Considering Brrrr in South Minneapolis from Hawaii

12 Replies | Minneapolis, Minnesota

Aloha! 

I have recently discovered BiggerPockets as I have been considering moving into real estate investment and am impressed by the quantity and quality of the information and contacts here. 

My fiancé and I live on the island of Maui in Hawaii, are expecting our first child in September and are considering investing in Minneapolis, preferably South Minneapolis where she grew up and her parents live. Depending on how financing happens we may find we will need to save money for a year or so before we start making offers. 

Generally speaking the Brrrr strategy on a single family home is the most appealing to me. 

As I have been researching the area in light of real estate investment I came across this article-https://amp.mprnews.org/story/2018/05/22/twin-cities-houses-selling-at-breakneck-pace

This of course causes me some concern. 

With the low inventory will it be especially difficult to find a good property from out of State and a first time investor? 

What might I be able to do to help compensate for those weaknesses? 

I am a carpenter and would have no problem doing/managing a rehab and feel quite comfortable in that area of investing. 

Thanks for reading and I look forward to any responses. 

@Jason Eno there is definitely low inventory but it's not impossible to find properties. As long as you're willing to be patient, stick to your numbers and do a little work to rehab the property you'll be ok.

I'm finding it hard to find Single Family in south Minneapolis that cashflows but small multi is still working out. There's a huge demand for both but the demand for lower priced single family for first time homebuyers is enormous and there isn't much end in sight there from what I can see.

Thanks. I’m definitely willing to be patient, stick to my numbers and do the work needed. 

I’ll be running the numbers on properties of interest to get as familiar with the market as possible. Will also be speaking to agents in the area regularly. 

Originally posted by @Jason Eno :

Thanks. I’m definitely willing to be patient, stick to my numbers and do the work needed. 

I’ll be running the numbers on properties of interest to get as familiar with the market as possible. Will also be speaking to agents in the area regularly. 

 Moving from Hawaii to MN???

Why oh why???

@Jason Eno :  Your team on the ground is key.  As a carpenter by trade, your experience will indeed come in very handy.  What you are looking for is other people who have experience that complements yours.  Having people you trust to fill in the gaps in your presence or knowledge is the way to keep moving forward.  

Networking through BP is a good start, as you are doing now.  Your fiance also may have some good undiscovered contacts in her home network;  ask around!  You might also consider listening to the BP podcasts with David Greene and his "Core 4" strategy for accomplishing this.  He has also written a BP book on long-distance investing.  

@Dan D. :  With our nice weather, convenient international location, and limited land base, Hawaii is a tight market these days.  Homes here average 3/4 of a million and most of that value is in the land.  With 2-bedroom condos also averaging above $400k, "starter homes" do not exist here in the traditional sense.  Combine that with the fact that we do not have anything close to SF wages and Mainland U.S. markets start to look much more attractive.  I have some thoughts on how this all changes in the mid term but that is for another thread.  

@Dan D. ... I didn’t say moving... “investing”. 

I will say, as a political kind of guy, the economy here is becoming more and more polarized, wealthy folks from everywhere come here and that drives prices up... not to mention AirBNB’s. There is almost no such thing as an affordable rental. I live in a yurt and thankfully due to my fiancé’s job/relationship we pay no rent. 

Basically one is in the service industry (hotels and tourism), own a business or came with money. There are cash poor land rich locals; often the ownership goes back to land grants by the King. 

Point being- there are many many many folks who leave and go to Vegas, Arizona, Portland, Seattle etc. People who have lived here for their entire lives and whose families have been here since before western contact are leaving for economic reasons. 

Also there is “island fever”... it’s a few rocks sticking up out of the ocean... it can get small. 

I wouldn’t rule out moving to the Continent at some point but free rent with ocean/island views in paradise, good job as a project manager for 189 acres and multiple structures with a multimillionaire who likes to help his employees.... ya, it’s hard to beat. 

As things move forward I will be having a conversation with my boss and the owner of the company to see if they can “help me out”.... say $200,000 for two years at 5%?

Seems crazy but this guy bought several properties at the end of the road (Hana), hardly ever comes to them and stays at the hotel when he’s here.... pays many people to hold the jungle back... who knows? I wouldn’t be surprised if he just said “yes” and tells me to contact his person for the check. 

But I digress.... don’t take a “normal” economic situation for granted. Broke in paradise is still broke; but you can live on the beach🤙🌈

@Jason Eno I completely agree with @Jordan Moorhead , you will need to be very patient but there are opportunities out there around the Minneapolis Metro. If you aren't completely stuck on S Minne then I wouldn't count out the other suburbs. It is a crazy market here right now and as Jordan mentioned, any SF homes are going faster than hotcakes and likely go for over list so finding those numbers that work for you will be the challenge not the rehab etc.

There are tons of connections here on BP and the forums are great. I have been quickly learning to get in touch with a few of these guys and look forward to meeting a few soon. Most of us would be more than happy to help in anyway we can.

Jason - where are the hook ups? that job sounds amazing! I could really enjoy a few years of escaping to island life while the soon to be wife works remote ;)

@Max Pallatt I would be interested in knowing a bit more about this lender/realtor you have.

Probably the hardest thing you will have to overcome to make this work is that you are competing with many locals who live here, probably know the market better than you, and have the cash to pull the trigger quickly.  I have several clients who are hounding South Mpls and swiping things up that hardly look like a deal on paper.  When you are ready to purchase make sure you have your financing in order and have done enough research where you can put in an offer within a day or two of the original listing.

So Mpls, it will be hard to find a great deal, that's for sure.  If part of your plan isn't to differentiate in some manner (better way to rehab, better way to finance, better plan for holding, etc)., it will be hard to get something that goes by book value.

The don't bet on appreciation police will come down on this thread, but in many cases, if you're going to make money in So. Mpls, you'll have to get really good at finding a deal, or settle with the fact you might need to make some money due to appreciation or just inflation over your holding period of time.