Lender · Fort Collins, CO · Member since 2015 · 304 posts · 148 votes
My partner and I are looking to invest in the Twin Cities (and/or the surrounding area). We are located in the Chicago area. We are focusing on smaller multi-family properties. For those of you who invest there, is there anything we need to know or be aware of? What's your take on the current market, as well as moving forward? Any help is appreciated. Thanks in advance!
Hi Nate,
It's difficult to find deals through the mls. They'll pop up every now and then but not often, and if they do, they are snatched up pretty quick.
Expect to pay about 90k minimum per unit (2/1) for maybe $1000-1150 in rents and higher in the niche markets (i.e. Uptown) but those 4 plexus will go well over 450-500k
Why are you not interested in the Madison and Milwaukee market?
Thanks @David Huynh, we have solid connections in the Twin Cities and my partner already owns some rentals there. That being said, we're not married to it either. We're open to other areas as well.
Let me know if you ever decide to sell them!
If I was a full time investor (time wise) I think there's a fairly huge play in Milwaukee for the Cashflow play, minimal appreciations
Ping me if you have questions about the neighborhoods here in the cities. Some blocks are less desirable and some are very desirable, one mile could be a huge difference. I'm sure you have the same situation in Chicago or anywhere else.
I would be careful about investing from a distance in the Twin Cities unless you know the market well, or have someone on the ground. Neighborhoods are changing fast, even people who live here don't know about a lot of the development that is happening in certain neighborhoods.
The solid A and B neighborhoods are very competitive (zero or negative cashflow) and the C neighborhoods can be tricky. You are looking at older housing stock, and subtle differences within larger geographic areas. The twin cities is very segregated. No one crosses the river, and tend to not cross the interstates. People will write off everything in E Saint Paul because its a "bad" area, but its as large as a small city, so there are some great neighborhoods and some terrible neighborhoods.
I think the major competitive advantage in the Twin Cities is that its very steady. We don't have the boom and bust that many cities see. There are many diverse fortune 500 companies here that tend to not lay people off in massive numbers, and that keeps the local economy fairly stable. On the flip side, cashflow is not nearly as good as some other areas that may or may not be more exposed to the boom/bust cycle.
So if you do find a good deal, it will probably be a good deal forever, and it will probably not lose significant value in economic downturns, but the price you pay for that stability is lower cashflow. I just looked at some data and it looks like Chicago sees the same trend, fairly flat median home price when compared with other major cities.
PM me if you have any questions about specific neighborhoods.