Up-and-coming and appreciating neighborhoods for a first-time house hack
Kollin RuizBusiness Member
Real Estate Agent · 8909 N Port Washington Rd 106 · Member since 2023 · 13 posts · 6 votesUp-and-coming and appreciating neighborhoods for a first-time house hack
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Nick HarringtonBusiness Member
Real Estate Agent · Milwaukee, WI · Member since 2019 · 31 posts · 28 votesHey Kollin -
I'm an investor myself in the Milwaukee area and also help a lot of house-hacker clients to find their first investment property.
For 150K, the neighborhoods I recommend that I see long term appreciation are going to be Riverwest, Harambe, Bay View, Washington Heights, and pockets of West Allis. These are neighborhoods that I see a lot of first time investors succeed in, and neighborhoods that I believe in long term.
Have you considered the duplex route instead of a single family or condo? With a duplex, you can still rent out your bedrooms, you have an additional tenant to offset your cash flow even further, and then down the road you have a rental property that is ideally cash flowing once you move out. This is how I got my start, and it gave me the ability to save up to add further investments to my portfolio and keep it as a cash flowing property long term.
Nick Harrington | Compass532 Reviews
6 Replies
- 3yNick HarringtonBusiness MemberReal Estate Agent · Milwaukee, WI · Member since 2019 · 31 posts · 28 votes
Hey Kollin -
I'm an investor myself in the Milwaukee area and also help a lot of house-hacker clients to find their first investment property.
For 150K, the neighborhoods I recommend that I see long term appreciation are going to be Riverwest, Harambe, Bay View, Washington Heights, and pockets of West Allis. These are neighborhoods that I see a lot of first time investors succeed in, and neighborhoods that I believe in long term.
Have you considered the duplex route instead of a single family or condo? With a duplex, you can still rent out your bedrooms, you have an additional tenant to offset your cash flow even further, and then down the road you have a rental property that is ideally cash flowing once you move out. This is how I got my start, and it gave me the ability to save up to add further investments to my portfolio and keep it as a cash flowing property long term.
Nick Harrington | Compass532 Reviews - Mequon, WI · Member since 2020 · 2 posts · 1 vote3y
@Nick Harrington
Hi I currently live in Milwaukee and I’m curious to learn more about house hacking a duplex. I was hoping to get in contact with someone who is willing to help me out!
- Investor · Milwaukee - Mequon, WI · Member since 2010 · 5k+ posts · 7k+ votes3y
@Cyle Baker-Schmidt here is a YouTube video about the different types of duplexes we have in Milwaukee that should answer most of your questions. We are in a very tight market at the moment, with very little inventory, but there should be more in spring and we also have a few listings coming up soon. House hacking with a duplex is a financial no-brainer if you are starting out, as long as you are okay with having a neighbor.
@Kollin Ruiz Milwaukee neighborhoods do not change much, what was a good neighborhood 30 years ago is still a good neighborhood today. The opposite is also true. Riverwest get's mentioned a lot, but frankly it's been called up and coming 30 years ago and it's still not quite there..
Investing in a neighborhood in the hopes that it will turn has a speculative element to it: it could work out, but it also could fail. A lot of people have lost money a few years ago investing in Racine and Kenosha in anticipation of a huge Foxconn factory that was supposed to create some 11,000 jobs for Milwaukee. I have seen pieces of land that sold 3 times in a year and doubled in price every time. Foxconn did not happen, so someone owns an expensive farm field now. Especially when you are working with limited capital you want to keep risks as close to zero as you can, which means you want to invest in a stable neighborhood that is predictable (most are in MKE).
The other thing that real estate prices and the risks associated with ownership of that property have an somewhat inverse relationship: the cheaper the property, the higher the risks associated (from neighborhood to people to construction issues). A quality property with a low risk profile will have a higher price. I made that mistake too when I started 15 years ago, because I came from the stock market to RE investing and #1 rule was to limit the amount of money you have invested. You probably want to stay around or just above median home price and that is now at about 219,000 in Milwaukee County.
- 3yRyan ThomsonBusiness MemberReal Estate Agent · Colorado Springs, CO · Member since 2018 · 1k+ posts · 1k+ votes
Hey @Kollin Ruiz I wish I was thinking like you in College! It may be difficult (unless you have good work history) to qualify. Here is an interesting idea. Use your knowledge and drive to convince your parents (or other co-signer) to get a home near your college. Co-sign with them and put some money down with them if you can.
Buy it as YOUR primary residence with your parents as the co-signers. This would allow you and your parents to only have to put 3.5-5% down. Then you rent out the rooms to your college friends. This will probably allow you to live for free and your parents to avoid a dorm or expensive home payment while you are in college. Not to mention you can both cash in on appreciation and loan paydown.
If you really wanted to scale, you could do this each year. Rent out the last house to a new group and move with your friends to the next house. This is a great way to scale and you only have to put 5% down if its your primary residence each time.
You obviously need to convince your parents or (someone who would co-sign and help with the downpayment) about how good of an idea this is. But if they are savvy money people and they trust you (which I bet the do), then this seems very doable. Maybe give them part of the equity or a monthly fee until you refinance and get their co-signing off the loan.
The Assumable Guy544 Reviews - Real Estate Agent · 8909 N Port Washington Rd 106 · Member since 2023 · 13 posts · 6 votes3y
Quote from @Nick Harrington:
Hey Kollin -
I'm an investor myself in the Milwaukee area and also help a lot of house-hacker clients to find their first investment property.
For 150K, the neighborhoods I recommend that I see long term appreciation are going to be Riverwest, Harambe, Bay View, Washington Heights, and pockets of West Allis. These are neighborhoods that I see a lot of first time investors succeed in, and neighborhoods that I believe in long term.
Have you considered the duplex route instead of a single family or condo? With a duplex, you can still rent out your bedrooms, you have an additional tenant to offset your cash flow even further, and then down the road you have a rental property that is ideally cash flowing once you move out. This is how I got my start, and it gave me the ability to save up to add further investments to my portfolio and keep it as a cash flowing property long term.
Hello and thank you for the feedback! I was actually initially looking at duplexes and multifamily units. However, after looking at a lot of duplexes in Milwaukee, I began to notice some potential limitations with the financing for the property. Finding a lender that is willing to work with me would likely be very difficult for a 200-250k duplex. After all, I am a college student and my net income is around 15k per year. In this case, my DTI would be less than favorable to a bank. The second reason is that my down payment would have to be much lower in order to make a deal in this price range work. On top of those, I am a young first-time homebuyer and much risker to a bank (my credit score is around 650 so not terrible but also not amazing especially since banks are being more cautious with who they lend to now).
After putting a lot of thought into these reasons, I came to the realization that I should not limit myself to only looking at duplexes. Of course, I am still open to a duplex but my main concern is finding the best deal that I can and most importantly, a deal that works. This is why I have been strongly considering condos and single-family properties. A single-family or condo would be much less expensive than a duplex in the same area. Also, my LTV would be much lower if I were to buy a property for less than 150k and my DTI would be much more appealing. As a result, I feel like financing will be much easier. I would appreciate any other suggestions! Thanks!
- Investor · Milwaukee - Mequon, WI · Member since 2010 · 5k+ posts · 7k+ votes3y
@Kollin Ruiz given your income and employment history you won't qualify for 150k either without a partner (your parents) to co-sign. Financially duplex is hands down the way to go, SF not ideal and condos are probably the worst.
Any advice is also pick at least an okay neighborhood, your future self will thank you 10 years from now!
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