Really ? in the city of Milwaukee WI you can buy a Duplex for $2,500 ! I can only guess at what the condition of these properties ( 60k in rehab) in an area that won't support the cost of the rehab. Still I find some of them interesting.
You're going to find these in 53205, 53206, 53208, 53210, 53212, 53216 and probably about 100 years old. Not exactly the best areas or the best housing stock. The ones you're looking at are City of Milwaukee Tax foreclosures. Basically they're just trying to get rid of them.
Your initial thought is accurate. You need to spend 50k to get a property rent ready when its value after doing the repairs would be 30k tops. That's why some of these properties will never sell.
Functional and socio economic obsolencance
Dawn, Darren and Jay are ALL correct AND if they're city of Milwaukee tax foreclosures, that means a city inspector has already gone through them THOROUGHLY and done a full report on ANY and EVERY issue wrong inside and out and that means they want it fixed up to code (i.e. fixed just right, not some rigged up quick fix) and ALL plumbing and electrical work MUST be permitted, thus you're hiring a master plumber/electrician for that work at around $70/hr +/-.
I very, very much caution anyone from skirting the permit rules not just for possible trouble with the city, lots of people do all sorts of unpermitted work and get away with it from city's point of view, but for liability reasons. The law as I understand it says as long as whatever unpermitted work you do or have done is in use-could be 20, 30, 50 years!-then YOU are liable for any damages resulting from it, if something goes wrong. If you've ever seen an insurance company investigate a large property claim, you'll know what I mean, they'll dig as deep as they have to and God forbid if someone is injured or killed, then the police/fire dept's will be looking too.
I've heard people say "Yeah, but home electrical is so simple, I do it just as well as any electrician, there aren't going to be any issues!" That might be true, normal home wiring isn't all that complicated, BUT here's another twist, what if some goof comes in after you and your "up to code but not permitted" work and THEY mess it up and then there's a fire and someone dies, leaving a multi-million dollar lawsuit? Then its back on you to prove that work that was done when you owned the place 15 years ago wasn't the problem, good luck with that!
Skirting the permit rules isn't even an option on the city owned homes, they know what's wrong and will expect to see those permits or you'll have a "cease all work" order on the front door in no time and that's when the inspector comes back with the MPD as his/her backup. Also, no guarantees that if the inspection was done say June 1st, that by now in the areas where the cheap tax homes are, that further stripping, squatting or just plain old vandalism hasn't done even more damage, although the city may adjust the price for that, but if there's another 5 grand in damage to a $2500 house, that doesn't then make the price -$2500.00!!!
Very thorough response from @Robert Taylor , although there are more to it including local politics, etc...
I'll agree with @Kingsley Siribour as well! One thing I've mentioned before a few times as a caution to any "out of town" investors looking to buy in the lower or lowest priced areas of the city of Milwaukee (and that can honestly mean someone from across the country, or even a fellow city resident, especially say if they live in one of the very expensive parts of the city, or just outside of the immediate area they're investing in) because the city has had enough of people who see these incredibly low sale prices with comparably high rents and who want to come in and collect every last penny in rent, but pinch their pennies to an extreme when it comes to upkeep and especially the safety of their tenants.
I don't mean to scare anyone away from investing here, but we do have a lot of central city residents who take great pride in their homes, even in the areas where the local paper's online "crime map" has all of its little dots concentrated heavily! If that is someone's intention, to buy cheap, fix cheap and upkeep cheap, yet collect that rent and do their best to not stick anything back into the property, word gets around and the inspector's office can easily make life very uncomfortable. They've seen too many slumlords come and go! Also, building code fines can quickly turn into civil judgements, so even if that slumlord decides to abandon the place, that judgement will follow them from coast to coast!
On the other hand, if you show a willingness to help improve a block or an area, the city can also be a very good friend, too!
Definitely! Some investors took advantage of the 2-year code compliance waiver and never put anything back until it expired living lots of mess behind among others.
I always let clients know they have about 4 months before the city enforcers
will be stopping by the property, so far it has not been an issue.
-> Keep in mind I only been part of about 9 or 11 city owned successful
renovations over the last 3 years.
-> My personal initial goal was to help purchase and renovate over 100 city own properties within next 10 years, but I had to cancel that idea after dealing with a
few difficult contractors.
-> I would suggest that everyone make sure your contractors are pulling all
necessary city of Milwaukee permits.
( plumbing, furance, water heater, fence, and etc )
-> This week tip: ( city owned properties )
As the buyer/listing agent I typically revisit each client work
site within three months to cover my rear with the city of Milwaukee.
There are still many more topics we could delve into, the vacant property registration requirements, contractors need to be both state AND city of MKE licensed and I'd say the VAST MAJORITY of craigslist (besides the ads that are for a known contractor) are BS contractors. Oh yeah, I can do it all, roof to basement blah blah blah.
I'm going to follow in @Jenkins Ramon footsteps and offer my first "tip of the week or whatever it will be and that is for ANYONE you have even slightest inkling might not be totally legit AND who give you proof of in surance-TAKE THE THREE INUTES AND CALL THE INS COMPANY AND SEE IF IT IS FOR REAL!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!
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