Milwaukee: Good & Bad?

Question

I've been actively looking for a multi-family investment property in Grand Rapids, Mi (GR) for the past 2-3 months and have continually run into either bidding wars, deals that get snapped up the very next day, or places that need far too much work than they're worth. So I'm contemplating shifting focus to another market that might be more accessible. I've heard from several people on Bigger Pockets that have had success in Milwaukee, including @Brie Schmidt, and I was hoping that I might be able to get some input from the community. I recently drove up to Milwaukee from Chicago to check it out myself and find myself asking a few questions...

• Should I change my approach in GR or change markets?
• What tactics should I consider adopting in a highly competitive market such as GR?
• Is Milwaukee the best alternative market to enter?
• If I enter Milwaukee, what are the zip codes to target and what are the zip codes to avoid?
• What do I need to know about Milwaukee as a new entrant?
• What other markets should I consider if not Milwaukee or Grand Rapids?

Any input is much appreciated!

Ibn Abney · Answer

@Jason Shoemaker

1) Want is your end goal?

2) Not sure what approach you have now for deal sourcing and analysis, so hard to comment. If all the bidding wars are on MLS listings than I suggest looking off market and/or try direct mailings. Bidding wars are everywhere though.

3) IMO, with the Elon development and the Post office redevelopment in the loop, why not stay in Chicago? I believe Chicago has more to offer than MKE or GR.

http://www.chicagotribune.com/business/columnists/...

http://www.chicagobusiness.com/article/20180613/BL...

Jeff Burdick · Answer

Depending on what your budget is, I'd extend the search a little bit.  Look into Avondale, Irving Park, Albany Park, Portage Park in terms of north west.  McKinley Park and Little Village in the SW.  What sort of price range are you interested in?

John Franczyk · Answer

My take on Milwaukee:

The crime maps on Trulia and other real estate sites will give you a good idea of Milwaukee neighborhoods to avoid. This is not to say that those neighborhoods are bad investments; in fact, they have lots of opportunities for someone who knows how to manage property in distressed neighborhoods. Rather, as an out-of-state investor, I suspect that you'll have a hard time finding a good property manager who is willing and able to work in those neighborhoods. You really need a strong local presence to manage those properties.

The popular neighborhoods in Milwaukee are experiencing inflated prices right now. Walkers Point (south of downtown) and other neighborhoods directly south of Walkers Point are very hot, and finding good opportunities there will be difficult.

The Riverwest neighborhood is a good option if you can find something. I believe that the Harambee neighborhood, next to Riverwest, has strong possibilities. You can also find some good prospects if you go farther north or west. Likewise, the traditionally Polish/Slavic neighborhoods to the near southwest are showing promise.

As for other markets, think about the entire 50-mile corridor south of Milwaukee and stretching to the Illinois border. You can join the flood of out-of-state money coming in to capitalize on the FoxConn development that will supposedly bring 10,000 new permanent jobs into southeastern Wisconsin. Housing for the construction crews that will be building FoxConn is also in short supply, and everyone is looking for apartments in Racine and Kenosha.

I think that the key for an out-of-state investor is to find a property manager that you trust. Just make sure you add property management fees into your financial analysis.

Jason Macht · Answer

@Jeff Burdick, in terms of Chicago, I've looked mostly to the north west (bucktown, logan, humboldt, etc) and some in Pilsen. I'm in West Loop and not many (good) opportunities there. South loop is interesting, but again, numbers don't make sense in most cases. Let me know if you think otherwise!

Jason Macht · Answer

Thanks for the response @John Franczyk. I've heard similar feedback regarding finding a strong property manager in WI. I have also been following the FoxConn story and think there's potential there as well. Thanks for the input!

Jeff Burdick · Answer

Hey Jason.  I'm a fellow Chicago investor.  What neighborhoods have you looked at in Chicago?  There are many many places in the city where you can find a MF for significantly less than the $1M+ you reference.  There are more than 700 MFs on the MLS right now for under 350K.

Jason Macht · Answer

Hey Ibn,

Thanks for the response!

In terms of end goal, I'm looking to acquire multi-families to hold. Ideally something that require only medium to low rehab, and that (obviously) cash flow at an acceptable level.

Approach so far has been working with a realtor in the local market, so yes, MLS listings. I recently started approaching craigslist landlords in hopes they may want to sell. Direct mail I have not yet entertained...

Why not Chicago? Mostly due to the price points. If I had a $1MM+ to burn, then sure, but I can't afford to get into most places in the city, unless I 'house hack' it and even then, most flats are too expensive to make the numbers work. I've contemplated getting into South Loop, but I'd prefer to stay away from condos (i.e. HOAs) and the inventory of multis is sparse. Do you have any specific recommendations that I should consider?

Thanks again!

Milwaukee: Good & Bad?

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