Considering real estate investment in Minneapolis? The Minneapolis, St. Paul rental markets are prime for investors on any scale. Here are just a few of the highlights that make these markets some of the most desirable when it comes to rental property investment.
Untapped alternate markets can be a gold mine for CAP rate
• Mass influx of out-of-state investors has not occurred in these markets, hence pricing is still very competitive
• Higher amounts of non-distressed and distressed inventory than what’s available today in main-stream markets
• Higher than average rent rates (MSP/STP averages 33% higher rent rate than the national average)
• Wider variety of property types(SFH, TH, Multi-units/brownstones) all with strong CAP rates
Recipe for Success!
• Each market is different…what works in 1 market may not work in another market
• Make sure you have a business plan in place for each market
• Partner with your Property Manager to validate your business plan
• Your business plan should include (but not limited to)
o Neighborhoodso Property typeso Price rangeso Rehab expenseso Rent rangeso CAP rate goalso Short term/long term growth and exit strategies
Regulation? Not to worry!
• Consult with an expert Property Manager and leverage their expertise BEFORE writing a purchase agreement!
• Definitions and requirements for a sale transaction are not the same for renting out a property
• You need and expert to consult on the following:
• Seller disclosure statements
• Truth-in-housing requirements
• City/State housing regulations
• Tenant/Rental statutes
• HOA bi-laws
• Habitability code
• Rental licensing requirements by city
• Building/Property status (VBR, Cat. 2 etc)
• City assessments
• Hire a Property Manager that can execute with speed while being compliant with city/state requirements
• Hire the wrong Property Manager and it can cost you time and more importantly money!
• Make sure your Property Manager has your best interest in mind. Pay attention to their fee structure….does it drive toward your success or theirs, or both?
• Hire a full-service Property Management Company!
o Everyone says they are full-service…make sure they really are!o Special assessments on a property can be worked through and in some cases, negotiated or waived…..if you hire the right company to do it for youo Hire a Property Manager who is a Licensed GC. If you hire a 3rd party contractor to perform rehabs/ready-to-rent repairs, this will add time to the equation
• Make sure your Property Manager is connected and has established relationships
o City Inspectorso Rental License Inspectorso Section 8 Inspectorso Real Estate Officeso Peers/Competitors
• Make sure they are accredited/have credentials
o Licensed Real Estate Brokero NARPM members (local/national)o BBB accredited