North Minneapolis concerns - Duplex purchase

[Parker D.]

Hello everyone!

I am currently looking at a duplex in the Jordan neighborhood but I have some reservations...

Pros

- Property is in good condition and needs little work

- Great cash flow - based on my calculations I believe it would cash flow 700-900 for a <200k duplex. This would be 21-24% COC Year 1 with 5% vacancy and 5% capex.

Cons

- Neighborhood? I don't own anything in north Minneapolis and am concerned about the area given the state of Minneapolis

- Buying into a decline? I see there is a discussions on the state of rentals Minneapolis and see a lot of people that are holding off on buying. 

Are my concerns warranted? Does anyone own property in this area that would be willing to share their thoughts? 

Thanks!

[Amber Gonion]

@Parker D. If this is your first property then walk away, if you have a few years with others then maybe you want to take the risk.

Just the potential tax increases are scary for mpls along with the other potential regulations.

The North side was affected by the riots, but they kept it to minimum (early they picked the areas to protect and areas to clear out of, southeast they cleared out of, downtown and north they held the line)

Management in a class D neighborhood is much more difficult and is a steeper learning curve. I have managed in these areas and while you may be at a 1% rule expenses for maintenance, pest control, evictions, vandalism etc tend to knock the shine off them. Still profitable but these things tend to drive down cashflow. Some will get lucky for a while, but as regional manager with over 800 units years ago I can tell you the averages will catch up unless you are on top of you game.