Milwaukee multifamily investment guide

Our Chicago guide describes a city that does not cap rent and does not require cause to end a tenancy, but regulates landlord process closely, with automatic damages of two times the security deposit for a compliance failure and fee shifting to the prevailing plaintiff. We called it a fourth regulatory shape and said it is the one that most reliably costs money.

Milwaukee sits ninety miles north on the same lake, in a different state, and its city government is forbidden from enacting any of it.

Section 66.0104(2)(b) of the Wisconsin Statutes provides: "No city, village, town, or county may enact an ordinance that places requirements on a residential landlord with respect to security deposits or earnest money or pretenancy or posttenancy inspections that are additional to the requirements under administrative rules related to residential rental practices." Chicago’s security deposit ordinance is exactly such a requirement. In Wisconsin it is unavailable to a municipality as a matter of state law.

The preemption does not stop there, and its breadth is what makes Wisconsin distinctive rather than merely landlord-friendly. Under the same section a municipality may not enact an ordinance that prohibits a landlord from obtaining a prospective tenant’s monthly household income, occupation, rental history, credit information, "[c]ourt records, including arrest and conviction records, to which there is public access," or social security number. Nor may it limit "how far back in time a prospective tenant’s credit information, conviction record, or previous housing may be taken into account by a landlord." Nor restrict showing or re-leasing a unit during a current tenancy. Nor, under subsection (2)(c), "limit a residential tenant’s responsibility, or a residential landlord’s right to recover, for any damage or waste to, or neglect of, the premises."

Then Section 66.1015, whose title alone tells you the posture: "Municipal rent control, inclusionary zoning, prohibited." Subsection (1): "No city, village, town or county may regulate the amount of rent or fees charged for the use of a residential rental dwelling unit." Subsection (3) extends the prohibition to inclusionary zoning.²

Set that against the rest of this series. Most states we cover preempt rent control alone. Utah reaches rents "or fees," which we noted as unusually broad. Wisconsin reaches rent, fees and inclusionary zoning in one section, and then removes local authority over screening, deposits, inspections, damage recovery and disclosure in another. It is the most comprehensively preemptive state we have covered.

For an owner the practical value is not that the rules are lenient. It is that they are uniform and stable. In Illinois the compliance regime depends on which municipality a parcel sits in, and we found three different ones inside Cook County alone. In Wisconsin the regime is set at the state level and a city council cannot change it. An operator can build one set of procedures and run it across the state, and a change in municipal politics does not create a new liability.

• Municipalities may not add security deposit or inspection requirements beyond state rules.
• They may not restrict the screening inputs a landlord obtains, or how far back they look.
• They may not limit a landlord’s right to recover for damage or waste.
• Rent control, fee regulation and inclusionary zoning are all prohibited by one section.

Chicago regulates landlord process and prices the failures. Wisconsin removes the subject from municipal hands entirely. Ninety miles, opposite principles.

In our Knoxville guide we compared two counties whose median home values sat within about one percent of each other and whose monthly ownership costs differed by $681, and used the pair to isolate what a state’s tax and insurance burden actually does to a holding cost. Milwaukee extends that ladder from the other end.²

The median owner-occupied home in Milwaukee County is worth $230,700 and costs $1,688 a month to own with a mortgage. In Knox County, Tennessee the median home is worth $320,900, about 39 percent more, and costs $1,589 a month, about $99 less.²

Expressed against value, Milwaukee County’s annual owner cost runs about 8.8 percent of the home’s value on our arithmetic, against roughly 5.9 percent in Knox County. Wisconsin’s reputation for heavy property taxation is visible in the household data, though we repeat the caveat we have applied throughout: median owner cost bundles mortgage, taxes, insurance and utilities, so this is the combined effect of those items rather than an isolated property tax measurement.²

For a multifamily owner the consequence is direct. The single largest controllable expense on a Wisconsin asset is the tax line, it is heavy, and it is the first thing we would want three years of actual bills for rather than an assumed effective rate.

The affordability picture that results is unusual. Median home value against median household income is about 3.6 times in Milwaukee County, comfortably affordable on the purchase price. But the monthly gap between owning and renting is $587, wider than Knoxville’s $328 or Marion County’s $300. So the barrier to ownership here is not the price of the house, it is the cost of carrying it, which is precisely the mechanism that sustains a majority-renter county at these income levels. Rent absorbs about 20.5 percent of median household income.²

• Milwaukee County: $230,700 median value, $1,688 a month to own.²
• Knox County: $320,900 median value, $1,589 a month.²
• About 8.8 percent of value annually here, against 5.9 percent in Knox County.
• The barrier to ownership is the carry, not the purchase price.