Would like to build portfolio in Milwaukee C areas. Thoughts!

Question

I am an out of stater assessing Milwaukee C area opportunities and it appears to look good from the surface. Seems like a lot of growth opportunity for cash investor. Appreciate any guidance from anyone on the ground as I am ready to dive in.👍

Marcus Auerbach · Answer

Depends on your definition of C area. A lot of people look at a Milwaukee D area with rose coloured glasses and want to call it C to make themselves feel better about it.

In my book A neighborhoods are not suitable to rent, new contruction suburbs, downtown lakefront condos, rent to value makes cashflow impossible. Over 500k.

B would be what's next, so that is top neighborhhod and school districts, typically large homes, affluent residents, still very expensive and not easy to cash flow. Under 500k.

C is smaller homes, average school districts and median home prices (about 193k currently in Milwaukee) - positive cash flow and a good chance on appreciation.

D neighborhoods are below median home price (I would say 100-150k currently), elevated crime levels, challanged schools. D minus is what is dark blue on Turlia crima maps.

Based on this, I think C neighborhoods are perfect to invest. C - and D+ work as well, but I would definitly stay away from D minus.

@Michael Perry Milwaukee is a great place to invest, but it is also very, very competitive and comes with it's own challanges, things change within a few blocks. It says you are from Atlanta, I think you have great opportunities in your own backyard, why would you give up the home field advantage and compete with local investors here?

Scott Mac · Answer

C area vs D area--The Whopper Test.

C area: I can sit in the Burger King in the morning or afternoon and have a Whopper and discuss the area with whomever.

D area: I will drive to what seems like a safer area to have a Whopper, and avoid the area completely after dark.

Benjamin Romski · Answer

@Michael Perry I'm also based out of Atlanta and purchased two duplexes in Milwaukee during late 2020 in "C" areas. Granted, my partner in these endeavors is from there, so my reasoning for investing there is slightly different. Couple of points for you.

1) I leveraged @Marcus Auerbach and his team when purchasing these investments and I cannot recommend them highly enough if you need a realtor up there. They were more than happy to video walk throughs of each property and were excellent at communicating -- something that I highly value when investing out of state. They were also great at providing detail around each submarket we were looking at and what to expect. Additionally, their network allowed for us to find a high quality property manager and a bank that would close via mail.

2) I think we got in at the right time, but both our duplexes are in the West Allis area (which is likely a C area per my understanding). They currently cash flow at about $400 or so per month and we've seen about 10%-15% appreciation since the end of last year (I wouldn't expect this to keep climbing at this rate). We've put in a few more offers (one at $15k above ask!) on potential BRRRR's since then, but haven't been able to find a property where the numbers made sense based on our strategy (BRRRR's are nearly impossible to find on the MLS there). Essentially, the market up there is super competitive right now -- even if there seems on the surface to be a lot of supply. I'd look for homes that have been on the market more than two weeks, that's usually where you'll find some wiggle room to deal. Moreover, I'd consider areas like West Milwaukee, West Allis and any location in between Wauwatosa & West Allis or West Allis and Greenfield. In sum, I'm bullish on Milwaukee's potential, lower barrier to entry and believe it to be a strong rental market.

Hope this helps a bit!

Rebecca Knox · Answer

@Scott Mac that's great....my Burger King Whopper test is

D --Definitely do not want to order from this BK--probably have many health code violations

C--maybe order if desperate but strive to get to a B or A area--in the A area, you're whopper will look like the commercial

It's funny but fast food restaurants can tell you a lot about the neighborhoods too--never thought of that but I have my red line areas that I will never order from and pretty much there the same areas I wouldn't buy in. Follow Chick-Fil-A locations :)

Michael Perry · Answer

@Marcus Auerbach great points on defined neighborhoods. More focused on C - D+ neighborhoods. Seems like a ton of inventory in Milwaukee, very affordable to cash buy and hold and cash flow seems very achievable in Milwaukee. Atlanta market is hot although extremely competitive as well. At the Atlanta price point I can get 2 for 1 in Milwaukee. Very aware of tenant pool risks, income and employment factors in Milwaukee from my research and your market updates on YouTube. I am actively pursuing opportunities in South Georgia instead of Atlanta metro since barrier to entry are lower... lower rents, prices are in arms reach for cash buy and lip stick renovations for renter/section 8.

Rebecca Knox · Answer

Michael Perry, I'm guessing you'd be looking at 53216, 53218, 53209, 53208, 53210, etc or if on the southside, some pockets of 53215 and 53204 but you could go a step up in to West Allis like areas. Just my opinion but these areas are where the majority of rental investors are in.  Probably stay away from 53206 unless you live in the area.

Would like to build portfolio in Milwaukee C areas. Thoughts!

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