I am new to out of state investing and looking for suggestions for markets to purchase a duplex/triplex to begin my journey.
From my research, Wisconsin and Indiana are great states to start looking into.
Would love to get some guidance from other fellow out of state investors!
That's a lot to think about. I'm in Madison, WI. We have a growing tech industry (increasing millenial population), popular retirement destination (per Money Magazine #1 in 2020) and a large college town (UW Madison) and government (Capital of WI). However, it's overall a more expensive market than many other WI markets. That said, with demand, have seen decent appreciation (a campus area 3-unit recently sold from long term owners who averaged 7% appreciation per year on top of cash flow). That said, cash flow may be pretty lean initially, but should be able to see rent increases each year (although taxes and other expenses will go up as well). Within the city, like most larger markets, rougher areas show greater cash flow on paper, but may result in more economic loss if you run into more evictions for non rent payment/turn overs. If you are investing out of state, I'd consider going with a stable area where you will hopefully get long term tenants. Real estate taxes are I think higher overall in WI (I'd estimate them in Madison at around 2% of assessed value, which would likely be adjusted to your purchase price) so if you find a similar market with lower real estate taxes would obviously see better cash flow. Madison does have a lot of parks, well funded schools, etc., so maybe get what you pay for, but overall think it's a pretty high tax rate city, so something to think about if you are open to investing anywhere.
@Alexander Ballesteros I agree with a lot of what Peter said about Madison. So if you're looking for more affordable cashflow style properties, check out Milwaukee. They have a ton of multifamily inventory, and they are much more affordable than Madison.
Hi Alexander, I am in the Indy market and would love to connect with you. Inventory on Multis is very low but the deals are still there if you dig.
I also second what @Jack Medford said - I used to live near Beloit/Janesville WI and think those would be great markets. (Many of my friends are moving over the state line to get away from Illinois and I think those areas will benefit from that).
@Alexander Ballesteros First, take a moment to congratulate yourself to getting to the beginning of this journey. My suggestion to you is to narrow your search. First, decide on one or the other, then look into it. There is a certain amount of fatigue analyzing deals puts on you and if you spread your net too wide you'll drown yourself.
Next, determine what your budget is. A good piece of advice that was told to me a while ago was, "Figure out your budget, then go to the best neighborhood you can afford."
Lastly, understand that just because you are investing in a market like Milwaukee or Madison or wherever else, doesn't mean it's uniform across the board. Once deciding on a locale, you have to dig into where you want to be in the area. You essentially must transition from an out of state investor to a local investor and understand where you're putting your money.
That all depends on your overall goals for real estate investing and if you are looking for upfront cash flow or long-term appreciation. There has been a lot of opportunity in the midwest lately where prices are still very affordable. @Alexander Ballesteros
If you decide to invest in Milwaukee the neighborhoods can change drastically block by block. Let me know if you need advice on any of the neighborhoods in the city. Racine, and Kenosha are also great for cash flowing duplexes but have similar challenges as that of Milwaukee. Finding the balance between affordability and desirable locations is the hard part.
Thanks for the mention @Jack Medford . Lots to think about and understand when investing OOS and congratulations @Alexander Ballesteros for taking the first step in accomplishing your RE goals by doing research and asking for help. What you intend to accomplish in WI or IN (or anywhere for that matter) will hinge largely on your investing strategies and team(s). I’d be happy to share some insight on the areas and strategies I find myself spending time in. Feel free to send me a message with more info. @Rebecca Knox is a great resource as well as she has created multiple investment/resource groups in Milwaukee. Check out the Brew City REI Group on Facebook for starters. Best of luck!
Hi Alexander---nice to meet you. What's your budget for the duplex/triplex? That narrows down areas that might work for you. If you're thinking of Milwaukee and are like most out of state/out of country investors, you probably will be in better areas of northwest Milwaukee (53216, 53209, 53218, 53210, 53208) and 53212 or southside 53204 and some 53215 and maybe 53207 but that zip code is getting pricey. This is my opinion of course---it depends on your investing strategy/goals, resources and risk tolerance.
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