MPLS 2040 comprehensive plan and how landlords can add more units
I am participating in the MPLS 2040 comprehensive plan by attending meetings and provided feedback that can be a big win for both landlord owners and renters in Minneapolis. I am an advocate of changing our current ADU ordinance as part of the MPLS 2040 comprehensive plan guideline to allow up to 4 plexes throughout the city. The change would be to allow non owner occupants the ability to add an ADU to their current 1-4 unit properties where currently only owner occupants can add an ADU. Portland has been a trailblazer in opening their city to landlord/owners adding an ADU and has increased the building of ADU's from 24 units in 2009 to 615 in 2016. Minneapolis could do the same thing.
In my case, I own 12- 2 and 3 unit buildings and would add a 1,000-1,300 sq ft ADU to everyone current property. It's new construction without the land costs and there really isn't any more land available. I'm a general contractor so adding a new "carriage house/ADU" of 2-3 bedrooms would add new housing in high demand areas where renters want to live. The financial equation works out better than a 1% rule as it comes in at a 1.1-1.2 % rent to cost of building and the apartment is brand new so you wouldn't expect any initial CAPEX. It is literally impossible to find a 1% deal in a good neighborhood in Minneapolis.
One action point is for every landlord/owner/investor to log onto the city's MPLS2040 plan and leave feedback that you want to see the ADU ordinance changed to include owner/landlords in adding ADU's as part of the comprehensive plan. See link below:
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@Tim Swierczek I may be able to meet, let me know if you set something up. CPA hours and my drive to and from the cities really kills my day so I do most of these on the phone now to keep my wife off my back. I roll out of tax season with a lot of deferred RE work so it seems I don't gain any time.
My general thought is that it won't affect portfolio loans much because the ADU will likely cash flow enough to pay the debt but on the residential side it will be interesting. I think it will be an appraisal issue on the residential side because there will not be a lot of comparable properties and residential loans typically do not consider cash flow.