Cash flowing Milwaukee Multi-family B/C class neighborhoods

[Mavely Pazmino]

Hi all, 

Im from NY and looking to invest out of state for obvious reasons. I've been in the "analysis paralysis" state for a few years now and i think im finally ready to take the jump into real estate investing. I'm looking at the Milwaukee market for buy & hold duplexes in B/C class neighborhoods. I'm looking for cash flow and not appreciation (even though this would be great). Ideally id like a turn-key duplex and looking to use a Debt Service Coverage Ratio (DSCR) loan to purchase the rental. I was looking at duplexes in Riverwest, Harambee, Old North Milwaukee, North Division, Arlington Heights, and Wauwatosa. Trulia crime map and other real estate apps no longer have the crime maps.

1. If not turnkey- then I've also considered duplexes that need light cosmetic work ($5-7k), but what can i expect from subcontractors in Milwaukee as far as completing a job/prices?

2. For those that have invested in these areas,  what can i expect to see as far as maintenance expenses, capex, turnover/vacancy rate, property management fees, utilities, types of tenants ?? Any specific points i should consider about these neighborhoods? 

3. Is  ~$125k turnkey for a duplex reasonable?  

Thank you in advance! =) 

[Marcus Auerbach]

Milwaukee has a lot of duplexes, but they are old - either 1920's or 1960s. While the 1920s have great curb appeal, they are expensive to rehab - everything was custom built on site by carpenters. You can't just got to Home Depot and buy a door, it won't fit. That's different for the 1960's vintage, but I call them shoeboxes and they lack cur appeal. Look up Milwaukee duplxes on YouTube.

We also have a chronic housing shortage here, both for sale and for rent. This has been driving prices and rents for the last 8 years. A turnkey duplex for 125k will be in an F neighborhood. 250k is probably the minimum budget for an okay area, but even then you will need more than 5-7k for rehab. Paint and carpet will be more than that, usually you have a few other things to fix as well.

On the positive side, we have also seen rents go up and there is huge demand for nice rental properties. We usually get 100+ inquires in a week and rents are substanially higher than they used to be. 

Given our inventory situation and the fact that demand is driven by a demographic shift I don't think much will change on the supply and demand equation and therefore prices are likely to continue to reflect that.

One way you can tell is that a good duplex in the 300-400k range will usually sell with multiple offers within 3-5 days and significantly over asking price. Anything that you see that has been on the market 10+ days be careful, 30+ days is a red flag, especially when it's dirt cheap and still nobody local wants it.