Intro: Newbie Investor in Duluth, MN

11 Replies

Hi All! I am a new investor in the Duluth, MN area and am very excited to join the BP community. I got connected to BP through the real estate podcast, and listen daily. My partner and I are new to Duluth and looking to house hack a duplex. We are hoping to use the accessory home share permit to do a STR setup. Wow! The market is moving pretty quickly here! Any tips for someone just starting out?

Congrats for jumping in to real estate investing up here in the twin ports! House having and coupled with STR is a great strategy in Duluth. Before Covid we used to do monthly meetups at Heirloom, co-hosted by both Steven Potter and Michael Schaefer.

Mike would be a good resource to reach out to on the STR front and they can also help you with finding a property that would work for you.

personally I own properties in Superior and haven't made any investments over the bridge.

@Jillian Peterson I have several clients in Duluth and have met a few investors there so my knowledge might just be enough to be dangerous, so take it with a skeptical eye.  My personal belief is that Duluth is one of the best cash-flowing markets in MN.  It has strong rental demand and a large stock of low-priced homes.  The city seems to be tough on landlords and licensing can be an issue.  I believe they only allow so many per block but you may want to confirm that fact.  The houses while cheap are often in a state of disrepair so my warning to you would be to make sure you properly assess the price you pay vs the home's condition, with housing prices increasing Duluth is seeing an atypical appreciation for that market.  It's usually a slow growth appreciation market which is why it generally cash flows so well but when the market increases like this you see low-end properties shoot up in value quicker than high-value properties.  That being said do not shy away from the higher prices properties if their condition is great.  I've made several well-timed and very profitable investments this way.  I'd be happy to do a virtual coffee if you would like to discuss just PM me.

@Jillian Peterson

Hi Jillian! Welcome to the Duluth area! I’ve lived here for 15 years, and just got my first investment properties this past summer. I’ve been watching the market and listening to BP for years. Stoked to finally be off the sidelines.

@mike schraepfer is a great resource! His company, Heirloom Properties manages the one property that is currently rented and I will Turning over the other to them when they’re ready (currently renovating them).

I would describe Duluth as a small city trapped in a large town mentality. Many residents oppose any type of change and it takes them years to warm up to an idea. So, the city council has its work cut out to appease younger, more progressive ideas/investors, as well as the long time residents who fight change. The rental laws seem to have gotten a little less restrictive since I’ve been paying attention (~12 years).

Be ready to love on properties fast as they are going very quickly. There have been more multifamilies on the MLS in the past 6 months here than I have seen in the last 2 years! Happy hunting!

Hi @Jillian Peterson , welcome to Duluth! I recently moved to Duluth as well and am getting into investing. I close on my first property this week! I've found much of what others have said to be true about housing appreciation and heard it time and again from local realtors about how high some houses get listed for. The city did move away from limits on rentals per block a number of years ago after mixed results of the regulation. I've noticed some houses listed on the MLS will have been lived in as a primary residence but will maintain their rental license, so that's a bonus. Rental licenses in Duluth are good for 3 years before needing to renew, so where a property is in the cycle is something consider for initial costs. Happy to connect to chat more. Good luck!

As others have said, Duluth is a great cash flowing market and the appreciation over the past few years has been pretty extreme. If you're doing a house hack, make sure you know which neighborhood you want to live in or neighborhoods. There's not much that's DANGEROUS dangerous up there, but it does vary quite a bit from neighborhood to neighborhood. There's some spots in the west end that are up and coming so that could be worth looking at. Others have mentioned Heirloom Property Management, which Mike Schraepfer owns. They're a great company; they manage my places up there. Any specific questions, happy to help! 

Brittany Kuschel is an awesome agent up there too in case you're looking for one. She gets it on the investment side and works hard for her clients. 

Originally posted by @Craig Hansen :

@Matt Jennissen What areas in the West are "up and coming"?

Lincoln Park, for sure. I know a couple of folks who are optimistic about Spirit Valley and Denfeld too. There are some cool projects getting started that could draw more people to the area like these ones.