South Minneapolis - Along the Hiawatha light rail line down to the airport

8 Replies

Hi,

I have been researching SFRs, duplexes and triplexes in South Minneapolis. The triplexes and duplexes I have seen seem to be all built around 1900s. They are essentially older than the SRFs. For now, I use www.rentometer.com to suss out potential rent. The ones I really like (price and condition of building) I run by my realtor who also comes in around the same price. I have noticed that a 4/1 SFR comes out to be pretty much the same as a 2/1 -- 2/1 duplex. Am I off base here in my assessment?

This is all preliminary thinking (pre number crouching) and so I am wondering if anyone has used any other method of getting an idea for rent (outside of actually asking for the rents)? Mind you I haven't pinned down a potential purchase yet as I am 13 months away from making offers.

Being that I am going to be an out of state owner, even though duplexes and triplexes are my preferred route for RE investment ( I own a duplex in Los Angeles), I am leaning towards SFRs where the owner will be in charge of things like water, snow blowing and general garden and yard upkeep. 

I am also researching school districts as related to a potential SFR purchase. I see good school districts as a strong marketing point. Minneapolis/St Paul is a pretty high education oriented city with lots of top educational institutions. Good schools seem to really matter to parents there (as they do elsewhere). My thinking is that buying say a 4/1 SFR jn a great school district will further enhance the rentability of any 3/1 or 4/1 SFR I may purchase in that neighborhood. A good friend of mine who owns duplexes in is vehemently against SFRs but I have to consider these as an out of state owner. In my wildest dreams I would like my SFRs tenants to stay at least 2 - 5 years and so any little advantage counts.

I am told by my brother who has lived in Minneapolis for 16 years that Edina has the best school district. But my instinct is to pay 2/3rds of an Edina home price till my 3rd of 4th purchase. My realtor who also owns rental properties tells me that I will probably not have too much trouble renting a 3/1 or 4/1 in south Minneapolis. Apparently freestanding 2/1 SFRs can be looked at like Condos (without the HOA fees). Curiously, South Minneapolis has quite a few 2/1s. My thinking is that a 3/1 or 4/1 will also add to the rentability of the place.

I have seen some pretty nice 3/1 and 4/1 homes in the 124K too 179 range. I am probably going to go in with a partner (who will match my initial investment to make our pool of cash essential double). As such I have scheduled a talk with a CPA about structuring a path moving forward. 

I have also found two Minneapolis property managers that came recommended by my realtor. Has anyone used property managers in Minneapolis that they absolutely love?

My research on South Minneapolis continues unabated. So far these neighborhoods have jumped out at me: Longfellow, SENA - Standish/Ericcson, Howe, Corcoran, Hiawatha, Wenonah, Morris Park, Minehaha and even St Paul which is pretty much good almost all around.  

A duplex or Trplex in Edina would be a very interesting purchase but that's for down the line when I own a few buildings or should I say when I "grow up" as a RE investor.

As mentioned before, this is all preliminary tinkering thinking. I am visiting Minneapolis soon to look around and ask more questions. I'll start plugging in numbers in a few weeks when I am better armed with info.

Any and all input is greatly appreciated!

Thanks and good luck to all in your investments!

Francis

I own a duplex in the Hiawatha neighborhood and let me tell you how wonderful it's been. The location is perfect because it's 4 block from the light rail and the river. It is also close to Minnehaha falls. Rents for a 2 bedroom bath are anywhere from $900 to $1200 per unit. Cash flow on my duplex after expenses is around $400. As for SFh's, I'm not a big fan because of the possibility of 100% vacancy rate vs a duplex.

@Marcus Johnson    Thanks for your input!! Ironically, my one of my wife's best friends from her college days in Minneapolis was born and raised in Richfield. Very nice sized lots in your neighborhood that's for sure! 

So my thinking about Hiawatha by the light rail way line holds water. That's comforting to know as there are some nice properties up and down that area from the airport right up to Target field. I am actually growing to love the light rail station map!

Do you use a rental manager or are you self managing for now? The rents you quote seem to be in line with what my agent is quoting me. I am still exploring the pros and cons of both SFRs vs duplex or tri. Your post gave me new clarity. Thanks for sure.

You mention you're cash flowing. If you don't mind me asking, was your purchase the standard 20% down or was it FHA?

Thanks again!

Francis

Contact renterswarehouse.com they will give you an exact quote of what you will get for rent and they can manage the place for $80.  They own the market up here.

Edina has one of the top school districts in the Midwest.  Most homes that are listed at $500,000 in Edina are tear downs and developers buy them and rebuild homes that they sell for $2 million.  Edina is the wealthiest city in Minnesota.

The neighborhoods you listed in South Minneapolis are all in SE Minneapolis, which is considered less desirable than SW Minneapolis.  SW Minneapolis is probably 2nd to Edina as far as high end areas in the MSA.  Cash flow is hard to find in SW Minneapolis due to high prices.

That said, SE is very middle class and a good market for renting.

Also, the schools in SE Minneapolis are considered good.  The schools in SW Minneapolis are considered outstanding.

Thanks all!

PS: I Googled SW Minneapolis and the boundaries of what I see isn't as large as I thought. And not surprisingly, Edina looks to be smack in the middle of it. 

@Account Closed    Speaking of $500,00 tear downs, I am seeing 4/1 SFRs in Edina (redfin) for $239,000 that look quite nice.  There was even an open house for a 4/1 that looked quite spiffy. Definitely NOT tear down material if you ask me.

And then there are those homes in Richfield MN that seem to sit on 10.000 sq foot lots. Sheesh!!

Over the past two months we looked at some 40 months in SE Mpls, lots of options. The goods take some digging but we finally locked one down that had great bones and was built in 1945.

@Paul Palmer

Great to know there are options in SE Mpls. Looks like you're about to score again in your investment deals. I have been looking  up and down the Hiawatha light rail line (from afar). 

In your opinion, why are there so many homes on the market? 2/1s SFRs especially. My realtor in Mpls says to look at them like one would look at Condos. There also seems to be a whole bunch of 3/1s and 4/1s with any different combination of bathrooms thrown in available. 

Duplexes on the other hand seem to be scarcer than SFRs. Ironically, the duplexes are all at least 100 years old which is also very interesting.

Eventually, it would be nice to own SFRs Edina (I rarely see Edina duplexes) but a fellow investor who is leery of out of state investing worries about when that time comes when people who would love to send their kids to school in the Edina school district can afford to buy their own homes rather than rent which would suck for an SFR owner investor.

All the best in your investing!!

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