Milwaukee- looking for local advice own to rent

[Mark Kash]

Hello fellow BPs Looking for advice on owning a single family home for couple of years then renting it in the Milwaukee area. Looking for thoughts from the local experts on here what areas in Milwaukee should I buy that I can get it rented easily with quality tenants? I'm targeting SFH in the range of $250-300k. Areas that I'm looking at Brookfield, elm brook and maybe Glendale/foxpoint. Any thoughts or advice? I came to this conclusion based on the lack of quality SFH in Brookfield and elm brook. Thanks

[Pat Parrillo]

Mark, 

Are you married to SFH? I understand you're goal is to start owner occupied for a little bit and then rent. What you will find is the area that you're seeking for your primary residence is not typically a rental market because those properties usually do not cash flow as a rental.

A few things to keep in mind. Using the 1% rule of thumb in this scenario to keep it simple let's say you purchase a $250K house. You would need about $2,500 in rent for it to cash flow as a rental. The problem with that is someone could buy a house and their mortgage would be less than $2,500 so there is little incentive to pay for a similar property that you don't own and have the benefits of principal pay down, etc. Even with a 3.5% down FHA loan you'd probably be at or under $2,000 a month at the very most so it would be very difficult to charge the $2,500 a month in rent.

If you aren't worried about school districts I think you'd get the most bang for your buck if you purchased a duplex or triplex for $300K in the Milwaukee closer to down town. If school districts are a variable of interest a duplex in the surrounding suburbs that would cash flow better when you turn it into a rental would be a better fit. 

Unfortunately, I just don't see SFH in Brookfield, elm brook, or Fox Point cash flowing as rentals and right now we're at the top of the market so I wouldn't anticipate a lot of appreciation in the near term either if you're considering playing the appreciation game.

Maybe someone has insights I may be overlooking regarding SFH potential in those markets at $250K - $300K price range.

If there are any other specific questions or inquiries about the Milwaukee market feel free to reach out directly any time.