Milwaukee low income Rentals

18 Replies

Greetings, I am looking for guidance on low income rentals in Milwaukee, WI.  I own 2 duplexes and they have been listed with a local Prop. mang. co. for 4-5 months with success in filling them.  These were my first "out of state" properties.  To do over would vet my real estate agents much better and I am not happy with the Prop. Mang. co.

The real questions are is there anyone with knowledge of this market to open to a bigger discussion on the issues: 

Who has great property  management co. they would recomend and Real Estate agents that deal in low income housing in Milwaukee?

Thank you,

Stuart

Hi Stuart!  Following, as I'm looking to purchase in Milwaukee and needing to establish relationships with my core 4.  May I ask what property management company you're currently using, and what you're not satisfied with?

Hi there Tiffany, I am so new to this but I would say no I do not like them to this point.  They are in a lot of transition it appears and trying to find the person with the answers id very hard.  Needless to say I have 2 duplexes half filled and they have been empty since March and April.  I was not expecting it to take this long to get them filled.  I think it is hard to find company's that work in the "low Income" market. There is just not much money there, it must be a volume thing then and so on and so on.  Please let me know any info.you know/have or find out.  My company is Nimius.

All the best

Hi @Stuart Marshall and @Tiffany Reed

I have a decent knowledge of the Milwaukee market as Im local and self manage. Id be glad to chat more. Im curious to know more about your rentals, either neighborhood/zip, purchase/rent amount and level of updating. Feel free to message me if you dont want to talk publicly about it.

My 2 cents on low income housing is avoid it, and had we talked before you invested you probably would have. The cash flow can look nice, but deferred maintenance, vacancy, and cap ex costs can eat up a lot of that cash flow especially inside the city limits where a lot of the housing stock is 100+ years old. And as you are probably finding out, its hard to manage effectively. Im familiar with Nimius, In fact I met the owner of the company a few weeks ago at a local meetup and a lot of people I trust would recommend them, so I think this might be a case of "you cant get blood from a stone" 

Th best piece of advice I can give for both of you would be to check out some of the local REI groups. There's one on facebook called Brew City and you can meet some very knowledgeable and helpful people on there.

-Adam

Originally posted by @Stuart Marshall :

Greetings, I am looking for guidance on low income rentals in Milwaukee, WI.  I own 2 duplexes and they have been listed with a local Prop. mang. co. for 4-5 months with success in filling them.  These were my first "out of state" properties.  To do over would vet my real estate agents much better and I am not happy with the Prop. Mang. co.

The real questions are is there anyone with knowledge of this market to open to a bigger discussion on the issues: 

Who has great property  management co. they would recomend and Real Estate agents that deal in low income housing in Milwaukee?

Thank you,

Stuart

Stuart, we insure many of the investors in the Milwaukee market.  I personally insure around 5,000 units.

Almost 100% of the low income real estate is self managed.  If the owners stay on top of their business, they can make great returns.  For those who operate these as "Passive Investments" are always struggling to make $ on it.

There are many good managers out there, but many who also will not go into certain parts of town.  If you can't locate a replacement PM, send me a note and I will connect you with many of the ones my out of state clients work through.

@Stuart Marshall who was your buyer's agent and why were you not happy with them?  Just out of curiosity, would you be able to sell the property today and at least break even? 

What is Nimius's response to the vacancies? Do you see them marketing the unit? Are there applicants but none that will pass their screening?  

I know Dennis Schramer is a smaller operation but they have had some very good reviews. In fact, they are the only PM that manages in low income areas who actually have received a few documented good reviews from clients.  There aren't many PMs that manage in those areas because of many things; cost, time, headache and safety.  In fact, if someone asked me today who the best bet would be, I would say Nimius--and this is based on the many calls I get from out of state 'investors' who have bought properties in the hood, typically at way too high of a price, and want to sell shortly after and who those companies/people are that sold them or are managing these properties.  

Dennis also just hired some people as well. I always think it's best to speak with the person if you haven't already and share your concerns to see if you can come up with a resolution.....or find another PM but be prepared for different problems.  The other main challenge in low income investing is maintenance costs and all contractors, like PMs, do not like to go in the hood so expect to pay premiums.

Most of the people who I see that are successful in low income housing actually live in the neighborhoods, do the work themselves and self-manage.  They are extremely hands on. This is not PASSIVE income. Low income housing investing in Milwaukee should be considered active income in my opinion.   The biggest issue I see is that people, especially out of state, are not doing enough of their own due diligence and relying solely on other people's opinions, paying way too much for hood properties and comparing the buy to what they could buy in their own backyard. 

As an out of state investor, consider spending a little more on the purchase price to be in better areas. Long term, you probably will be spending less if you consider turnover, vacancies, maintenance and your time/peace of mind.  

Hey Stuart, I hope our conference call this morning was helpful in giving you a better sense of your investments; reviewing the applications we've received, feedback we've gotten, our leasing process, and my recommendations should have given you a better idea of what we've been doing to fill your vacancies.  As I mentioned, I'm always available to answer any questions you may have.

HI there Captain Rebecca, than you so much the the reply.  Yes a learning curve for sure.  I think Dennis is great and like any company especially dealing with this type of investment property, it is tough.  The Agent is Susan K. at Golden Oaks.  NOT happy, she should have steered/directed more and I should have done my home work better on finding the correct agents.  But moving on and trying to save these properties.  I live in Boulder and have a property here, very very different market obviously.  

Dennis said on this type of property 10-15% vacancy.  They are being marketed for sure a few applicants and people are not following through.  Many applicants don't meet screening.

Can we connect again?  I have more $$ to invest and want to learn and get more active. I believe that you would be a valuable assets.  For example, 1 of my properties has a couple boarded up house next door, I would love to get creative to possibly improve the neighborhood.

I will coming to Milwaukee in July, love to meet.

Updated about 1 month ago

Let me clear about our Agent, Susan K. worked very hard, communication could have been much better.

Thank you Dennis, super helpful.  David and I are learning more everyday.

Thanks for the knowledge.

Renting to low-income tenants is almost a sure way to lose money.  Especially if you are out of state.  

The only way to do it is to run it like a slum-lord.  Minimal upkeep, industrial strength supplies at cheap prices.

To clarify, you should definitely account for higher vacancy in low-income areas. When assessing low-income investment opportunities, I use 20% and sometimes greater as a more apt vacancy rate to account for the higher rate of non-payment and vacant units.  I recommend using more conservative numbers, so when/if you beat your expectation, you're ahead not behind.

Originally posted by @Eric D. :

Renting to low-income tenants is almost a sure way to lose money.  Especially if you are out of state.  

The only way to do it is to run it like a slum-lord.  Minimal upkeep, industrial strength supplies at cheap prices.

I'm going to disagree with you on this. I do not advocate 'minimal upkeep' on properties. You want to make sure your properties are taken care of otherwise larger problems can present themselves.

I work with lower-income tenants and I take care of my properties. I make sure that the roofs are in good condition, the siding, replace windows if they are not energy-efficient, etc. I basically ask myself, "would I live in this house?" and I have to answer "yes" to this.

It's never a good idea to purposely be a slumlord.

When you guys are talking low income in Milwaukee, what areas specifically? West of the freeway next to Bay View? North and Lisbon ish? Just curious what you guys think qualifies.

Thanks!

Subbed very interested in this thread.

@Brent Watanabe

I would say west of 43, from north up to Capitol. Between 8th and 35th. Area west of highway next to bay view is also lower income.

On the northside, I would say North Division and Borchert field are not so great--most parts of 53206 although I like some parts of Lindsay Heights. I would say on the south side, many parts of 53204 and parts of 53215 may be more challenging.  This of course is my opinion. 

@Stuart Marshall if you come down in July try to make it towards the middle or end. 

My husband and I run a private real estate investment social club, Brew City REI Club. Feel free to join and you can say I invited you for the first question. We can plan a happy hour where you can meet many real estate investors and professionals.

Please message or email where your duplexes are at now--general vicinity is fine and how much you had aimed at spending per property in the future. That will help narrow down the best neighborhoods for your resources. 

@Eric D.  I agree 100% with your point of view @Dawn A. . Lower-income are not all that bad. "Would I live in this house" is the fundamental question you need to ask yourself. If you rent a bad property to people, don't expect them to take good care of it. Nasty places attract nasty people. Treat people good and you will be well treated

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