenities that people love and its , but that also comes at a price.  Madison is about 1/2 the population as Milwaukee too, and in a smaller city you might also find prices higher.

Dawn Anastasi, Core Properties, LLC | http://www.coreprop.biz | Podcast Guest on Show #29

Douglass welcome aboard.

I recently visit Madison about 4 weeks ago and totally agree with you.

A great deal of investors from Madison visits Milwaukee and other surrounding REIA groups. My suggestion would be to attend your local meet ups and branch out to a community you feel more comfortable with. Good luck moving forward.

Jenkins Ramon, JMWPS Ventures, LLC | [email protected]

@Douglass Belt  Madison is not the market I'm actively searching, but a number of properties I have looked at were priced too high.  With the prices of real estate and the stiff competition, I've been wondering if the only way to truly find the great deals is through direct marketing campaigns.  Have you put any thought into that?

Also, have you looked into surrounding markets on the border of Dane County?  Those are typically a bit lower priced depending on where you look but most of them still commute to Madison for work everyday.

Just a thought Dougless, good luck!

I agree with you. Things on the market here now (I live and invest in Madison) are nowhere near 1%.  We bought our rentals (duplexes) in 2001, so we're doing pretty well as they've appreciated, but can't find anything else here to add to our portfolio.  

My neighbor is a realtor with family in construction. He buys SFH fixer-uppers from elderly (or their families) when they move on to assisted living or pass away. Then his cousins fix them up and he rents them at a premium.

Good luck! and let me know if I can help in any way,

I agree with @Dawn Anastasi. Madison is one of the fastest growing small cities in America and there are many areas that are quite expensive. I've driven through many areas in the city and in some way, every area was growing and had new expensive condos/apartments under construction, which tends to drive the price up.

I dont invest in Madison, but if I were to start, I'd look in neighborhoods along Stoughton Rd, in my opinion, there are decent areas that aren't too expensive

I am new to BP but not new to investing in buy and hold.

The reason you are not seeing the 1% rule is because you are comparing apples and oranges. Madison is a market where you are likely to get significant appreciation, so returns are lower. You are not likely to find rehabs or REO or distressed properties in Madison. Those are the properties that give you those amazing returns.

But I am following my mother's strategy. She bought 5 small condos in the UWS of NYC for $125K in the 80s and 25 years later they had increased in value 400-500% on top of all the cash it generated.

I don't have property in Hudson OH and Washington DC. The Hudson property has a very high cash flow but very little appreciation compared to DC properties which if you sit tight will increase like UWS did in NYC. Same with Madison if in good location. Think young professionals, not families.

Hi Doug,

I invest in duplexes in Madison, WI and I am seeing a handful of 1%+ deals on the west side of town...they're not all that common, but there are few there.  I haven't done a lot of research for the east side and i know that downtown is pretty much a non-starter.  I'd recommend taking a look on the west side (53711, 53717, 53719 zip codes).  I work with a realtor over here that has a pretty good handle on it as well.

Hi Lucas Wagner-

Thanks for the feedback and I appreciate the input on zip codes. The more I look into COC return, etc I am thinking SFH might be a good strategy currently in the Madison Wisconsin market? More availability of homes, good cashflow and priced reasonable. Thoughts?

 I would be interested in discussing further or perhaps meeting up for coffee sometime.

Hi Tanya F- Good feedback and thanks for your thoughts. Is there are particular area in Madison you have invested with Duplexes ? What areas has your cousin seen success with for the SFH homes he fixes? Thanks again for the input!

no problem.

when i started looking to invest i was going to track down SFH's as well, but I ultimately found better cash flow in the duplexes. I'd love to chat to see what you're seeing for SFH's though. Let me know if you're on the west side of town ever.

Hi @Douglass Belt  (not sure why this mention isn't becoming highlighted)

Our two rentals (each with 2 apartments) are on the east side Atwood neighborhood (by the Barrymore) and on the north side, by Warner Park.  We bought them in 2001 for ~$155-$170K and now they've appreciated quite a bit. Gross monthly rent for the $155K purchase is about $2600 (but we put a lot into that house in 13 years), and for the ~$170K building is $1900.   Both buildings have a 3BR apt and a 2BR apt.

Our neighbor, who is a realtor, buys small SFHs, one became available on our street on the near west side when another neighbor died. I'm not sure how much he spent to buy it but I'm guessing about $170-200K for an ~800 sq ft 2BR house. He had it flipped (ready to rent) in a couple of months, and not sure how much he put into it. He fixed it up inside and out with help from family (as I understand it), and it was recently rented for $1700. He's not my cousin, but I'm happy to put you in touch with him. He sends flyers in our neighborhood, but I'm not sure how wide his area of expertise is (neighborhood-wise) in Madison real estate. But you can see this particular SFH is barely 1% after a remodel.

I hope this gives you some idea!

@Lucas Wagner , I'm also interested to learn your experience on the west side.

@Douglass Belt - Madison is tough right now. I get MLS notifications for all SFH under 200K and all multi-family residences and apartment buildings. It'd be tough to get a 1%'er multifamily, and a 1%SFH is probably of the question (more likely to be 0.6-0.8%). GRM numbers here have risen from about 8-9 to more like 10-11 for multifamily alone, which is a significant leap.

If you want, feel free to send me deal numbers / locations and we can discuss them.  

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