2-4 unit property that actually makes sense - Minneapolis

2-4 unit property that actually makes sense - Minneapolis

Mike JuliffBusiness Member
Real Estate Agent · Minneapolis, MN · Member since 2017 · 18 posts · 13 votes
Hello Biggerpocketers, I have been vigilantly searching for a multifamily property to purchase as my first home in the Minneapolis area for the past 7 months and have found very few that actually make sense by standard metrics. These prices are absurd! Ideally my first purchase would be a 3 or 4 unit property that would reduce my monthly payments to make it much easier to save money for future properties. I have seen a handful of triplex and fourplex properties on MLS but can’t seem to get an offer accepted on the ones that are not overpriced by $50-100k. I actually had an accepted offer on a triplex that was going to work out super well but the deal fell apart - a story for another time. Any suggestions for how to acquire a nice 3 or 4 unit property? Seems like off market is the way to go. So far have tried MLS, Craigslist, Facebook marketplace, bigger pockets ads, direct mail (~200 letters with 1 semi-solid response), cold calling rental ads, and attending local meet ups to try to meet investors. Any advice would be much appreciated! If you live in the area I would love to meet up and chat!
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Jordan MoorheadBusiness Member
Real Estate Agent · Austin, TX · Member since 2015 · 5k+ posts · 3k+ votes
8y
Mike Juliff I understand wanting a 3 or 4 unit but the search is going to take 2-3x longer than finding a duplex that actually works. There are 10X the duplexes out there on the market. I do find off market fourplexes from time to time but much more frequently do I run into off market duplexes. If you’re set on finding a 3-4 unit just be patient and stick in there.
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  • Investor · Minneapolis, MN · Member since 2014 · 743 posts · 927 votes
    8y

    just bought bought a bank owned illegal duplex in S Minneapolis that i'll Convert back to SFH instead of going through headaches to legalize it. I'll sell in a year and a day.but will do a minor Reno and rent until then

  • Buy and Hold Investor · Alexandria, VA · Member since 2013 · 181 posts · 51 votes
    8y

    OK, hopefully the city council gets something done soon to open up more affordable housing options.

  • Minneapolis, MN · Member since 2017 · 40 posts · 70 votes
    8y

    The city has their 20yr master plan up right now and looking for ideas and suggestions on all of these issues.  Look for housing and find the policies for it, then you can leave comments for them.  Check it out here https://minneapolis2040.com/   

  • Jordan MoorheadBusiness Member
    Real Estate Agent · Austin, TX · Member since 2015 · 5k+ posts · 3k+ votes
    8y

    @Bruce Runn everything I've heard from anyone in Minneapolis who's tried a conversion says it's awful. SFH to duplex being near impossible.

  • Investor · Minneapolis, MN · Member since 2014 · 743 posts · 927 votes
    8y

    @Jordan Moorhead

    - I’ve Done it, it’s just hard and expensive but. It impossible there fore because everything else is drying up, it may be an option going forward.

  • Investor · Minneapolis, MN · Member since 2014 · 743 posts · 927 votes
    8y

    @Dustin Ruff

    I was at a 2040comp plan last night and there is tremendous push back from SFH owners- they seem to only want SFH in their neighborhoods or people that are rich enough to buy their own home

  • Minneapolis, MN · Member since 2017 · 40 posts · 70 votes
    8y

    @Bruce Runn yeah I watched a Facebook live video of a good bit of it.  That's what it looked like to me.   A lot of folks seem to think that the plan is legislation or something.  It's just a guideline basically which is why they're asking for input.   Plus I don't think the SFHers are aware of whats already allowed in their neighborhoods.  There did seem to be some landlords with legitimate concerns.   The city's growing.  The people need to live somewhere.

  • Investor · Woodbury, MN · Member since 2016 · 90 posts · 72 votes
    8y

    @Mike Juliff  Tons of great info here.  I'd also suggest one more option for you.  Stick to what you are doing.  I know 200 letters may seem like a lot, but sending them out once is probably not going to cut it.  What happens if they think, "No, I'm not interested in selling" and then a month later things change.  As a lot of bigger pockets episodes state, you have to stick with it because you never know when someone needs to sell.  I think you are doing things right, you just have to stick with it.  Good deals come to those who are patient.  

    Another option is to network at Meetups (there is an apartment meetup in Bloomington today at lunch time) and talk to a few wholesalers.  They may be able to put you on a short list if they know what you're looking for and that you're serious.  

    The issue I see with your approach is that it seems like you are trying to put very little money down and get a good deal. The best deals are probably deals that need a little work and/or creativity. I may be wrong here, but it feels like the nice places (that would qualify for traditional lending options) are going to only be on the MLS and therefore command retail prices.

    My two cents.

  • Investor · St. Paul, MN · Member since 2017 · 64 posts · 8 votes
    8y

    Hi @Mike Juliff I'm a local wholesaler in the twin cities area. I actually have a 4 plex owner that I'm talking to. Its in the Newport area. Not sure if you're interested in that. I get properties under contract far cheaper than anything you will find on the mls. This 4 plex has some value add. I could use some renovating. Looking at maybe 315 or 325k for it. PM me if interested. I am also looking at 2 6 unit apartment buildings with low buy in. I negotiated with the owner on one and got the price to 450k with a 50k seller carry back. So the buyer would only need 50k to buy the place. Not sure where you're at monetarily. That's a really low buy in for a 6 unit and you could homestead it. 

    I was at the apartment investors meetup today. 200 letters is not going to cut it. I send out thousands of postcards every month. The response rate is around 1%. At 200 letters, you're looking at 2 calls and thats not going to cut it. You also need to be consistent and send out letters every 2 months. Sometimes you wont get a call until your 3rd or 4th mailer. Let me know if interested in anything. PM me and we can go from there.

  • Real Estate Broker · Hugo, MN · Member since 2016 · 688 posts · 596 votes
    8y
    When we meet with clients the first time we are really looking for things that our clients can bring to the table. There are all kinds of people on BP and other groups looking at every property that becomes available, but everyone needs to find their value, sometimes it is rehab, sometimes owner occupying (househack), conversions, or many other things. Looking for properties that out of the gate are great earners is tough most of the time you need to have a vision for the property to have a good deal. Find your advantage over others and look at properties with a 1-2 year timeframe in mind. Everyone has something you just need to find it.
  • Rental Property Investor · St. Paul, MN · Member since 2016 · 3k+ posts · 3k+ votes
    8y

    I am a bit late to this party, but I would not buy unless it make absolute sense. Rents are high in the TC, building is up for MF complexes and prices are making margins non-existent. Don't let your underwriting standards relax. Keep doing what you are doing, but step it up. I stopped finding 1-4 family deals that made sense back in 2016. I don't look anymore as my focus is large MF, but I can't image it's gotten cheaper. 

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