I bought a home last year in Milwaukee’s Uptown neighborhood. It’s a nice place—one I’ve come to see as quintessentially Milwaukee. Kids walk to the playground at the end of the block. Adults walk to the coffeeshop. The mostly interwar-built houses are sturdily constructed on small lots. Typically, they’re worth about $30,000 less than the citywide average, so it’s the kind of place many people can comfortably afford to live. Since moving in, I’ve enjoyed getting to know my neighbors—school district employees, a firefighter, a welder, a guy who assembles circuit boards, the lady who feeds the cats. For a researcher like myself, meeting my neighbors hasn’t just meant striking up conversations on the sidewalk. I’ve also dug into the property records of the houses near mine. In doing so, I’ve learned that locals aren’t the only people interested in Uptown.
Since 2018, LLCs based outside Wisconsin entirely have purchased dozens of houses near mine. Ohio-based VineBrook Homes, Milwaukee’s most aggressive home buyer, owns five houses within three blocks of mine (part of the nearly 350 they have purchased citywide so far). Another national company, SFR3, owns several more. Sometimes the ownership is obscure. The duplex at 2702-04 North 49th Street is owned by “2704 N 49TH ST 53210 LLC.” This particular LLC lists an owner’s mailing address in San Francisco. I’ve lost track of the number of flyers I’ve received encouraging me to sell my home. One Friday night, someone even called my cell phone, offering to buy my house.
My neighborhood is one small part of a wave of single family home and duplex purchases by large corporate investors, often with Wall Street backing. My colleague Mike Gousha and I recently wrote about this for the Milwaukee Journal Sentinel. Cary Spivak contributed another story, taking a closer look at the biggest companies involved. My full report on “Out-of-State Investment in Milwaukee’s Home Rental Market” is available here.
This kind of investment first caught our attention over a year ago when we wrote about the decline of homeownership across Milwaukee. We noticed two things. During the initial Housing Crisis—about a decade ago—a wide variety of buyers took advantage of plummeting housing prices and the glut of foreclosures on the market. Many of them did quite well just by buying low and selling high. But as the housing crisis abated, investment by local landlords levelled off and began declining as some houses reentered owner-occupancy. By contrast, investment by landlords based outside Wisconsin saw no decline. With fewer foreclosures and distressed homeowners to buy from, deep-pocketed out-of-state investors switched to buying more properties from local landlords.
Large corporate investors, often organized as Real Estate Investment Trusts (REITS) used the Housing Crisis to develop a new business model. Institutional investment in single family rentals (SFRs) as a new asset class. This style of investment was pioneered in the early 2010s by companies like Invitation Homes, American Homes 4 Rent, and Tricon American Homes. But these businesses ignored Rust Belt markets like Milwaukee in favor of growing metros with newer, more valuable, housing stock in the Sunbelt.
Our research finds that another set of companies have adapted this business model to markets like Milwaukee. The disadvantages of Milwaukee’s stagnant population growth and old housing stock are overcome by the fact that rents here are unusually high compared to home values. As large corporate landlords realize the lucrative potential of Milwaukee’s rental market, their rapid expansion is both changing the experiences of tenants and puting them in direct competition with would-be homeowners.
All stories in this series:
- “It’s an Unsettling Day in the Neighborhoods: Two trends—the end of the residency requirements for city employees and a surge of homes owned by people from outside the city—are altering the fabric of Milwaukee’s residential life.” Mike Gousha and John D. Johnson. The Marquette Lawyer (Summer 2020).
- “Growing ‘land grab’ by out-of-state investment landlords raises questions for Milwaukee homeowners and neighborhoods.” Mike Gousha and John D. Johnson. Milwaukee Journal Sentinel (April 15, 2021).
- “Out-of-state corporate landlords are gobbling up Milwaukee homes to rent out, and it’s changing the fabric of some neighborhoods.” Milwaukee Journal Sentinel (April 15, 2021).
- “Out-of-State Investment in Milwaukee’s Home Rental Market.” John D. Johnson. April 18, 2021.