Milwaukee market questions for OOS investor

[Daniel Whitmore]

Hi,

Looking for feedback from local Milwaukee investors.

I currently reside in CA but am interested in exploring the MKE market as I have family there and a property manager I might be able to add to my team. Seeking a small multi family that will require low-moderate rehab and cash flow nicely.

After briefly researching online it appears to be a favorable market with decent population growth / ave cap rate.

Questions I have:

- Top emerging neighborhoods around the area?

- Best cash flowing areas?

- Indicators of industry/job growth?

- For those with rental properties: are you increasing rents each year? If so, what %?

- Any areas to avoid? Anything to watch out for?

Thanks in advance!

[Matt Maurice]

@Daniel Whitmore When you say small multi-family, could you add a little more color to that?  Duplex, 4-unit, 8-unit?  Everyone's small is a bit different and based on that answer, it will likely push you to different neighborhoods in town.

Popular neighborhoods we are seeing right now:  Washington Heights, Nash Park, Grasslyn Manor, Sunset Heights, Capitol Heights, Story Hill, Silver City, Johnson's Woods and the City of West Allis.  

Best cash flowing areas will end up with me on a soapbox that nobody has time to read... let's just say that cheaper isn't better, and rent ratio's aren't due diligence.

For Milwaukee standards, we have some pretty cool stuff going on right now on the job & development scene.  Northwestern mutual built the first skyscraper in quite some time downtown, BMO harris is building another tower, Michels corp is building a new HQ, Kumatsu is starting a riverwalk site, apartments have been raising up as fast as contractors can build them to keep up with the demand.  I was convinced 2 years ago we were massively over building, I seem to have been inaccurate there.  

Rents aren't going up like they were a few years back, but still a steady 2-4% upon renewal.  You generally see a $25-$50 / month jump after a turn.

Areas to avoid?  Sure, just like any major city there are plenty of properties and locations you should stay away from as an OOSI.  It starts with, do you want to be a real estate investor or do you want to invest in real estate?  If you want to be hands-on, build a team, use employees instead of vendors, scale something big and have a sizeable tolerance for risk you can be a bit more aggressive with the location.  If you are looking for a completely passive venture, I'd suggest more modest choices.  

Best of luck!