Milwaukee, WI good or bad rental market
Realtor · York, PA · Member since 2020 · 140 posts · 28 votes
Milwaukee, WI good or bad rental market
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Investor · Milwaukee - Mequon, WI · Member since 2010 · 5k+ posts · 7k+ votes
5yMilwaukee is often misunderstood, let me set a few things straight:
Definition: The CITY of Milwaukee has about 600k residents and does not grow, partially because it is fully built out with no land left to develop, also because values are too low to support new construction appraisals. But there are 19 other municipalities inside Milwaukee COUNTY. And then we have 5 counties all blending seemlessly together to a metro area of about 1.6 million people, which actually is growing (like Corina said, the IL exodus is one reason). When someone travels and says he is from Milwaukee, he could really be from the City of Milwaukee, the county of Milwaukee or the suburbs surrounding Milwaukee - West Allis, Wauwatosa, Brookfield, Mequon or New Berlin to name a few!
Home Values: Milwaukee metro ranks #61 out of the top 100 most expensive metro areas with a median home price of just 193k. Austin or Denver are at 400k for reference, San Francisco 1.1mm. Affordability is very high, because wages are strong. Interesting also that Madison, the much smaller capital of Wisconsin is also very expensive and ranks #31 which much lower affordability.
Rents and Appreciation: we have seen home prices go up much faster than rent in the last years, about 10% in 2020, while rent only 1%. Milwaukee has a reputation as a cash flow market, which historically has been more true, but that has changed. A lot of the cheap home prices that draw attention are in a few pockets that have high crime rates and many local investors stay away from. Good areas command much higher prices and competition is more than fierce. For anyone who wants to see the data check out the video on my BP profile page.
Should you invest in Milwaukee?
I would say propbably not and here is why: most of the phone calls and emails I receive are from people who live in an area where properties are about the same as in a good area in Milwaukee. Remote investing comes with a lot of disadvantages and an overhead cost burden which can quickly errode any advantage you may have hoped to gain. On top of that you are unfamiliar with the city and you compete against locals. We work with a lot of investors and the only ones that keep comming back for more after their first deal are investors from the top ten metro areas like the Bay Area, LA and NY - the economic delta is large enough that it makes sense to go out of State.
If you live in any of the midium priced markets your home field advantage is more much more valuable than you may think. The grass only looks greener.
12 Replies
- Rental Property Investor · Oconomowoc, WI · Member since 2016 · 996 posts · 431 votes5y
Milwaukee is generally a decent market. It does have a higher crime rate. It does have considerable more "red tape" and regulations for rental properties than it's neighboring areas. BUT, it's a hub in a growing state. Milwaukee has great potential and it does earn investors a fair shake right now. There is a fair amount of BRRR and flip opportunities due to large amount of derelict properties. Is Milwaukee growing? Yes, but not as fast as Kenosha or Racine. Yet as those grow it only serves that it will be benefit Milwaukee. As the Illinois exodus continues (it's a thing) Milwaukee Racine and Kenosha will collectively benefit from it all.
If you are serious about investing in Milwaukee, hit up Brew City REI on FB. It's an amazing group full of active investors, contractors, etc. It's a great place to network.
- Investor · Milwaukee - Mequon, WI · Member since 2010 · 5k+ posts · 7k+ votes5y
Milwaukee is often misunderstood, let me set a few things straight:
Definition: The CITY of Milwaukee has about 600k residents and does not grow, partially because it is fully built out with no land left to develop, also because values are too low to support new construction appraisals. But there are 19 other municipalities inside Milwaukee COUNTY. And then we have 5 counties all blending seemlessly together to a metro area of about 1.6 million people, which actually is growing (like Corina said, the IL exodus is one reason). When someone travels and says he is from Milwaukee, he could really be from the City of Milwaukee, the county of Milwaukee or the suburbs surrounding Milwaukee - West Allis, Wauwatosa, Brookfield, Mequon or New Berlin to name a few!
Home Values: Milwaukee metro ranks #61 out of the top 100 most expensive metro areas with a median home price of just 193k. Austin or Denver are at 400k for reference, San Francisco 1.1mm. Affordability is very high, because wages are strong. Interesting also that Madison, the much smaller capital of Wisconsin is also very expensive and ranks #31 which much lower affordability.
Rents and Appreciation: we have seen home prices go up much faster than rent in the last years, about 10% in 2020, while rent only 1%. Milwaukee has a reputation as a cash flow market, which historically has been more true, but that has changed. A lot of the cheap home prices that draw attention are in a few pockets that have high crime rates and many local investors stay away from. Good areas command much higher prices and competition is more than fierce. For anyone who wants to see the data check out the video on my BP profile page.
Should you invest in Milwaukee?
I would say propbably not and here is why: most of the phone calls and emails I receive are from people who live in an area where properties are about the same as in a good area in Milwaukee. Remote investing comes with a lot of disadvantages and an overhead cost burden which can quickly errode any advantage you may have hoped to gain. On top of that you are unfamiliar with the city and you compete against locals. We work with a lot of investors and the only ones that keep comming back for more after their first deal are investors from the top ten metro areas like the Bay Area, LA and NY - the economic delta is large enough that it makes sense to go out of State.
If you live in any of the midium priced markets your home field advantage is more much more valuable than you may think. The grass only looks greener.
- Real Estate Syndicator · Milwaukee, WI · Member since 2018 · 1k+ posts · 907 votes5y
Population growth in Milwaukee has remained pretty flat. However, there are certain pockets surrounding the city that have seen growth. Milwaukee and surrounding areas can provide strong cash flow. If you're going to target cheap properties in the city I do suggest connecting with a good PM to manage it before buying one.
- Realtor · York, PA · Member since 2020 · 140 posts · 28 votes5y
@Marcus Auerbach thank you so much for the clarification and some insight into your market. It is very appreciated. I think I might check more into my own market as you have said, thank you!!
- Realtor · York, PA · Member since 2020 · 140 posts · 28 votes5y
@Corina Eufinger thanks for helping me understand!
- Investor · Wichita, KS · Member since 2015 · 769 posts · 279 votes5y
@Brock Mogensen @Marcus Auerbach
Wichita has garnered way more attention than I ever thought i'd live to see - it's rightly justified by the strides the city has completed over the years but it's also driven prices up like crazy and a being a little big town a few people control the market on larger assets.
Anyways noting you said your homefield advantage is big - still curious about Milwaukee after taking a vacation (I know odd place to go but had a reason to be there) in July for 6 days. Stayed in Walkers point and loved it. Thought the neighborhood and surrounding areas were awesome - drove around quite a bit and blown away by the investment/energy, coffeeshops, etc etc.
I live close to KC but dont know it as well and the multi's I've looked at there are garbage deals compared to what I'm seeing in your hometown.
Am I crazy for wanting to invest there? Thoughts on Walkers point or any recs for a solid property manager or Realtor?
- Real Estate Syndicator · Milwaukee, WI · Member since 2018 · 1k+ posts · 907 votes5y
@Shane H. Walkers Point is an awesome up and coming area in Milwaukee. Deals in that area don't come up too often but there are some. I can connect you with PM's and Realtors, just send me a message.
- Investor · Milwaukee - Mequon, WI · Member since 2010 · 5k+ posts · 7k+ votes5y
We work with a lot of relocation clients and a lot of people are positivley surprised about Milwaukee when they come here the first time. I am glad you enjoyed it, even though Walkers Point is really not the finest neighborhood! There is some cool aspects to it, but you want to go east from there much more than west!
I have a client who moved back to KC and ownes in both markets and even tough he dislikes property taxes in Milwaukee (yes they are high, sales tax lower, not the best marketing strategy of the city) overall he thinks KC takes the silver medal.
- 5yCharles ClarkBusiness MemberReal Estate Broker · Milwaukee, WI · Member since 2020 · 306 posts · 209 votes
@Nathan Barshinger
Milwaukee is a city that you can not put it in one category or box. Just like most markets if you run the numbers for a property and it works for you, then I would say, “you can find cash flowing deals in Milwaukee”.
Putting a team together to ensure you have the resources to accomplish your RE investment goal is the most important move for you to make if you want to invest in this city. Go Bucks!!!
Raise the Standard RE LLC55 Reviews - Real Estate Agent · Waukesha, WI · Member since 2016 · 48 posts · 13 votes5y
@Nathan Barshinger I am an agent and investor in and around Milwaukee. There are alot of good opportunities here but it's not always easy haha. It's amazing what can change In a blocks space. If you are interested message me and we can discuss more. Goodluck
- Rental Property Investor · Hart, MI · Member since 2018 · 89 posts · 29 votes3y
I lived and worked around Milwaukee for the last 3 years before moving to Michigan and I was pleasantly surprised! I worked for a flipper out there who does amazing, but she knows the market very well and spends tons on marketing every month to find her deals. Definitely not easy! Just because the prices are cheap, doesn't make them a good deal!
- 3yDrew SygitBusiness MemberProperty Manager · Royal Oak, MI · Member since 2012 · 12k+ posts · 9k+ votes
We think the Midwest is a GREAT place for OOS investors to consider!
YES, we may be a little biased, but check out our blog here on BP comparing Detroit to other cities and Deep Dives on Metro Detroit cities & neighborhoods: https://www.biggerpockets.com/...
Your biggest question shouldn't be WHERE to invest, but HOW you will invest!
Many OOS investors set themselves up for failure because they don't truly take the time to understand:
1) The Class of the NEIGHBORHOOD they are buying in - which is relative to the overall area.
2) The Class of the PROPERTY they are buying - which is relative to the overall area.
3) The Class of the TENANT POOL the Neighborhood & Property will attract - which is relative to the overall area.
4) The Class of the CONTRACTORS that will work on their Property, given the Neighborhood location - which is relative to the overall area.
5) The Class of the PROPERTY MANAGEMENT COMPANIES (PMC) that will manage their Property, given the Neighborhood location and the Tenants it will attract - which is relative to the overall area.
6) That a Class X NEIGHBORHOOD will have mostly Class X PROPERTIES, which will only attract Class X TENANTS, CONTRACTORS AND PMCs and deliver Class X RESULTS.
7) That OOS property Class rankings are often different than the Class ranking of the local market they live.
8) Class A is relatively easy to manage, can even be DIY remote managed from another state. Can usually allot 5-10% vacancy factor and same for maintenance.
9) Class B usually also okay, but needs more attention from owner and/or PMC. Vacancy and maintenance factors should be higher than for Class A as homes will be older, have more deferred maintenance and tenants will be harder on them.
10) Class C can be relatively successful with a great PMC (do NOT hire the cheapest!), but very difficult to DIY remote manage. Vacancy and maintenance factors should be higher than for Class A or B. Homes will have even more deferred maintenance and tenants will be even harder on them.
11) Class D pretty much requires an OWNER to be on location and at the property 3-4 times/week. Most quality PMCs will not manage these properties as they understand most owners won’t pay them enough for the time required and even then it’s too difficult successfully manage them.
***Only exception is if an owner has plan & funds to reposition Class D to Class C or higher.Also, SERIOUSLY consider - do you really have the time to be a DIY landlord or should you hire a PMC?
Good luck with whatever you decide😊
Logical Property Management4.9459 Reviews
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