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Guide to Buying a Duplex For Sale in Milwaukee, WI

Purchasing a duplex can be a great investment, especially in a city like Milwaukee where the real estate market is strong. The city's central location on the shores of Lake Michigan make it an appealing option for both renters and new homeowners. Naturally, its population enjoys steady annual growth and expects to increase by over 50,000 people over the next five years.

When buying a duplex, or any home in Milwaukee, it's important to understand the process and to know what to expect. A strong understanding of the homebuying process can help you secure the best possible property at the best possible price. To help you navigate the homebuyer's journey, we've created this helpful guide to buying a duplex for sale in Milwaukee. Read on for the essential steps you need to take to find your dream duplex in Milwaukee, WI.

Understanding the Milwaukee Real Estate Market

Milwaukee is a great place to buy a duplex thanks to its huge selection of affordable properties. The city is also home to a variety of unique, popular neighborhoods, each with their own personality. From the historic downtown area to the more modest suburbs, Milwaukee offers something for everyone.

The first step in buying a duplex in Milwaukee is understanding the local real estate market. You'll want to research the city's median home prices, average rental rates, and the availability of duplexes for sale. Knowing these market conditions will help you find the best deal and ensure you're making a sound investment.

The State of the Market

Milwaukee's real estate market is currently very competitive. Many longtime homeowners are choosing not to sell their homes, and the city is constructing new housing options too slowly. These and other factors have caused increases in property values and rent that have effectively "frozen" the market. As a result, potential homebuyers are at a disadvantage while property sellers and landlords are enjoying healthy revenues.

Currently, the median single-family home listing price in Milwaukee county is around $190,000. Multi-family homes, however, are trending considerably lower at a median listing price of around $145,000. Urban Milwaukee reports that home prices have continued to rise in 2023, though at a rate slower than inflation. This means that the average home in Milwaukee has effectively depreciated in value over the past year.

Meanwhile, the Milwaukee rental market remains strong, with average rent for an apartment hovering around $1,200 per month. This reflects an annual increase over last year's average rent by about 9%, or about $100. The most likely cause of this increase is a growing demand for affordable housing in the Milwaukee area. With more people opting to rent instead of purchase, this trend is likely continue, making multi-family homes a promising investment.

Investing in a Duplex

Owning a duplex can offer considerable financial and lifestyle benefits. You can choose to live in one unit, or rent out both units for a reliable monthly income stream. Effectively, this will reduce your monthly mortgage payments, as rental income will subsidize them. This grants the potential to build equity in the property while reducing your overall living expenses.

Duplexes can be a source of significant rental income if you choose to rent out both units. In addition, they can also appreciate in value over time, offering increasing return on investment the longer you own the property. This is especially true of a market like Milwaukee's, where property values are rising because of shortages in housing.

However, these inflated prices also mean that as a buyer, you'll be facing tough competition for more affordable duplex properties. These duplexes will be in high demand, and will likely require aggressive bidding to secure. Take the time to pick out properties in neighborhoods with high potential for growth. These duplexes will be well-maintained and have good rental prospects, giving them strong potential to appreciate in value more quickly.

Lastly, always make sure to obtain a full inspection of the duplex before you buy. Seek out a qualified inspector who can help identify issues or potential areas of concern with the property. This will minimize the need to make costly repairs or renovations in the future, and will protect your investment.

Steps to Buying a Duplex in Milwaukee

Once you're confident in your knowledge of the market, you're ready to take your first steps in the buying process. This may seem a bit daunting, especially if this is your first property purchase, but don't feel discouraged. After enough diligent research and due time, you'll be ready to close on your new duplex.

Determine Your Budget

The first and most important step of any purchase is to figure out exactly how much you can afford to spend. This will give you a reasonable sense of your ideal price range and the types of duplexes available to you. In addition to the initial down payment, consider how much you can afford to spend monthly on mortgage payments.

Budgeting for a duplex purchase is different than buying a single-family home because of the potential for rental income. Your budget should include the cost of the property as well as the potential expenses related to renting out the units. Common rental expenses include maintenance and repairs, insurance, property taxes, utilities, and more. Obviously, the monthly rate you charge tenants for rent should exceed your monthly expenses.

If you're not confident in your budget calculations, it may be a good idea to speak with a financial advisor. A financial advisor can help you determine your budget and make sure it's realistic given your expected income. Furthermore, an advisor can recommend a financing method once you're finally ready to purchase your duplex.

Begin Your Property Search

With a firm, realistic budget in place, you're ready to start searching for your new duplex. Start by using online real estate platforms to search for duplexes for sale in your ideal neighborhoods. Along the way, keep a running list of your top choices that you're interested in seeing in-person. You can use our property search tool to start a property search for multi family homes for sale in Milwaukee WI.

During your search, try to refine your results using filters to target specific criteria, such as price range and square footage. Apply these filters to the specific neighborhoods you identified earlier to eliminate the least appealing prospects. Afterwards, you'll have a refined selection of duplexes with the features you need in an affordable price range.

Consider hiring a real estate agent who specializes in duplexes or multi-family homes to help you find the perfect property. A Realtor will guide you through the process and help you find the best duplex for your specific needs and budget. They will also be able to provide you with important local market insights and help you negotiate the best possible price. If you need help finding an experienced Realtor in the Milwaukee area, reach out to us on our contact us page.

Visit and Inspect Your Favorite Properties

After your property search is completed and your top choices are selected, it's time to start visiting and inspecting your favorite duplexes. Schedule viewings with your real estate agent, or on your own, and do a thorough walkthrough of each property. Consider things like the condition of the building, the number of bedrooms and bathrooms, and the size of the yard. Ask questions and take pictures to help you remember each property and compare your top choices.

If you're uncertain about any aspect of the property's condition, it's best to consult with a professional inspector. A professional home inspector can provide you with a detailed report of a property's potential problems or required repairs. Making these repairs early will save you from expensive damages in the future if you decide to purchase the property.

Secure Financing

Once you've made your final home buying decision, you'll need to secure financing before making the seller an offer. When exploring financing options, consider your specific financial needs and circumstances, namely your available funds and credit rating. Carefully evaluate each financing option and consider factors such as interest rates, down payment requirements, repayment terms, and eligibility criteria. If you spoke with a financial advisor while budgeting, remember to consult with them about the financing options available to you.

The most common financing option homebuyers utilize is conventional loans, which are loans offered through banks and mortgage lenders. These loans require a down payment and have fixed interest rates and repayment terms. Typically, conventional loans are a popular choice for borrowers with good credit scores and stable income.

Another financing option to consider is FHA loans, which are federals loans that the Federal Housing Administration insures. These loans often have more flexible approval requirements and lower down payment options compared to conventional loans. As a result, FHA loans can help individuals with lower credit scores or limited down payment funds become homeowners.

Additionally, owner financing is another alternative to explore. In this arrangement, the seller of the property acts as the lender and provides financing directly to the buyer. This can be beneficial for buyers who may not qualify for traditional loans or prefer a more personalized financing arrangement. Owner financing typically involves negotiating the terms and interest rates directly with the seller.

Remember that If you plan to rent out your duplex, potential rental income may help you qualify for a larger loan. Take into account how much monthly rental income you can expect as well as the associated monthly costs. This will determine what kind of mortgage you can afford to pay, and whether or not your investment will be profitable.

Make an Offer and Close the Deal

Once you've found the perfect duplex property and secured financing, you're finally ready to make the seller an official offer. When making your offer, you'll need to decide on a total purchase price, down payment, earnest money, and other terms. Your real estate agent can help you craft an offer that's competitive yet fair. However, prepare for the possibility of a bidding war in a competitive housing market like Milwaukee's.

After the seller accepts your offer, you'll begin the closing process. This includes a home inspection, appraisal, and finalizing your mortgage. Make sure you have enough money saved for closing costs, which can include taxes and title insurance. After you sign all pertinent documents and pay all closing fees, you will officially own your new duplex.

Finally, with closing completed, you can move into your new duplex, or prepare to rent it out. Of course, this will depend on whether the inspection found any issues with the property. Once you address these issues and the property is up to code, you're ready to make it a home. Congratulations!

If you're interested in finding your own duplex for sale in Milwaukee, start your Milwaukee property search today. For help connecting with an experienced local Realtor, contact us at Century 21 Affiliated.