Where to Invest and Where to Avoid in Milwaukee Wisconsin

Seattle, WA · Member since 2017 · 21 posts · 4 votes

I'm a real estate investor from the Seattle market looking out some out of state options, specifically Milwaukee, Wisconsin. Would love to hear from others on if this is a good general area to invest and then specifically which neighborhoods/areas to avoid (eg. high crime, no upside appreciation etc.), and or which neighborhoods to focus on.

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Dawn AnastasiPro Member

Rental Property Investor · Milwaukee, WI · Member since 2013 · 6k+ posts · 4k+ votes

Originally posted by @Dawn Anastasi:

When investing for cash flow, it's best to be realistic. I know some of my properties are worth way more than I paid, but only because I paid very little for them. However, I know that they're not going to skyrocket in value.

Example: 3 bedroom single family purchased for $23,000, put very little into it (a few thousand), and now it's probably worth about $55k - $65k based on other sales in the area. However, I've rented it out to the same family since I bought it, and since then, they've paid me $49,875 in rent. That's more than double what I paid for the house. They pay every month, they take care of the house, so I am happy with that investment.

It's funny reading this thread I posted on from 2 years ago. Update: the SAME tenants are still with me ever since I bought the house in November 2012. They pay $875/mo and as of this writing, they've paid me $71,750 in rent on a house I purchased for $23,000. It amazes me sometimes on the return I'm getting on that house. I still haven't raised the rent on them. They still take care of the house and will probably live there another 10 years.

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Shawn AckermanPro Member
Real Estate Entrepreneur · Mid West, East Coast · Member since 2015 · 3k+ posts · 1k+ votes
9y
@Simon Panosh Welcome to the Milwaukee market. I hope you decide to invest here. Milwaukee, At least for me is a cash flow play. Thus I invest in higher crime areas as the returns out way the negatives honestly. I've learned that property management is the key to success which is why I've built my management team myself. I'm from NY and have been investing in Milwaukee for some time now. And no matter what areas you invest in, the property manager will make or break your business. Regarding places to avoid. You can simply look at the trulia crime map and it will reflect zip codes like 53206, 53208, 53210 are rough areas that many investors avoid. That's where I thrive..... In my market there is pretty much zero appreciation but I don't mind that because I buy in cash 65% on a dollar and leverage my lender at 70% of appraised value with long term debt. For most of my properties I'm not in them for a dime. And month after month they yeild a return. So strategy and a team is what your looking for. I'd suggest you either take some trip, network, meet some local people and build your team or leverage someone in the market who is doing it. Best of luck to you my friend. Always remember to persist and you will WIIN!!!!!
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Jay HinrichsBusiness Member
Real Estate Consultant · Summerlin, NV · Member since 2014 · 45k+ posts · 66k+ votes
9y
@Shawn Ackerman I just cringe when I read that when you can buy in the hood for those prices get some lender to cash you out you have no skin in the game... this is 08 all over again.. you make it work because your in the game and a professional the average investor trying this will end up a statistic and you will be buying his burnt out landlord syndrome home in a year or two.. and some bank will have taken yet again another bath.. .its comes full circle now.
no true cash equity high risk property.
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Shawn AckermanPro Member
Real Estate Entrepreneur · Mid West, East Coast · Member since 2015 · 3k+ posts · 1k+ votes
9y
@Jay Hinrichs Hey Jay, As you know the hood is not a bed of roses.....But since my play is cash flow and I needed to find a way to scale, this is the play that has worked for me. My mortgages are laughable and I spend more on coffee then the P&I on a 30 yr. fixed mortgage. Sometime I can't believe the "as is" appraisals when they come back. But everyone has there niche and I was never interested in picking up a hammer. This window of opportunity will not last forever but as long as it's here I'll be taking full advantage LOL!!!! This of course is not for everyone. Definitely takes strategy and team building to invest in the rougher areas.
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Jay HinrichsBusiness Member
Real Estate Consultant · Summerlin, NV · Member since 2014 · 45k+ posts · 66k+ votes
9y
@Shawn Ackerman no argument here.. I was just commenting on how its come full circle.. Milwaukee in particular had some pretty hellasish mortgage fraud going on in these areas.. so you would have think the lenders would not go back to the same old stuff that cost them billions.. giving 100% loans... just too easy for borrowers to just up and walk away and then what do you have.. your 90k apprasial and 70k loan property is trashed.. and its sells for 20k to a wholesaler rehabber and cycle repeats.. bank takes a big hit.. you have no cash into the deal and you laugh all the way to starbucks.. LOL but yes taketh what the man giviths
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Simon Panosh
OP
Seattle, WA · Member since 2017 · 21 posts · 4 votes
9y
@ Shawn Ackerman - Thanks for the encouragement and input. It sounds like you have a strategy that has been working well for you! I am definitely interested in cash flow, but would love to be able to better handicap the city so I can understand the different neighborhoods and risk/reward.
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Drew Markert
Franklin, WI · Member since 2015 · 56 posts · 27 votes
9y
Simon Panosh I grew up in the south suburbs of Milwaukee. There's a wide variety of property classes in the city depending on what you're looking for. East of the Milwaukee River are the most desirable areas in the city (downtown Milwaukee, Whitefish Bay, Shorewood, etc.). It might be more difficult to find cash flowing properties, but you'll have a great chance for appreciation. Riverwest is an up and coming area. Anything west of Riverwest is going to be a cash flow play. If you're interested in these areas, Shawn Ackerman may be able to provide more insight. Bay View used to be up and coming, but is now more up than coming. Still a good chance for appreciation in my opinion - lots of great restaurants and businesses in this area. Walkers Point is also up and coming, but there are low income areas. West Allis is more of a working class city. In my opinion, it offers a mix appreciation and cash flow with more cash flow than appreciation. Cudahy and South Milwaukee are also working class cities despite being so close to the lake. Greendale has a good mix of cash flow and appreciation. Franklin mainly consists of nice single family homes. Oak Creek is growing rapidly and there's been a lot of development in the past 2 years (nice apartments, shopping centers, etc.). I'd love to hear what others think as well. Hope this helps! Drew
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Dave CarpenterPro Member
Investor · Cedarburg, WI · Member since 2013 · 439 posts · 150 votes
9y
@Simon Panosh welcome to Milwaukee, or at least maybe in the near future. There are lots of Milwaukee investors who are active on BP. Do you have specific criteria you are considering? Price range, class of property, type of property. Based on that, you may be able to find a few specific investors that would be willing to help you.
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Rebecca KnoxBusiness Member
Specialist · Milwaukee, WI · Member since 2014 · 1k+ posts · 1k+ votes
9y
We just had a deal in Riverwest, property was north of North Ave, west of Holton. I'm actually pretty amazed---the deal sold for $18000 and a local bank appraised the AS IS value at $75k.
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Dawn AnastasiPro Member
Rental Property Investor · Milwaukee, WI · Member since 2013 · 6k+ posts · 4k+ votes
9y
When investing for cash flow, it's best to be realistic. I know some of my properties are worth way more than I paid, but only because I paid very little for them. However, I know that they're not going to skyrocket in value.
Example: 3 bedroom single family purchased for $23,000, put very little into it (a few thousand), and now it's probably worth about $55k - $65k based on other sales in the area. However, I've rented it out to the same family since I bought it, and since then, they've paid me $49,875 in rent. That's more than double what I paid for the house. They pay every month, they take care of the house, so I am happy with that investment.
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6 Reply
Simon Panosh
OP
Seattle, WA · Member since 2017 · 21 posts · 4 votes
9y
@ Dave Carpenter - A definitely do have specific criteria I look for, but for me it also depends on the opportunities in the area. I've currently been investing in Washington state, in and around Seattle (2 hour radius). Properties are relatively expensive here, so I generally stick to small multi-fam properties where I can eventually add value in command higher rents. At this point, I'm not really looking to flip and generally have buy and hold cash flow model. Still learning about the market, I plan to take a similar approach for Milwaukee: focus on cash flow, buy and hold with opportunity to add value, small multi-fam to commercial. Generally I would like to avoid the worst areas and hopefully find the sweet spot of cash flow, with some upside potential.
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Simon Panosh
OP
Seattle, WA · Member since 2017 · 21 posts · 4 votes
9y
@ Dawn Anastasi - That's amazing to basically double the cost of the property in rent. One thing I've struggled with when looking at lower priced properties is that with rents being low, expenses can take a huge chunk of the rental revenue. Would love to here your take on expenses for lower price point properties in the area. Are you still able to make the numbers work? Or put another way, what % of rent are you generally budgeting for expenses.
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Shawn AckermanPro Member
Real Estate Entrepreneur · Mid West, East Coast · Member since 2015 · 3k+ posts · 1k+ votes
9y
@Jay Hinrichs LOL!!! Could not have said it better myself
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Dawn AnastasiPro Member
Rental Property Investor · Milwaukee, WI · Member since 2013 · 6k+ posts · 4k+ votes
9y
Originally posted by @Simon Panosh:

@ Dawn Anastasi - That's amazing to basically double the cost of the property in rent. One thing I've struggled with when looking at lower priced properties is that with rents being low, expenses can take a huge chunk of the rental revenue. Would love to here your take on expenses for lower price point properties in the area. Are you still able to make the numbers work? Or put another way, what % of rent are you generally budgeting for expenses.
Have you ever seen those asterisks on ads saying, "your mileage may vary"? This is not a typical house, this was an amazing deal I got. So not all deals will be like this. I specifically hunt for amazing deals or at least, really good deals. I don't have a ton of properties (I currently only have 17) so I make sure I am profitable as possible with the ones I have.
One of the #1 keys to making this work is getting good tenants. If you get tenants that pay their rent and take care of the property, then you're in a very good position. In some lower priced areas, you get crappy tenants that don't pay their rent, don't take care of the place then you are left with high turnover costs and lost rent, which eat into your profit considerably.
When you get a good tenant, treat them well. I remodeled this tenants bathroom last year. I installed a new light fixture because they wanted something prettier. These things don't cost hardly anything compared to the rents I bring in. I haven't raised rent on those particular tenants since I bought the house, and in fact when I took over back in 2012, I lowered the rent by $75/month from what they were paying the previous owner. Some may say I'm crazy, but I'm making this work for me and being very profitable at it.
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Jay HinrichsBusiness Member
Real Estate Consultant · Summerlin, NV · Member since 2014 · 45k+ posts · 66k+ votes
9y
@Dawn Anastasi I never raise rent on a good tenant.. I have tenants in the last of my rentals that have been there since the day i bought it 12 years ago.. never raised the rent.. turn over kills you in this industry
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Simon Panosh
OP
Seattle, WA · Member since 2017 · 21 posts · 4 votes
9y
@Dawn Anastasi - I've never heard of lowering rents, but if you can keep great tenants for the long term, maybe it's worth it. I completely understand that there may not be any hard and fast rules, but what areas do you avoid based on your experience?
0 Reply
Simon Panosh
OP
Seattle, WA · Member since 2017 · 21 posts · 4 votes
9y
Some great experience on this thread. Does anyone have solid recommendations for investor friendly agents/brokers in the area?
1 Reply
Jason BottPro Member
Insurance Agent · Nationwide · Member since 2014 · 2k+ posts · 1k+ votes
9y
@Simon Panosh definetly call Mr Duplex...@Michael Henry. He will be able to provide some great perspective for those areas you are looking at.
0 Reply
Ramon Jenkins
Real Estate Agent · Milwaukee County, WI · Member since 2009 · 3k+ posts · 525 votes
9y
@Simon Panosh when inventory pick ups -> Send me a private message if you have any general questions
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Account Closed
Investor · Singapore · Member since 2013 · 1k+ posts · 3k+ votes
9y
Originally posted by @Jay Hinrichs:

@Dawn Anastasi I never raise rent on a good tenant.. I have tenants in the last of my rentals that have been there since the day i bought it 12 years ago.. never raised the rent.. turn over kills you in this industry
Ive been having this discussion with my PM on my Indy properties. You are right Jay, turnovers kill. The only reason I would inch rents up though is if I plan to sell. Investors look at Cap rates (or GRM) so raising rents a little increases values more.
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David Faulkner
Investor · Orange County, CA · Member since 2015 · 2k+ posts · 3k+ votes
9y
Originally posted by @Account Closed:

Originally posted by @Jay Hinrichs:
@Dawn Anastasi I never raise rent on a good tenant.. I have tenants in the last of my rentals that have been there since the day i bought it 12 years ago.. never raised the rent.. turn over kills you in this industry
Ive been having this discussion with my PM on my Indy properties. You are right Jay, turnovers kill. The only reason I would inch rents up though is if I plan to sell. Investors look at Cap rates (or GRM) so raising rents a little increases values more.
Depends on the market really ... I tended to be very conservative in Phoenix raising rents, even if I was under market. In CA where the supply is super tight, I jack 'em up with market. I raised rent $300/mo in CA to get up to market and the tenant didn't blink, not a peep. Another buddy of mine in CA did this and the tenant did complain and raise hell and said it was an outrage and she wasn't renewing the lease ... then a couple weeks later when she went out and saw what was available for rent in the open market and for how much she came back begging my buddy to renew the lease with the increase ... LOL. Different markets, different strategies.
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Account Closed
Investor · Singapore · Member since 2013 · 1k+ posts · 3k+ votes
9y
Yeah, In CA I have consistently increased rent. Over the last two years we have raised rents by 600$ each on the Bay Area properties. ALthough I love my current tenant at one place and didnt raise the rent. They were actually suprised that I didnt. But also in the Bay Area the rate of increase has slowed down. Also cost of turn over in the Bay Area is not very high. I can usually have new tenants in within 2 weeks and dont pay anyone any commissions on it. Turnover cost in terms of repair is minimal and when you hold $3500 of deposit it covers a lot of damage!
These are the things people dont understand when comparing "cash flow" markets and prime markets.
1 Reply
Annette Margolis
San Francisco, CA · Member since 2017 · 6 posts · 2 votes
7y
@Simon Panosh hoping you can provide us with an update! Did you end up investing in Milwaukee? Where? How is your rental doing so far? Would you recommend the team you used/are using? :)
I'm in the San Francisco Bay Area and looking to get into the Milwaukee SFH cash-flow market as my first investment.
1 Reply
Marcus Auerbach
Investor · Milwaukee - Mequon, WI · Member since 2010 · 5k+ posts · 7k+ votes
7y
@Annette Margolis I work with a lot of OOS investors and out of curiosity just looked at Simon's profile page - looks like he has not been active since 2017, which is frankly, what happens to a lot of new investors.
When I think about why that is, I would say a lot of people underestimate how long it takes to build something substancial. It takes a lot of properties, before the cash flow amounts to something substantial. I always say the first 5 are the hardest - financially at least. Because at that point your cash flow starts funding down payments. And it usually takes many years to get there, in my case 7 years, before my passive income eclipsed my W2 as a corporate exec. Is it worth it? Absolutley, but you better be prepared to commit yourself for the long haul..
As far as where and how in Milwaukee. Where is easy, crime maps and school district will guide the way. SFH require a lot less management attention and can be managed remotley with some key contacts on the ground, which saves PM fees. Snow and lawn by tenant. Mulitfamily require a litte more management attention; you'll need a local PM. Also there is the issue of snow removal, ice management and lawn and tree care. Rental demand is strong and competition on the landlord side is weak - a lot of properties offered for rent are in poor repair. (Which in my opinion is setting up the owner for a long term fail).
On the purchase side, don't underestimate how competitive the market is in Milwaukee, we are currently selling within 18 days on market on average (should be 180 days in a normal market) and there are many local investors looking for a deal, in particular for a quality deal vs a cheap deal.
4 Reply
Dawn AnastasiPro Member
Rental Property Investor · Milwaukee, WI · Member since 2013 · 6k+ posts · 4k+ votes
7y
Originally posted by @Dawn Anastasi:
When investing for cash flow, it's best to be realistic. I know some of my properties are worth way more than I paid, but only because I paid very little for them. However, I know that they're not going to skyrocket in value.
Example: 3 bedroom single family purchased for $23,000, put very little into it (a few thousand), and now it's probably worth about $55k - $65k based on other sales in the area. However, I've rented it out to the same family since I bought it, and since then, they've paid me $49,875 in rent. That's more than double what I paid for the house. They pay every month, they take care of the house, so I am happy with that investment.

It's funny reading this thread I posted on from 2 years ago. Update: the SAME tenants are still with me ever since I bought the house in November 2012. They pay $875/mo and as of this writing, they've paid me $71,750 in rent on a house I purchased for $23,000. It amazes me sometimes on the return I'm getting on that house. I still haven't raised the rent on them. They still take care of the house and will probably live there another 10 years.
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8 Reply
Brock Mogensen
Real Estate Syndicator · Milwaukee, WI · Member since 2018 · 1k+ posts · 907 votes
7y
Milwaukee is a great market and I invest in it. Cap rates are still somewhat reasonable here compared to many other markets. I would suggest scheduling a trip to Milwaukee and meet with brokers, lenders, and PM's. If you can squeeze in a meetup or two during that time I would do that also. The area in which you are trying to buy in depends what type of property you are targeting (a,b,c). I suggest defining a specific criteria of property you are looking for prior to setting up your in person meetings in Milwaukee.
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