Investing in real estate can be a lucrative way to build wealth over time. However, not all properties are created equal, and choosing the right investment can make all the difference. If you’re considering investing in Milwaukee real estate there are a few things you should be thinking about to find a great investment. Here are five things you should be looking for to ensure your investment is a success.
1. Location, Location, Location
Real estate is all about location, and Milwaukee offers diverse opportunities depending on your investment goals. When choosing a property to invest in, it’s critical to consider proximity to key amenities such as schools, parks, and public transportation. In Milwaukee, some of the highest rental demands come from neighborhoods close to local attractions like the Milwaukee Riverwalk, the Third Ward’s thriving arts district, and the popular dining scene in Bay View.
For example, Bay View has become a hotspot for young professionals and families, leading to property value appreciation of around 8% annually over the past five years. Renters in these areas are often looking for walkability and easy access to public transit, particularly the MCTS GreenLine or nearby bike trails. Similarly, areas like Brewer’s Hill and Walker’s Point have undergone significant revitalization, attracting a mix of creative professionals and students from nearby universities like Marquette and UW-Milwaukee. Properties in these neighborhoods also offer a lower entry price compared to more established areas like the East Side but show strong potential for appreciation.
Additionally, don’t overlook school districts when evaluating investment properties. Neighborhoods such as Shorewood, with its top-rated public schools, tend to see consistent demand from families, which keeps vacancy rates low and property values stable. By focusing on neighborhoods with ongoing development projects or community growth, you can better position your investment for both long-term appreciation and steady rental demand.
2. Rental Potential
If you’re planning to rent out your investment property in Milwaukee, finding a property with strong rental potential is crucial. In neighborhoods like the East Side and Bay View, two- and three-bedroom homes are highly sought after by young professionals and families. Properties with ample square footage and multiple bedrooms tend to be rented quickly, especially in areas close to Lake Michigan, which are attractive due to their proximity to recreation areas and the downtown job market.
Outdoor spaces, such as private balconies, patios, or fenced yards, can significantly boost a property’s rental appeal in Milwaukee. In fact, properties with outdoor features in neighborhoods like Brewer’s Hill or Walker’s Point often see 10-15% higher rental rates compared to similar properties without these amenities. Renters in these areas are often looking for spaces that allow them to enjoy Milwaukee’s seasonal weather, with yards providing a premium for families with children or pets. Also, multifamily homes or duplexes can be particularly lucrative, especially in areas like Riverwest, where student housing demand is strong due to proximity to UW-Milwaukee.
Milwaukee also has a growing trend of renters who value energy efficiency. Homes with modern energy-saving features such as new windows, updated HVAC systems, and well-insulated attics can command premium rents while also lowering long-term operational costs. This trend is especially noticeable in newer developments or in renovated historic properties, where sustainable upgrades are becoming a key selling point for tenants.
3. Cash Flow
Before committing to any property in Milwaukee, it’s crucial to crunch the numbers to ensure that your investment will generate positive cash flow. Start by evaluating the potential rental income based on the property’s location and type. For instance, in neighborhoods like the East Side or Riverwest, a two-bedroom apartment can fetch an average of $1,500 per month in rent, while properties in more upscale areas like the Historic Third Ward can command rents upwards of $2,500 for similar units.
On the expense side, be sure to factor in Milwaukee’s property tax rate, which currently sits at an average of 2.53%, slightly above the national average. This can significantly impact your bottom line, particularly for larger or more expensive properties. Maintenance costs should also be accounted for, especially when dealing with older Milwaukee homes that may require updates to heating systems or insulation to handle the city’s harsh winters. Budget for at least 1-2% of the property’s value annually for repairs and upkeep.
Another key factor to consider is vacancy rates. While Milwaukee’s overall rental market remains strong, properties in less central or developing areas may take longer to rent, leading to potential gaps in rental income. A good rule of thumb is to aim for properties with at least a 6-7% cap rate to ensure you’re generating enough income to cover not only the mortgage and taxes but also unexpected repairs and vacancies. By thoroughly assessing all these factors and working with a local real estate expert familiar with Milwaukee’s rental market, you can ensure your investment produces positive cash flow from day one.
4. Condition of Property
When investing in Milwaukee real estate, the condition of the property can make or break your profitability. Milwaukee’s older housing stock, particularly in historic neighborhoods like Washington Heights or Bay View, can often present a charming exterior but hide costly repairs beneath the surface. As a result, a thorough property inspection is absolutely essential. Many of the city’s homes built in the early to mid-20th century may still have original plumbing or electrical systems, which could need upgrading to meet modern safety standards.
Be particularly mindful of the roof and foundation. Milwaukee’s cold, snowy winters can take a toll on properties, leading to potential issues like roof leaks, cracked foundations, or water damage from poor insulation. It’s common to find older homes that need roof replacements, which can cost between $7,000 and $15,000, depending on the size of the property. Similarly, ensuring that the foundation is solid is critical, as frost heave during harsh winters can lead to structural damage if the property isn’t well-maintained. Budget for immediate repairs or negotiate a lower price if the inspection reveals issues like these.
Another common concern is asbestos or lead paint, which are often found in older Milwaukee homes. These issues require costly remediation and should factor into your decision-making. On the flip side, many historic properties have already undergone significant renovation, offering high rental appeal due to their classic architecture combined with modern amenities. Homes that have been well-maintained or recently upgraded are prime targets, as they provide an attractive rental space without requiring extensive immediate investment.
In general, aim to buy properties that require only cosmetic fixes, like fresh paint or updated flooring, unless you’re prepared to manage a full renovation. Working with a local contractor who understands the specific challenges of Milwaukee’s older homes can be a great asset when it comes to accurately estimating repair costs and timelines.
5. Potential for Appreciation
Finally, consider the property’s potential for appreciation. Properties in up-and-coming neighborhoods or those undergoing revitalization projects may appreciate in value over time, making them a smart investment. Work with a professional real estate agent who is familiar with the local market to identify properties with potential for long-term appreciation.
How Northwoods Property Resources Can Help
Investing in real estate can be complicated, and working with a professional real estate buyer like Northwoods Property Resources can help simplify the process. Our team of experienced real estate professionals can help you identify properties that meet your investment goals and guide you through the buying process from start to finish.
At Northwoods Property Resources, we work with a network of trusted real estate agents and investors to find the best investment opportunities in Milwaukee. Our team can help you identify properties with strong rental potential, positive cash flow, and potential for long-term appreciation. We can also help you negotiate the best possible price and navigate any legal or logistical challenges associated with buying an investment property.
In addition to our buying services, Northwoods Property Resources also offers property management services for investors who choose to rent out their investment properties. Our team can handle everything from tenant screening and leasing to maintenance and repairs, ensuring that your investment property is well-maintained and profitable over time.
Investing in real estate can be a smart way to build wealth, but it’s important to choose the right properties to ensure your investment is a success. By working with the real estate professionals at Northwoods Property Resources, you can find properties that meet your investment goals and enjoy a hassle-free buying and owning experience. Contact us today to learn more about how we can help you find a great investment in Milwaukee real estate. (920) 851-9727