When it comes to investment properties, many real estate investors ignore the heartland in favor of the big cities, but this can be a huge mistake. Investment property in the Heartland, such as Wisconsin, can be highly effective, as the property values are lower than in other areas. Your property's potential income can be much higher here if you buy low and sell high - and Wisconsin's prospects are very bright, promising a great return on investment.
Housing is very hot here in Wisconsin, as one-bedroom homes have risen in value by almost 17% in the past year. While many markets experienced a boom during the pandemic, the Badger State's home stock only continues to fly off the market: in 2022, some properties were bought within two days of being listed. Many choose to remain renters thanks to the stress of competing in such an intense marketplace, which is great news for a real estate investor.
Despite this, a single-family home in Wisconsin costs around $297,100 on average, far less than in pricey areas like New England or the West Coast. You can qualify for a DSCR loan much faster than for a traditional mortgage loan, which gives you a leg up on other investors still trying to get financing for their purchase.
Another reason to seek DSCR loans in Wisconsin is that the state has no rent controls; in fact, it's entirely prohibited by state law to restrict how much a landlord can increase pricing. This means you can charge competitive rents without concern of municipal bylaws, ensuring you can make plenty of rental income to cover your monthly mortgage payment.
Like the tenacious animal of its nickname, the Badger State is working hard to revitalize its economy and add new jobs. It's expected to add 191,222 new jobs to the economy by 2030, a growth of nearly 6.3%; many of these will be in blue-collar roles like manufacturing and agriculture, which makes an investment property near these industrial zones an excellent choice.
A strong focus on automated manufacturing ensures that Wisconsin will remain competitive in the coming years; food manufacturing giant Nestle is also adding new production lines to its Wisconsin plants, bringing further attention to this state's untapped potential as an economic powerhouse.
For decades, Wisconsin has been known as a place where tourists from places like Chicago and Detroit come to relax; in fact, tourism rose by an unprecedented 8.7% from 2021 to 2022, reaching a record-breaking 111.1 million. As many are overnight vacationers, short-term rentals in popular spots like Madison, Wisconsin Dells, and Kenosha are brilliant options for investors wanting to find highly productive property in this promising economy.
While DSCR loans require far less paperwork and no personal income information, there are still stipulations you must consider when applying for these loans, such as the minimum DSCR and the loan-to-value ratio.
While you don't need to show tax returns or other personal information, you will still need to prove your creditworthiness to be approved for most DSCR loans. Most lenders require a score of at least 640 for Wisconsin DSCR loans; this is lower than in other states in deference to the more humble market. However, the higher your score, the better interest rates you can acquire, so strive for a 680 or higher.
DSCR loans focus on the DSCR ratio, which divides the rental income by the monthly mortgage payment, called PITIA (principal, interest, taxes, insurance, association dues). If the rental income covers the payments, it's a 1 or above, but if the net operating income is lower than the loan payments, you have a negative DSCR. Most lenders require a minimum DSCR of 1.2 or higher, though 1.25 makes you a better contender.
Lenders require an appraisal of the property before approving DSCR loans; you'll also need to submit a rental analysis, called a rent schedule, which proves the expected rental income.
This refers to how much you borrow versus how much the property costs. The maximum loan-to-value ratio is 80%, but some lenders will want no more than 75%.
Your down payment amount will be directly proportional to the loan-to-value ratio, typically 20% or more. You'll also need to pay closing costs as with other mortgage loans.
DSCR loans anywhere in Wisconsin are a wonderful idea, but these four markets are some of the hottest in the state, based on economic projections, variety of profitable property types, and potential rental income.
The capital of the state, Madison is known for its colorful, quirky vibe and its large population of college students. With the many tourists coming to bask in its beauty, both long-term rentals and short-term rentals do very well here.
As the average home price here is much higher than the state average - about $376,977 - accordingly, rental properties generate more income. The average rent is $1,622 across all residential properties. Both office and retail spaces average about $23.60 per square foot.
Vacations and staycations are a mainstay of the Madison economy, so it's no wonder that the average cost of a vacation rental is an incredible $300 per night, with some averaging even higher at $1,987 per night. An attractive, well-maintained home in a desirable location could make big money for a clever investor.
Famous for its breweries, Milwaukee also has many cultural attractions, including the Milwaukee Public Museum, Milwaukee Museum of Art, and the Warehouse Art Museum. It's also home to the Milwaukee Brewers, drawing in sports fanatics from around the Midwest.
Home values are much lower here than in Madison at about $195,566, but rents are only a little lower at $1,410, making it an excellent place to purchase investment property. Office and retail space rents are comparable to the capital at around $22.30 per square foot.
Kenosha is where weary travelers go to breathe fresh Midwestern air, making vacation rentals a great use of a DSCR loan: you can generate $348 per night on average. Home values sit squarely between Milwaukee and Madison at $232,810, but its rents are lower at $1,350 per month. Commercial space is cheaper at about $17.61 per square foot.
Home of the NFL team, the Packers, this town has emerged like a phoenix from its gritty industrial roots to become a peaceful and contemporary urban area. Home values are comparable to Kenosha at $235,138, but the cost of living is much lower: about 10% below the national average.
Part of this low cost of living is due to the fact that rents are quite low at $949 per month across all residential rental types. Commercial real estate is shockingly affordable, averaging only $12.70 per square foot. This signifies great growth potential for those who want to participate in this city's regeneration through small businesses and investments.
Visio Lending is one of Wisconsin's foremost lenders for DSCR loans, making it easy for investors to qualify for the financing they need to develop a healthy income through investments. We require no tax returns or other personal income information: just your credit score and a strong DSCR ratio on the investment property in question.
We encourage you to reach out and learn why so many investors have relied on us for a simple, straightforward DSCR loan process to make their investment dreams come true.
Check out some of Visio Lending's recently closed DSCR loans in Wisconsin.
Green Bay, WI
Kenosha, WI
Milwaukee, WI
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Visio Lending is the nation's premier lender for buy and hold investors offering, long-term loans for SFR rental properties, including vacation rentals.