Please advise on Milwaukee REI chosen market
New to Real Estate · Atlanta, GA · Member since 2020 · 25 posts · 23 votes
Please advise on Milwaukee REI chosen market
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Investor · Milwaukee - Mequon, WI · Member since 2010 · 5k+ posts · 7k+ votes
5y@Damien Lee they say the grass always looks greener on the other side! One might add: the grass is greener where you water it! I know Atlanta has gotten competitive, but we have the same here.
If I may tell you. You should always invest in your backyard, where you have the homefield advanatage. If you invest in Milwaukee you have to compete with all the local investors! But everything you do remote, every interaction, every quick check on a property has a cost burden, that locals don't have.
And you are in a great market, it's not like you are in CA! You have to focus on cash flow, but going remote will just eat into that cashflow every step you take.
11 Replies
- Milwaukee, WI · Member since 2020 · 61 posts · 25 votes5y
@Damien Lee Congrats on getting ready to take the plunge! It is good that you've been able to narrow down budget, property type and area. While I've seen a lot of people interested in investing in Milwaukee, they are most often from the Bay area since it isn't practical to invest there due to extremely high property values. I wouldn't have expected the same from Atlanta since I'd always thought that was supposed to be a more affordable city if not other parts of the state (Savannah or Athens). What made you decide to pick an out of state city you've never been to over options closer to home, especially for your first property? I'm not overly familiar with the real estate market in Georgia, although it seems like many parts of the country are seeing big rises in home prices lately.
You mentioned wanting to get used to the flow of being a property manager. How much of the property management are you planning to do yourself given the distance?
To learn more about the Milwaukee market, I'd highly recommend Marcus Auerbach's YouTube channel. He has a variety of educational videos that are very beneficial for folks interested in purchasing properties, including rentals, in the greater-Milwaukee area. He has videos dedicated to the different types of duplexes in the city, the best neighborhoods, and detailed updates of the local market with lots of stats. He is also very active on the BP forums and you can see a lot of the valuable insight he shares on the Milwaukee Real Estate forum.
- Investor · Milwaukee - Mequon, WI · Member since 2010 · 5k+ posts · 7k+ votes5y
@Damien Lee they say the grass always looks greener on the other side! One might add: the grass is greener where you water it! I know Atlanta has gotten competitive, but we have the same here.
If I may tell you. You should always invest in your backyard, where you have the homefield advanatage. If you invest in Milwaukee you have to compete with all the local investors! But everything you do remote, every interaction, every quick check on a property has a cost burden, that locals don't have.
And you are in a great market, it's not like you are in CA! You have to focus on cash flow, but going remote will just eat into that cashflow every step you take.
- 5yRebecca KnoxBusiness MemberSpecialist · Milwaukee, WI · Member since 2014 · 1k+ posts · 1k+ votes
This is just my opinion but Walnut Hill and Midtown are not what I would suggest for an newbie out of state investor to start out in. There's better neighborhoods you could be in at those price points. Trulia crime map is truth. Definitely take a visit before spending that amount in that area.
- New to Real Estate · Atlanta, GA · Member since 2020 · 25 posts · 23 votes5y
Hi Jon! Thanks for taking the time to respond! I'm currently living in Midtown and all the prices for REI here are comparable to the Bay Area as they're more suited for appreciation than cashflow. Plus I'm noticing quite a lot of new residential buildings popping up. This being said it doesn't seem very wise to invest in the Atlanta area. There's also the caveat that I don't have a car nor am I planning to get one and I don't plan on staying in Atlanta for more than another year from now on. With all this said investing anywhere in Atlanta that would make sense at my price point would pretty much have the same struggles as investing in an out of state market so I looked around and found Milwaukee as a viable option before settling down and choosing this market. The two areas I'm looking to get a new job are in Madison Wisconsin and Boston Massachusetts.
Since a lot of property management is based around scheduling appointments I feel like once I find a reliable handy man I can do a decent amount of the property investing myself. I've heard from another investor who's also investing in long distance properties that she's managing her properties herself using that method so I'd like to give it a hand. I believe if I can get the feel for managing one property I can use that to start building or at least think about how to build the systems I need for when I have more than one. And I'll definitely take a look at his channel, after I respond to him, haha!
Hi Marcus! As mentioned before, with my current situation investing anywhere in the Atlanta area that would be considered a homefield advantage to me would pretty much be the same as investing remotely, plus since I'm planning on moving within a year. While it may be advantageous to get a car and pick Atlanta as my main market for investing, if my only reason to invest is because it's my backyard than that advantage becomes moot once I move. I'll start taking a look at your channel and I hope you don't mind if I start asking you questions! It may be that I may decide not to invest in Milwaukee after watching your channel but my strategy is for long term buy and holds and I feel like Milwaukee may have some potential (although probably would have to wait at least a decade before the appreciation gets serious). But again, I'll make a decision after I get educated from watching your channel!
Hi Rebecca! Thanks for the advice! I was using neighborhood scout to figure out what would be the safer areas and found that those areas were less dangerous than the inner city, but they're still pretty dangerous. It was the cashflow that I would be able to make with the duplexes that got me really interested in that area, although with the concerns I had which led to this post. Could you suggest the neighborhoods you were mentioning? Or are you saying better neighborhoods out of Milwaukee?
- Investor · Milwaukee - Mequon, WI · Member since 2010 · 5k+ posts · 7k+ votes5y
@Damien Lee absolutley, I always enjoy answering questions! I got relocated to Milwaukee in 2007 and was less than excited about my new home at the time, but things have changed in the last 5 years, both from a quality of life and a REI perspective.
The median slaes price has increased from 132k to 192k. We have seen +10.2% alone last year. At the current rate the window to buy cash flowing properties will close in the next 3-5 years.
I am not sure where this is going, but Milwaukee has not seen a dynamic like this and we are getting more and more people moving here, many from Chicago. A good portion of my YouTube channel is proividing information to families, investors will get more value out of the monthly market updates, you'll get all the numbers and trends. At this point I am referring out of state investors to other agents, I am getting so many emails of people who want to get a deal and not realize how competitive the market has become.
First time home buyers are writing offers 20 and 30k over asking with no inspection and only limitied appraisal contingencies. We have seen more inventory in the last two weeks, but we are also seening even more buyers come on the market as the snow is melting..
- New to Real Estate · Atlanta, GA · Member since 2020 · 25 posts · 23 votes5y
Is this including in price points where I'm looking? Which are in the sub 100k range really. And that's awesome! I'm glad to hear you're doing well! I feel like due to my price point I won't be getting a lot of first time home buyers where I'm looking, I'll be checking out the zip codes that Rebecca sent me (@Rebecca Knox thanks!) but are those areas also included in the market update videos on your channel?
- Investor · Milwaukee - Mequon, WI · Member since 2010 · 5k+ posts · 7k+ votes5y
@Damien Lee you are right, you will not have that much competition in the sub 100k segment, in fact there are a lot of listings that are selling very slow or not at all. My best (and probably not very accurate) estimate is that we have about 1,200 active small private investors, who do not have deep pockets (yet) and are looking to grow and are fiercly competing on properties at higher price points. So the obvious question is why are they no buying up all the cheap inventory? Know that some PM's will not take on properties in rough areas, some contractors will not take on jobs, in particular larger, where they would leave tools over night. As an investor you may find out that capex exceeds cash flow after a few years and now you actually have a money pit. Not to mention the drama and headache that you really have to personally experience top unerstand. However, it can be done, just make sure you understand the mid term capex situation, you screen the tenants really good and potentially sell the property before it requires improvements (and know that selling may not be that easy either, expect that deals can fall through on financing or other issues before you get to the closing tabel). I know that the book says make sure it cash flows (check) and hire a PM, so you don't have to deal with the drama (easier said than done - just like when they say always get estimates from at least 3 constractors; not as easily done in times where contractors in high demand and dont want to run out to spend their afternoons writing free estimates instead of making money)!
Please don't take this as discouragement, I want you to be aware of these issues so you are prepared and can navigate them. There are endless ways of making money in REI and each one can lead to success!
- Real Estate Syndicator · Milwaukee, WI · Member since 2018 · 1k+ posts · 907 votes5y
I suggest visiting Milwaukee before buying a deal. It will also be crucial to connect with a good PM before you buy the deal. There are lots of rough areas within the city. I personally prefer some of the tertiary markets surrounding Milwaukee.
- Investor · Milwaukee - Mequon, WI · Member since 2010 · 5k+ posts · 7k+ votes5y
Very good suggestion @Brock Mogensen! Nothing beats a first hand personal impression..
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