Hey Minneapolis investors!
I'm currently living in Boston, MA and am just starting my real estate journey. I moved to Boston right out of college, and while it has treated me well, I'm looking to relocate. I'm interested in Minneapolis for a variety of reasons and have a couple of questions about the area - if anyone could help me out, I would appreciate it!
My Goals: I plan to go the house hacking route and buy a property with an FHA loan, live in one of the units/rooms and rent out the rest. Preferably this would be a multi family property, but single family works, too. I have read on the MN forum that house hacking here is more achievable with single family homes. That's step one. After that, I'll be looking to continue acquiring buy and hold residential rental properties in the area.
Financing: I currently have about $15,000 saved for a down payment. I would be able to earn a salary of $40-$50k and I have good credit.
Here are a couple of my questions. (I feel like I have a million...)
1. Is house hacking a viable option for me if I wanted to keep my commute within 30 minutes to the Minneapolis/St. Paul area? From looking into home prices on trulia/zillow, it doesn't seem like I'd be able to afford anything super close to downtown. Are there areas further outside of the city that would be more affordable but that tenants would still find desirable to rent?
2. How drive-able is the city? I'm asking because in Boston, what should be a 30 minute drive into the city can really be twice or three times that length because there is so much traffic. I want to keep my commute as short as possible!
3. Would you think that Minneapolis would be a good place to get started in real estate investing for someone of my income level and experience? It's certainly not the most affordable place, but it seems like prices are rising and the population is growing, so it appeals to me as a place to call home. I have a lot of freedom of movement at this stage in my life, so I want to choose a place that I will LOVE and that will allow me to carry out my goals in real estate.
not from the area, but good luck and welcome to BP ;)
I’m a local realtor/investor and just finishing up the remodel on my Northeast Minneapolis house hack.
It’s a great property within 10 minutes of the city, walking distance to cool bars and restaurants, right next to the river and I live completely for free!
By buying a fixer upper duplex I’ve been able to cash flow and build a bunch of equity.
There are still deals left within the city limits and the city is very driveable, even bikeable from my neighborhood.
If you want me to set you up with an auto search so you can see all of the properties listed on the MLS shoot me a PM.
@Harry Sharp to answer #3. I think it still is a good city to invest in. I have a duplex here and am looking for another residential property at the moment to move into for another house hack.
@Harry Sharp I live in the Boston area and chose to invest in the Twin Cities. From my visits out to the Twin Cities area, the traffic isn't nearly as bad as it is in the Boston area. I would say that the Twin Cities aren't as established as the Boston area (read overpriced), and there are still some areas where you can make a buck or two. The thing that attracted me to the Twin Cities area is how many white collar jobs there are (it's a banking hub in the midwest). There are a lot of banks and financial institutions (can't forget Target, too, which is everywhere out there), with a lot of white collar jobs. With $15k down, you could definitely get a MFR if you were to house hack in a fairly desirable area. From my limited research (guys and gals on the ground, please correct me if I'm wrong), duplexes in solid areas trade at about $100k-$125k per door, while triplexes are closer to $90k-$115k per unit. Therefore, it's fairly affordable, especially in comparison to the Boston area.
@David Barnett you’re about right with the prices per door although @Harry Sharp will be able to get into something for less than that down with an FHA loan and down payment assistance if he wants it.
I didn’t take the down payment assistance personally because I had the cash for the down payment and didn’t want to pay it back later.
I agree that there is a very strong job market in the twin cities.
I was $15k into my place with down payment and initial remodel of my unit. All of the additional renovations have been funded by rental income or AirBNB income :)
@David Barnett PM me your criteria if you want and I’ll keep an eye out for you
@Jordan Moorhead Thank you for the offer. I have a realtor that I have an existing relationship with that is top notch. I'd be happy to discuss my criteria through a pm, however, any deal that I would explore would include my realtor as my buyer's agent. I know this is usually a non-starter for most agents.
@Harry Sharp as a Minnesota lender and investor in Minneapolis, 100% agree with @Jordan Moorhead . You absolutely can house hack either a single family residence or duplex within 10-20 minutes of downtown Minneapolis with 15K and your projected salary. I do disagree that single family is a better option in our market, I think its just easier to find and that is why you will read more people suggesting it. I would not listen to them unless your goal is appreciation and not cash flow. The long-term cash flow and other benefits from multi-unit properties far outweigh the pain in looking a little harder for a SFR over a duplex. I suggest finding a good team, a Realtor who knows multi-family is key.
As to your bigger question is Minneapolis/St Paul (MSP) a good market for you to invest. The answer is yes. I know many investors who kill it here, and there is no reason you can't be one of them. The truth is there are many great markets, the question is would you like to live here? That I can't answer, but there are many incredible reasons to like MSP. As the 10th largest media market we have all major sports leagues, arts & theater, great schools, major and stable corporate employers like 3M, Target, Best Buy, Honeywell, Boston Scientific, Medtronic, St Jude Medical, Cummins, and many more. These are all reasons to invest here as well. Our workforce is well educated and job opportunities are plentiful. Come check it out. And, if you want to talk strategy PM me and we can chat more. But in closing I'd especially encourage you to avoid SFR as your first house hack, especially when moving cities, that complicates it further.
@David Barnett shoot me a PM regardless. If I have any listings or come across any off market deals that fit your criteria I’ll let you know!
Thanks everyone for the great responses.
@Harrison Sharp Thanks for the welcome! Strange coincidence we have almost the exact same name.
@Jordan Moorhead That's good to hear. Yeah, I've been looking at the numbers, but there's only so much you can tell from a distance. Good to hear an active investor is able to do exactly what I'm looking to do. Sounds like you have a sweet set up. I'll definitely be shooting you a PM.
@David Barnett That's great. That sounds right on with what I'm trying to find. As for the white collar jobs - that's one of the reasons that made Minneapolis stand out to me, as well. Seems like there's a lot of opportunity and I'm glad to hear it's still affordable enough. Moving to Boston after college was a bit of a shock!! Before I moved out here I was paying $340 for a pretty big room in Greeley, Colorado that was a 5 minute walk to my college campus. Quite a different experience than renting in Boston, as I'm sure you know!
Very cool that you are investing in the Twin Cities and we both live in the Boston area. I would be curious to learn more about your experience investing in the Twin Cities. Thank you for your response!
@Tim Swierczek Great. I have no problem looking harder and putting in the time and effort to find a MFH that will work. I agree, I think that the time spent will be worth it in the long run. Thank you for the encouraging words.
As for you second point, I believe I really would like MSP. It's tough to tell without experiencing it first so a visit is in order, but the region of the country has everything that I'm looking for, and it's much closer to family than I am now. I do worry about the winter, though... It seems like that is the #1 thing most people bring up when I mention Minnesota. I need a city with the seasons, though! I will be sending you a PM, as well. I really appreciate the insight.
House hacking is generally easier to fund when looking at multifamily properties considering you can count the cash flow from the other units towards your income and thus have an easier time getting the financing required.
Im not from your area but if you're not attending your local REIA meetings you should definitely start going and connect with the older more experienced investors who can not only mentor you but show you the dos and don'ts of your area. I saved myself alot of money, time, and pain by connecting with these types of people and they led me down the right direction.
Hey @Harry Sharp , here's a (maybe too early) welcome to the Twin Cities! It's all about what's most important to you, but I'd recommend coming out here for a visit and seeing if you like the feel of the city before you spend a bunch of time deciding if you'd want to move here for the REI opportunities (or wouldn't want to move here because the lack of). That being said, my wife and I love living here and the area has a ton to offer in terms of livability. More of a how-to-live-your-life comment, so take it with a grain of salt.
I'm in a similar situation as @Jordan Moorhead - currently house-hacking a duplex about 5-10 min from downtown Minneapolis, but different neighborhood. It's definitely do-able here. Although inventory is tight, you still are going to have an easier time finding a multi-family deal that cash-flows than a similarly performing SFH. Rents in MSP for SFH are relatively low when compared to purchase price. One note- I would plan on trying to do a conventional 5%-down first-time homebuyers program as opposed to an FHA loan. With how competitive it is here for most properties, I don't think many sellers are going to with an FHA offer when they have other options, which is usually the case right now. I can connect you with a contact who can do such a program if you'd like.
@Harry Sharp I agree with @Joseph Lee that the 5% down conventional loan on multi family is the way to start if you qualify however for a slightly different reason. It's because the conventional option must be your only loan at the time of closing and that means you can still get an FHA loan on your second. This way you can get two properties for 8.5% total instead of 18.5% if you start with the FHA and then go to conventional second.
Good point by @Tim Swierczek
Tim- I don't want to derail the thread, but do you do 15% down for conventional non-first time multi-families? PM me if you do.
Thanks @Joseph Lee - I appreciate it! I've been wanting to move for a while and have been putting together a list of cities I could see myself in and want to explore, independent of their REI opportunity. I appreciate the insight you provided. As for your mention of the 5% down payment conventional loan... Thanks for the tip! I wasn't aware that option was out there.I would love to connect more about that, I'll send you a PM.
@Joseph Lee I sent a friend request with a PM
Are you willing to work an additional 5-10 hours a week to wholesale? It can be annoying but I've scheduled myself to drive for dollars as a wholesaler. You can learn the business by networking and finding great deals which is a good skill. I have not closed a deal yet and my first driving for dollars session is tomorrow for 2 hours. I am a newbie so these words don't mean much now but I will reply to this thread in 3 months after driving for dollars 2 hours a day and learning what I need to do to be successful and let you know how it has worked out for me. If it has been successful then I will probably be able to give you some great information even if you already moved into the area you intend to. The way I see it now this a great way to learn the business and earn a minor amount of cash while you do it.
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