Minneapolis - Penn Ave Area

16 Replies

Hi,

I'm a Biggerpockets newbie and a duplex owner in Los Angeles. I have family living in St Paul. I have been looking at duplex properties in Minneapolis for a few weeks now. (At first glance, the math makes more sense there). I came across some single homes on Penn Ave in the 55411 area under 90k.

At first blush, some of them look decent. Inspections will obviously reveal the truth. I am also aware that Minneapolis is expensive with regards to property prices etc but cheaper the LA.

My family who live in the suburbs of St Paul are a tad leery of this area (it isn't exactly the 'burbs) meaning, I have to tread extra carefully and probably have to think about outsourcing property management IF (and only if) a deal is too good to walk away from.

I have started to have exploratory conversations with a realtor who has quite a few listings in this area. Any firm decision is far from made on my end as I'm keeping an open mind and will walk away from the idea of investing in this city if the conditions force me to.

I am going to Minneapolis this summer to spend a week scouring potential properties (with an open mind) and may choose to just stick to the Los Angeles market.

To the savvy investors in this forum:

Has anyone invested in this zip code area and if not does anyone have any knowledge about this area of Minneapolis? All input is greatly appreciated.

Thank you all!

Francis

Hi @Francis A. best of luck with your search.

I don't mean to pull you off topic, but would you be interested in sharing the economics of your search in Minnesota? (private message if preferred) I'm always curious to hear the thoughts behind moving money out of one's primary market, particularly when the deals are small (SFR or duplex) and only accessible by plane if you need to visit the site.

I've been resistant to do so myself over the past 20 years and have heard far more regrets than success. No judgement, strictly curiousity.

Best of luck

A

Hi Francis,

North Minneapolis is definitely not the "burbs".  Here is a chart you may find interesting.  The area with the high density red dots is 55411.

Minneapolis shots fired - June 3-9 2014

http://www.ci.minneapolis.mn.us/www/groups/public/...

Here you can look at more periods

http://www.ci.minneapolis.mn.us/police/statistics/...

I don't personally know the area all that well, but it would potentially be one of the more challenging areas of Minneapolis.

@Francis A.

Anytime you look at a property google the property name and address. I found out about a murder 2 months earlier on the street. That brought the price down with the broker.

To find out about an area go to IREM.org search for ARM certified property managers. Call 5 ask them what parts of the city they like/dislike and why. Ask them what they see expenses running per category per unit. What do they see them selling for per unit, what is the market occupancy rate. Ask them if they know anything coming up for sale. Great way to pick up some good info and possibly a deal.

Good luck

Paul

@Francis A. ,

As a reference point, I lived in 55411 for two years at 2 locations. One year was in the southeast corner and didn't have any problems. The other was in the southwest corner. We knew of two gun shot incidents within a few blocks and also had a break-in.

Both places we had neighbors that have been there for 20+ years without issues.

Things also get worse in a hurry as you get north of Plymouth Ave. There are good pockets and it definitely can be done, but I'd recommend knowing the area really well.

And for what it's worth, I've found St. Paul to be more affordable than Minneapolis. If that's where your family is, maybe it's worth considering? Just a thought!

Fellow members,

Thank you for your generous input! This greatly helps in thinking through the problem of investing (where/when/how etc).

Kudos to Biggerpockets!

I consider this my due diligence stage and so all areas have to at least be investigated and charted on a plus/minus chart.

Regarding moving money out of Los Angeles; my first choice would be to stay right here for my next purchase however the more I work with the numbers, the more it makes sense to at least widen my search and become more knowledgeable about cities in which I have family (eyes on the ground). This doesn’t mean I will pull the trigger in another city. Rather it helps me figure out where I will get the best long term value for my money and what makes sense.

So yes, the number one reason I am looking out of state is because of the math: IE: 2% rule etc. I feel the math with regards to investing here in Los Angeles needs to be looked at through additional lenses because of the prices of properties here versus long term tenant demand etc. I am currently living in one of the units of my current duplex so that’s how I partially solved the issue of approaching my first purchase.

As mentioned earlier, I’ll only consider cities where I have strong ties to, however, this does not mean deals in these cities will make sense. I have also considered (tentatively) pooling money with certain family members and a close friend (who has expressed interest) in order to make the math more digestible. I guess that might be called home made syndication.

Searching for ARM certified property managers is a great idea. Thanks for suggesting that (Paul)!

The quest for info continues!

Thanks so much again for being generous with your knowledge, I hope I can be of help in the future!


Francis

I'm from Minneapolis and I recently purchased a duplex in South minneapolis in the Longfellow neighbor which is conveniently located by the light rail and near the historic Minnehaha Falls desirable area. I paid 180k and the rent is $1700 and in cash flowing around $350 a month after all expenses.
The problem with the location your talkin about is that it's North minneapolis and it is a poor neighborhood with a lot of crime. Us here in Minneapolis don't think very highly of North Minneapolis. When mentions that area, we think of crime first. Just my two cents.

Marcus,

Your "two cents" are well received indeed! I initially started looking around the U of Minnesota area as a starting point.

As a result of this post and my family in St Paul's observations, I have asked my realtor to include listings from South Minneapolis.

Where you describe as the location for your duplex is exactly what I'm looking for. I really appreciate your input.

Did you inherit your tenants and if not, were you able to rent the apartments fairly easily?

Thanks!


Francis

I also live in a suburb of Mpls. When I hear North Minneapolis, it's essentially the worst neighborhoods in Minnesota that you could find in my opinion.

Pick pretty much anywhere else, and it would be better expect for a couple other smaller pockets.

Thanks! I'm looking south. My family pretty much echoed your sentiments.

@Marcus Johnson, @Jeromie Hamann and @Eric Guitierrez have all sounded the horn with regards to that.

Thank you all!

@Allan Glass, I have had one rental (4B/2Bth) property about 2700 miles away from where I live, and I've had it about three years.  The first year was a little rocky b/c we didn't find all of the maintenance items that it needed when we bought it but it has settled down nicely and stays rented, to good people who take care of the home.  We just bought another in that area.

But we also 1) know that area REALLY well as we grew up there and not much has changed and 2) had trustworthy contacts from day 1 on all aspects of the acquisition and maintenance and 3) have a really good PM company.

So my experience with out of state investing has been good, so far.

@Amanda Hensley, it's so great to hear about your experience!

I brought this question to the open forum because I had been hearing sentiments against investing outside of the city of my residence. This included some of my family members.

Part of my thinking is that if I can consistently rent out a place I bought for $160k for $1000 - $1200, it makes sense to add it to the portfolio assuming that all other factors aren't out of whack!

I read this article by Mark Ferguson on paying of mortgages early etc.

http://www.biggerpockets.com/renewsblog/2014/02/09/paid-off-rental-property/

I'm beginning to see creative ways to solving the problem of ramping up on investment properties.

Thanks again for sharing!!

YW, anytime.  

In my opinion, so many people react negatively to 1) things they don't understand or 2) things they wouldn't choose to do themselves.  Don't let it stop you :)  Good luck in your search!

@Amanda Hensley. Thanks again for your kind and encouraging words. May the positive Kharma coming to you be fantastic on the "flip" side!

I meant to ask. Do you use a Property manager and if so are they a regional outfit or a local one? I'm assuming by 2700 miles from your rental property, it's situated on the east coast or the midwest? I need to be thinking about property managers as part of my due diligence.

Thanks again!

Francis

We use a local property management company - they're not part of the AMO/IREM but they are hands down the best in that small town. They KNOW the market, they have a stellar repair team, they market our homes very well, our performance is aligned (meaning, they charge based on rent only, they don't nickel and dime me), they have good accounting practices, and they use a web software that I can log into so I can always get the financial reports, details on repairs, etc - anything I need. Our rental homes are in East TN.

Actually, this blog post from @Ben Leybovich  may help you find a good property management firm - I thought these questions were extremely good:

http://justaskbenwhy.com/rental-property-management/

@Amanda Hensley. Thanks as always for your generosity! It's much appreciated.

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