Updated over 5 years ago on . Most recent reply
#2 Starting Out Contributor
- Investor and Real Estate Agent
- Milwaukee - Mequon, WI
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Milwaukee Market Update June 2020 - why the market is so hot
#2 Starting Out Contributor
- Investor and Real Estate Agent
- Milwaukee - Mequon, WI
It feels like it was just a few weeks ago when the US got hit by the pandemic, states were going into shut down and we all got worried if we are going to see rents come in on April 1st. Evictions were suspended and newer investors pulled out of deals or asking for advise here on BP. Is the real estate market going to crash? Are we going to see home prices drop? For a while I was a little nervous too; heck - Grand Cardone was in trouble (or was he.)
Anyway, fast forward to June: rents have come in almost better than usual and the market did not crash, just to the contrary. Covid19 has had a very short lived effect on Buyers, after about 2 weeks in lock-down, we saw activity levels increase slowly at first, but furiously in the last weeks. Seller's on the other had have been more shaken by Covid: after all, selling a home means a bunch of strangers come right in you bedroom. So the unexpected result is that we are seeing an inventory squeeze and prices are being pushed up way over asking by multiple offers.
- Marcus Auerbach
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Most Popular Reply
@Justin Schaefer I like the thought process. Banks aren't loosely lending. The DSCR that many of the bigger banks are using is 1.4 or more. That's incredibly tough to come by when the multipliers a lot of sales are using is 1.1 to 1.3. That doesn't leaving much room for profit, in any deal really for MFH. You essentially have to self manage otherwise MKE is quickly turning into a 5 CAP market with property managers taking 10% at a minimum with fixed flat fee prices, even if they don't collect any rent! Ludicrous in my opinion but that's how things are transforming. Back to the banks, with DSCR figures being so high, many owners have more money into their deals, which has given more financial backing to equity ratios. I don't see COVID having much effects the market from a bankruptcy perspective. Investors have collected their rents. A minimal amount of company's have folded. As long as supply doesn't flood the market, expect prices to continue to maintain and increase.