Real Estate Investor · Carpentersville, IL · Member since 2015 · 26 posts · 2 votes
I was looking at homes in both Milwaukee and Madison WI to see how the market is there and I am finding multi family homes ranging from $4,000 to $100,000 in Milwaukee and $100,000 to $200,000 in Madison. Why are the multi family homes so affordable in those towns? I know Milwaukee made the top 10 list for the unsafest city to live in, however, Madison is considered a great place to raise a family. Can someone who knows those areas share some light on these topics and if possible share some areas within those towns that are invest worthy.
Investor · Milwaukee, WI · Member since 2014 · 811 posts · 420 votes
11y
Well, multi family homes selling for $4,000 are mainly going to be city tax foreclosures where the properties have been abandoned for years in some cases and they are all going to be in D areas. There is no incentive to rehab these places as they are never going to be worth the amount of money you put into them because of the neighborhood they are in.
With that said, you can find occupied 4 families in Milwaukee in the $60k to $100k range in C to C- class areas that will bring in $1,600 to $2,200 roughly. But, I personally would not invest in these properties unless I did it myself or had some boots on the ground that you really trusted. The neighborhoods change block to block in some cases.
Madison is a completely different animal. I've never invested there. There are no D class areas in Madison. Prices will certainly be higher in general though and it is not very landlord friendly.
Investor · Milwaukee, WI · Member since 2014 · 811 posts · 420 votes
11y
Well, multi family homes selling for $4,000 are mainly going to be city tax foreclosures where the properties have been abandoned for years in some cases and they are all going to be in D areas. There is no incentive to rehab these places as they are never going to be worth the amount of money you put into them because of the neighborhood they are in.
With that said, you can find occupied 4 families in Milwaukee in the $60k to $100k range in C to C- class areas that will bring in $1,600 to $2,200 roughly. But, I personally would not invest in these properties unless I did it myself or had some boots on the ground that you really trusted. The neighborhoods change block to block in some cases.
Madison is a completely different animal. I've never invested there. There are no D class areas in Madison. Prices will certainly be higher in general though and it is not very landlord friendly.
Banker · Green Lake, WI · Member since 2014 · 19 posts · 7 votes
11y
I live in Madison but invest outside the city. In Madison it is very challenging to meet the 1% rule because of high prices and high taxes but its still possible in some areas. Southwest Madison and Fitchburg may be the place to start looking. The benefits of Madison are vacancy rates well below 3% and increasing rents do to low levels of unemployment. Madison continues to build new high end housing. There is definitely a shortage of affordable rentals in this city.
Flipper/Rehabber · St. Louis, MO · Member since 2008 · 489 posts · 300 votes
11y
@Sebastian K. commented, yes there are some areas of Milwaukee that are a little riskier than others and where the $4k - $5k multi-families are located they are in the D neighborhoods, however there are some great areas that are in the Milwaukee city limits but in B+ neighborhoods.
There is a great area that borders Wauwatosa, which is a great town that is growing. Commercial developers are investing in this area heavily. They are adding a Nordstroms, and other shopping centers, along with improving the roads. Millions of dollars is going in this area. West Allis has some strong areas, along with Bayview, South Milwaukee and may other areas.
I also know many buy and hold investors are hitting that 1% to 2% rule on their properties.
If you are interested in investing in Milwaukee, feel free to contact me. I have a team of people that I work with and we can get you going in the right direction.
I completely agree with @Nicholas Vandervelde that Madison is just too expensive. I have been living here for 8 years and have not found anything that will work numbers wise. high taxes, high property values, low vacancy and high rents all create a pretty significant barrier to entry in Madison. I am actively looking in Milwaukee, and like @Nicole Pettis mentioned, those areas still have some potential.
The only way I can see investing in Madison is "House hacking" by living in one of the units while renting out the other. There are some duplexes in Fitchburg for sale, but still dont think the numbers make sense unless you have a large down payment...just my thoughts. Hope it helps!
Totally new to the real estate investment world. What is the 1% rule?
The "1% rule" or "1% test" is a metric for looking at rental properties. Generally you want the rent to cost ratio to be >= 1%. For example, if you can get $1,000 per month for a property, you want to pay no more than $100,000 for it (meaning your all-in costs including closing costs and rehab).
Investor · Madison, WI · Member since 2017 · 21 posts · 6 votes
9y
Madison can be a little difficult to find deals, but they are out there. I purchased a duplex this past year with my wife on a short sale, and it meets the 1% rule. This may just indicate that it is currently a great place to own property and not necessarily to purchase for the time being.
New to Real Estate · the US of A · Member since 2017 · 107 posts · 14 votes
9y
Considering a turnkey property in Milwaukee. Can someone provide me an honest opinion of Capitol Heights? The property I'm looking at is a 3.5bd/1ba for a $90 all-in investment. I will have a PM of course, as I'm investing from New York.
I was looking at homes in both Milwaukee and Madison WI to see how the market is there and I am finding multi family homes ranging from $4,000 to $100,000 in Milwaukee and $100,000 to $200,000 in Madison. Why are the multi family homes so affordable in those towns? I know Milwaukee made the top 10 list for the unsafest city to live in, however, Madison is considered a great place to raise a family. Can someone who knows those areas share some light on these topics and if possible share some areas within those towns that are invest worthy.
Thanks again.
Did you do any research in the surrounding area or the condition of the property? What does it rent as? It might not be a great area for investments.
New to Real Estate · the US of A · Member since 2017 · 107 posts · 14 votes
9y
Milwaukee itself seems great, and this property is about 7 miles from downtown. Surrounding area seems like a typical area for a property at this price point. And I stumbled upon a local community group specifically in that area that cleans, fundraises, etc.
Property is newly, if slightly rehabbed (last month). Forecasted rent is $1100. Number are one thing, I was hoping someone from the area had some first hand knowledge of the area. Even a quick visit wouldn't help as much as someone who knows the city.