Buying from the City of Milwaukee - One investors experience

[Andrew J.]

Good to be back BP, after being away from forums and BP in general I am happy to have more time to learn and help others with my most recent experience.  

In March we purchased a home from the City of Milwaukee as a non OO. While the majority of city properties are located in concentrated areas, this particular 2/1 duplex was in the Bayview neighborhood which has seen a wealth of commercial development over the past 5 years. The City of Milwaukee essentially has two lists of properties they own and are selling, the current listing which is available to owner occupants and the extended listing which is available to all. The city provides their scope of work, which details the bare minimum requirements required to bring the property up to code requirements. Using this scope of work, as well as visiting the property numerous times with our contractor (who I connected with through BP, thanks Zech Evans), we were able to drop the price another 10,000 to accommodate the desperately needed new windows. The city is not the most diligent when they "winterize" their homes. After our initial offer was accepted, we visited the property again to find both boilers blown out due to the freezing water as well as the entire plumbing system. Thanks city of Milwaukee, another 10k price drop to accommodate new hvac, going from the boiler system to forced air.

All in all the work done to the property included:

27 new windows

2 new furnaces, ductwork and water heaters

New PEX plumbing along with accompanying fixtures

Drywall work and insulation to remedy water damage

New roof (6 layer tear off)

Refinished hardwood floors

New cabinets, countertops, etc

Gutted bathrooms

Paint abound 

Etc, etc, etc

Being the largest project I have undertaken, I ate two months of holding costs in getting the property ready for rent as I grossly underestimated the amount of time it would take to get the property ready.  Additionally, a huge lesson I learned is to HIRE OUT FOR THE MAJORITY OF WORK NEEDED.  Time is money, and working full time and then going to work on the property on a daily basis became a big stress point, but one we managed to work through.  

The actual purchasing of the home through the city was relatively pain free, they have a huge amount of inventory, and from my experience are glad to get these liabilities off of their books.  A nice piece we discovered at closing is that when purchasing a property from the city you do not pay property taxes for the first year of ownership.  For anyone familiar with Milwaukee property taxes...this is huge.

Both units are now rented and meeting the 2% rule.  I would like to post some pictures of our before and after work, and if anyone could help me with how to do that I would greatly appreciate it.  

BP was an invaluable resource when analyzing this property and also in finding the contractor we work with.  If there are any questions I can answer about this experience I would be more than happy to do so.

Ah yes, one final lesson learned, hire a junk removal service next time!  I spent a whole day along with some friends filling a dumpster with the junk left behind, and probably should have been wearing a hazmat suit while doing so.

Andy