Under Utilized Intersection

76th Street and Good Hope Road, Milwaukee
Under Utilized Intersection - In need of planning and commercial development

Milwaukee's 76th street goes though many areas and neighborhoods on its way north out of the city. The focus of this discussion is on the area around Good Hope Road. This area features some growth, some vacancies, and some access issues. With almost 70,000 vehicles daily, this is a very busy intersection. Good Hope is a crossroad between Highway 45 and Interstate 43. Both roads have 3 lanes of traffic plus 2 left turn lanes in each direction. Checkout the Milwaukee DCD for demographic information here: http://www.mkedcd.org/business/pdfs/busmm76GoodHope.pdf

On the SW corner is a new Andy's Citgo. This is a great looking strip including a busy Subway, Domino's Pizza, and a bank. The SW corner is pretty much complete with a golf course and residential multi-families beyond there.

Across the street on the SE corner is an old standby, Popeye's chicken. There is also a Cousins over here and a deep-setback Home Depot. The Home depot isn't the busiest one around -- it could use some more commercial draws to help bring customers to the neighborhood. This corner also hosts a dilapidated Chinese restaurant (which is for sale right at around $500k).

The NW corner is a mishmash of what seem like odd fitting buildings and businesses. It starts well on the corner with another gas station right on the corner. There is a deep-setback grocery store behind this corner. But visibility and access are very poor. Along 76th at the street is a large locally owned pet store.

The NE corner is the least utilized. There is a movie theater about 1/4 mile north, but you pass several unkept properties along the way. There is a decent restaurant in there, but it doesn't look like much from the street. There is an abandoned amusement park there too. A bit to the east is an office building for sale. This building looks nice, and could use a good tenant.

There is a new unit being built in front of the Home Depot along Good Hope. That is a good sign, but this area needs to focus on cleaning up the look of the existing buildings to see continued improvement. Improve visibility and access to the big lot buildings, teardown/improve the dilapidated buildings, and open things up for new businesses. This would go a long way to making this busy intersection a commercial boom for the area.

The traffic is a mix of locals, people coming in to work at the remaining manufacturing, and suburbanites headed in and out of the city for work. This mix provides a great opportunity for many different businesses. Improving this corner would also help improve the entire Good Hope stretch. With the steady stream of soccer moms coming into Uhlien Soccer and the movie theater, there is plenty of potential for commercial draw.

Investing in Property and a City

What is Visualize Milwaukee all about - how to invest in property or improving a city? Can you tell? I admit this blog doesn't fit in very well as a Real Estate Investment site. The problem here is that I've mixed my zeal for investing with a zeal for actually improving our city. I didn't start that way. I really only wanted to make money. As I got started though, the only properties that I could find at a price low enough to make a profit were far from the nice areas of town. Areas where you don't just lock the car doors, but keep an eye on the car at all times. I established a relationship with a local commercial developer who I could use as a mentor, to bounce ideas off of, and to get local contacts through. Before I met with him I had looked at a particular building, walked around the neighborhood, talked to some people who were remodeling an abandoned building, written down numbers and addresses for others. What drew me to this neighborhood was not the crack dealers on the corners or the empty beer bottles strewn about, but the brand new library, police station, and huge park all within 2 blocks. Which one should I plan for? Crack dealers or the great potential, or was there really any potential at all? Turns out my mentor had lots of experience in revitalizing downtrodden neighborhoods. As he told me about what he has done, and how he does it, I started to realize that my money, talents, and desire could actually help! I was glad I had just canvassed that neighborhood. It made that first conversation with my mentor so much more exciting to me. And, he was considering a relatively major development almost right across the street!

That is how it began. I can't change the world by myself, but I can change a single block. My investment can attract others! I can get involved in a city-sponsored revitalization effort and invest there. I found a building that was being used as storage, and lots of vacant space around. It was a great deal, but could I really find a business to setup shop in there? I put a "will build to your needs" sign outside. I had local entrepreneurs calling constantly! There are people with great ideas everywhere. All they needed was a little help and a little motivation. I was able to work with them on their plans, provide the funding to it, and I got super lease rates because of it. Win, win, win -- for me, the lessee, and the neighborhood!

This also has me integrated much closer to the city than I have ever been. I knew where the "bad areas" were, I could walk through most of them without panicking, but I seldom did. Having multi-unit apartment buildings brings reality to you in a hurry. Again, I'm not going to save the world with a couple apartment buildings. But, I've found that I can always find good tenants. I haven't met too many people who said "I'm looking for a crack house where everything is broke, my landlord never comes around, and he won't mind if I deal drugs out of the back windows." I do background checks, I keep the places up well, I paint over graffiti right away, and I command a higher rent than the rest of the neighborhood. Want to know how I figured that out? I was talking to a local landlord and asked about his rents. He told me the market rent, except for one building: "I have no idea how she gets such high rents". From that, I realized it could be done. I have met great people everywhere I've been. I also get to see up close how hard it is to find a job, how many kids are running around without a dad to speak of, and why the inner city doesn't trust our police force. Like I said, I'm not changing the world, but I can make living a little more comfortable 8 families and 2 businesses at a time.

Our investment dollars can make a difference. I make money, local residents have a better place to live or conduct business, and together we can improve neighborhoods. Doing that creates jobs. Creating jobs and small business opportunities is what drives our community. Milwaukee was hit hard when manufacturing began to move out. We are still trying to find our way, and I want to be a positive part of that!

Finding Profitable Investment Property

I was in court the other day filing an eviction and I met a guy doing the same thing. He was complaining that his girlfriend gets mad at him for losing money in his properties. That got me thinking about how different people look at profit. To me it seems simple, but maybe that's because I think like me. Maybe I really don't get it?

So lets look at this guy, Tim. He has a bunch of duplexes and three families in Milwaukee. Since he is having a hard time managing these properties, he is considering selling out and buying one big property that will let him pull a steady income. Tim tells me that if he sold well, he would have $200k. His plan is to take that and buy a single 4 family. He is considering two different buildings. The first is in a decent area, looks nice, and is well maintained. It is selling for $300k. The second is similar, but it has a 4 car garage! The garage is great he tells me (this is Wisconsin and a garage sure beats scraping ice and snow off your car when it is 10 degrees below zero and still dark out!). This one is selling for $350k. What do you think? Sounds like a good move, right? Upgrade to a single building, only have one lawn to mow, and only 1 building to visit, not to mention it is in a nicer area of town.

I'm not so sure though. That is the same price I paid for an eight unit building. I asked Tim how much extra rent they are getting for the garage spaces. "None," says Tim. Next I asked him how much rent was - $625. Tim was still excited about the garage! I asked why, and he looked at me like I was some idiot who never scraped ice before. I asked again, a bit more obvoius: "rent is 625 at the one with no garage right? And rent is still 625 with a garage?" Tim is still looking at me funny. "So, I see why the tenants benefit, but what do you get from the garage, how much extra money do you make for the extra $50k?" Tim's look changed, he stumbled a bit and said, "I guess that is how you should look at it, like a business." YES!!

That seems obvious to me, but it took 15 minutes to get my point across to Tim. What about harder questions? I also asked Tim why he didn't put that $200k into a $1 Million property. Instead of $2500/mo he could be getting $8k/mo or more. But is it that easy? I didn't push Tim on that one. From his perspective, the leveraged money is money paid to the bank rather than himself. I think of every property as a cap rate. For me, a 10% cap rate in a bad neighborhood is always better than a 6% cap in an upscale neighborhood.

I know there is more to it than that, but that is my focus. Tim was right about one thing - maintenance is easier in the nice neighborhood. Less damage, fewer evictions, and less time spent removing graffiti. To me, that should commmand a higher rent too though. How much is that worth? Tim is getting $2500/mo versus my $4800/mo for the exact same purchase price.

Until the market rents increase in Tim's area, he will be subsidizing them while I profit. When looking at real estate as an investment, the money needs to add up. It isn't about pretty fences or garages unless the rent is higher, or vacancies are lower. Do you know that? Does your real estate agent?

Main Street Milwaukee: SoHi 27th Street

Last summer, the City of Milwaukee selected the winners of the Main Street Milwaukee program. There were four business districts selected: Burleigh, National Ave, Lincoln Ave, and 27th Street.

So, 27th street? What is the draw there? Why would anyone in their right mind invest in or want to move to 27th and Wells? That’s where the new “SoHi” neighborhood comes in. Their motto is So Much So Close. Much like the SoHo neighborhood in Manhattan or Chicago – SoHi stands for “South of Highland”. At least the name is a break from the 3rd/5th/latest craze Ward District!

So what does 27th street have? How about these for starters: A freeway exit, Marquette University and Harley Davidson headquarters. Its 5 minutes from Downtown - the stoplights are perfectly timed all the way down Wells street, 5 minutes from Miller Park, 5 minutes from Wauwatosa. Its right up the block from the newly renovated Ambassador Hotel and its Envoy lounge. Of course, there are some down sides too, but the district has stepped up security in an all-out effort to revitalize the area. Many of the multi-unit residential buildings have already been improved in that area over the past 10 years leaving a live-able environment. Couple that with some new excitement, some cash, and some fresh condos at a reasonable price, and maybe, just maybe, you have a vibrant new district called SoHi.

They’ve got an open house coming up on Saturday October 21st from 1-3pm. Stop by and check out the excitement: www.sohidistrict.org . It took awhile, but there is a lot going on right now. There are new businesses, new rental units, and new condos. Both already improved, and more importantly under construction. These condos aren’t the downtown-$300k+ variety, they are around $100k with space to enjoy!

Landlord Shmandlord - Dogs & Eviction

Today's post is a bit off topic, but good fun stuff. I did a guest blog over on http://landlordshmandlord.blogspot.com/ . Its the story of a dog, a broken dog leg, and an eviction. Head over and check out the action!

Lisbon Ave, Milwaukee

My last post was about North Avenue leading up to the intersection of Lisbon and North. As you may recall, the City of Milwaukee is pushing for new development around Washington Park. The Washington Park Plan which was adopted on June 30th, 2006 notes three primary commercial corridors: North Avenue, Lisbon Avenue, and Vliet Street. See the plan here: http://www.mkedcd.org/planning/plans/WashingtonPark/pdfs/WPPlan.pdf
North Avenue was discussed in the previous post. If you read through the plan, eventually it says Lisbon is too close to North Avenue to support businesses and recommends development of residential housing. The plan puts its support for new commercial development along Vliet. The plan is a great source of raw information - it includes demographic studies, maps of abandoned buildings, and even samples of development.

I don't agree with their assessment of Lisbon though. Especially around Washington Park. The traffic patterns are high, connecting to North Ave, Highway 41, and acts as a downtown artery. As it reaches Washington Park, the city built a brand new public Library on Sherman Boulevard. From Sherman west to North Ave is where I believe new development could be focused. There is a small triangle between Lisbon and Washington park which if improved would provide a continual flow from North Avenue right into this great park.

We should look to benefit from the North Avenue development and keep right on going back down Lisbon. This has already started. Right at the intersection of North, Lisbon, and 49th Street, there is a 7-unit commercial building being restored with apartments upstairs. There are several buildings, and open lots, which could be utilized for this. Improving this one small triangle would improve Washington Park. Today, it is surrounded by declining neighborhoods. To the West, it bordered by Highway 41. This would improve the Northern boundary of the park.

Lisbon and North: Washington Park

After stopping at the courthouse today, I decided to leave downtown via North Avenue. I always see something new on that trip. What caught my attention today was that the newly developed commercial fronts around 33rd street are all full!! Which made me think, "I wonder how the ones up the road closer to Lisbon and North are doing?"

Lisbon and North is an interesting area, just a block away from Washington Park. The North Avenue revitalization has been going on for a few years now. A couple months ago, the City of Milwaukee put out a new plan to focus on Lisbon well East of there. At the time, I wondered why not start from North Avenue and work back East from there, and I still wonder that today. I'm going to focus on Lisbon on my next entry. Today, I'll stick to North Avenue from 30th street through 50th street...

I kept driving, noting each of the nice new business signs as I went by. The developers must have put in a good push to bring in some good businesses. It really looks nice. As long as those businesses stay, they should lead to continued progress! I didn't check, but my guess is they are on 5-10 year leases. As I head up the road towards 40th street, I see that the new commercial fronts there are still empty! What the ???? These were finished up around the end of 2005, and have been mostly empty since then. Ogden is managing the building, but they sure aren't utilizing it. They've had the same Leasing sign up all year. The only change in the past 10 months that I can see is a smashed window (which has been there for several months too). I talked to someone at Ogden about this spot last year and it sounded like they were close, but having a hard time getting the lease rates they wanted. Now it just looks like a new abandoned building.

I have this to say: If you are going to develop an important area for improvement in the City of Milwaukee, you darn well better put the effort into getting it filled up! The difference between those few blocks is amazing. Full units sure look impressive and are great for the neighborhood. Empty units are just another blight.

Back to my drive, a Walgreens is on the North side of the road and has been a staple here for years. Then at 48th street is the new Wendy's and athletic store which were just built in the last couple years. That brings us to the corner of Lisbon and North. This corner still has a bunch of under-utilized buildings, but just across the street is the new Police building and HUD just beyond that. Those buildings look great, and the grounds were done really well. They really make for a welcoming atmosphere.

Next up ... lets head back east on Lisbon.