given the limited electrical capacity, lack of insulation, steam boiler and ancient plumbing, etc.

@Michael Evans You're still talking ancient history.

Melanie in the FWIW file Sharad is one of the sharpest investors I know.. many would do very well to follow his methodology.. he is humble and wont brag on himself but I can tell you from someone who has worked 4 decades at this.. he is an incredible talent. 

The soffits are rotten with large holes in them, there's an addition on the back that was never completed and basically looks like ancient ruins.

Can't vouch for the methodology one way or another but makes sense since rentals are less liquid.Ofc how things play out on a specific deal is another story. https://academic.oup.com/qje/article/134/3/1225/5435538?

Using Zillow's data and the same methodology I also get about 2% average using the last 5 years of taxes.

As I said before too, I'd REALLY REALLY emphasize that you and if you have any partners, that you check with the city of MKE as far as the work you mention this place needs and try to nail them down as to what they're going to require as far as fixing whatever in the place because one example I can give you is one home I'm soon to put on the market where it came (as an REO) with a 4 fuse fuse box and the ancient knob and tube wiring inside and while these days you really can't get ins coverage on anything with fuses, so they've been updated to breakers, you do still have a lot of knob and tube wiring around here as we have a fair amount of housing stock that's very old. 

The first time, the furnace was an ancient beast probably about 60 years old and came with the home. 

The more neutral team that did a study with a more thorough methodology found a net positive for the economy.

Or some methodology used to charge it back?