Milwaukee, WI good or bad rental market

[Nathan Barshinger]

Anyone who invests in Milwaukee, Wisconsin. What are the pros and cons? I'm looking into a number of cities and Milwaukee peaked my interest because of the very low prices. However, I know the crime rate is exceptionally high. Also, from an economic and population perspective is Milwaukee on the decline?

[Marcus Auerbach]

Milwaukee is often misunderstood, let me set a few things straight:

Definition: The CITY of Milwaukee has about 600k residents and does not grow, partially because it is fully built out with no land left to develop, also because values are too low to support new construction appraisals. But there are 19 other municipalities inside Milwaukee COUNTY. And then we have 5 counties all blending seemlessly together to a metro area of about 1.6 million people, which actually is growing (like Corina said, the IL exodus is one reason). When someone travels and says he is from Milwaukee, he could really be from the City of Milwaukee, the county of Milwaukee or the suburbs surrounding Milwaukee - West Allis, Wauwatosa, Brookfield, Mequon or New Berlin to name a few!

Home Values: Milwaukee metro ranks #61 out of the top 100 most expensive metro areas with a median home price of just 193k. Austin or Denver are at 400k for reference, San Francisco 1.1mm. Affordability is very high, because wages are strong. Interesting also that Madison, the much smaller capital of Wisconsin is also very expensive and ranks #31 which much lower affordability.

Rents and Appreciation: we have seen home prices go up much faster than rent in the last years, about 10% in 2020, while rent only 1%. Milwaukee has a reputation as a cash flow market, which historically has been more true, but that has changed. A lot of the cheap home prices that draw attention are in a few pockets that have high crime rates and many local investors stay away from. Good areas command much higher prices and competition is more than fierce. For anyone who wants to see the data check out the video on my BP profile page.

Should you invest in Milwaukee?

I would say propbably not and here is why: most of the phone calls and emails I receive are from people who live in an area where properties are about the same as in a good area in Milwaukee. Remote investing comes with a lot of disadvantages and an overhead cost burden which can quickly errode any advantage you may have hoped to gain. On top of that you are unfamiliar with the city and you compete against locals. We work with a lot of investors and the only ones that keep comming back for more after their first deal are investors from the top ten metro areas like the Bay Area, LA and NY - the economic delta is large enough that it makes sense to go out of State. 

If you live in any of the midium priced markets your home field advantage is more much more valuable than you may think. The grass only looks greener.