All Forum Posts by: Matt Higgins

Location x3, can’t move the railroad tracks so maple grove if that is your only 2 options.  What are your goals for the property?  What does the return look like @$2500 rent and 400k purchase in Maple Grove look like with an association fee?  If the property is for you that’s a question only you can answer, but I like maple grove long term better for resale. 

@Todd Dexheimer

Thanks Todd. I know few have their finger on the pulse of this town better than you, but I will not put you on the spot and ask you if you like MPLS 5 years from now? Or if St. Paul better is a better market? Or if it’s go to the sunbelt altogether?

You sound like a great operator @Bruce Runn.  Thanks for sharing your experience. Great work out there!  Hopefully we will cross paths sometime 

@Bruce Runn

Glad to hear that.  What are your thoughts on the new landlord/tenant screening criteria?  I check the commercial and multifamily sales daily and I still see a lot of things moving.  However, the landlords my wife and I have talked to in Mpls have all cut rents, had vacancy go up, and are having struggles with their collections.

Majority of our product is in norther suburbs and greater Minnesota where our #s have been solid during the pandemic, but all of a sudden deals are harder and harder to find.  I have always liked our niche, but I don’t think long term masses of people are going to pay up to live in rural minnesota, and the suburbs will always have to compete with the newest school and the cost to build 10 minutes farther out.  
If I liked the political environment in Minneapolis even a little bit I would invest more there.  That being said, NYC-CA-OR aren’t known for being landlord friendly and they have the highest priced real estate in the country.  

I’m interested in where “the curve” goes next.  I doubt the dozen people reading the thread will change the twin cities real estate market so I am not going to lie awake at night worrying about it.  I enjoy hearing about what other people are experiencing in their leasing and sales.  

I had a house I flipped in Lindstrom hit the market a month ago.  After getting 4 offers the first weekend I took the highest & best.  The appraisal came back 20k under contract for no reason so I cancelled contract.  Then I put it back on the market this weekend and had a couple showings, but nothing close to 3 weeks ago.  I ended up going back to previous offer and taking the 20k hit.  (Still made descent money).  Obviously the holidays is the worst time of the year to put a place on the market, but our agency currently has a couple deals that have been a struggle to get to a close.  This is a problem we were not having a month ago.  

It’s probably just the time of year, but I have been talking to more and more people that are not feeling good about their work situation and have fears of losing their home or having to move.  
In my personal portfolio there seems to be more and more county assistance available to landlords.    I forgave $4000 worth of rent a couple weeks ago to a tenant in Brooklyn Park in a cash for keys situation only to find out a few days later that the city has new funds available to pay landlords.  I didn’t qualify since my tenant no longer lives in the property.  I would strongly urge any landlords near the metro to search out options for available rental assistance.  

@Jared LaLonde is your St. Paul property at a different price point?  We had a really hard renting units in a renovated Lexington/Hamline building this summer.  School being virtual definitely played a part  in it.  This opinion article highlights some of the issues going on in St. Paul for our industryhttps://m.startribune.com/citi... Minneapolis council narrowly passed funding for additional police this week.  Hopefully an increased police presence will help. 
As an outer suburb guy I would say crime in general is the biggest concern with downtown.  I would think covid is the biggest issue with uptown.  If you can’t enjoy the restaurants, night life, and people why pay a premium to live there?  I would wait and see what happens when life gets turned back on.  That’s why I’m wondering if that area isn’t a solid long term play.  

@Jared LaLonde thanks for the market update.  That’s a nice part of town.  It’s my hope that rents will go back up once the moratorium ends. (If the moratorium ever ends). 
Would minneapolis be your preferred market to put new money to work?  It looks like you’ve completed a lot of projects in both minneapolis & 1st ring suburbs.  What’s your favorite market at the moment? 

Did anyone else see this article in the Strib today?  
https://m.startribune.com/twin...

For those who don’t subscribe, I will give you the highlights.....

They expect vacancy in Mpls/st paul to go from current 3.5% (2.5% last year) up to 7% next year, rents are expected to fall, and only 84% of C class renters are currently able to make their payment.  

I always said I would move my investing towards downtown if values dipped, but I’m sitting on my hands until the eviction moratorium ends.  Anyone out there love minneapolis or St. Paul at the moment?  I will say that our management company hasn’t seen a dip in rents, vacancy, or economic vacancy, but our target area isn’t the metro.  

 I’m in the same boat as you.  I pulled out a lot of equity that I’m now paying interest on.  I just feel like taking the “wait and see” approach is the prudent move until foreclosures get turned back on.  Currently we are only buying rent ready cash flowing stuff, sitting on cash, but my favorite product is the bank owned where we can add value.    

Let’s just say covid  wasn’t “a thing” but we decided to take 8 months off from filing evictions and having to pay rent.  Also, we decided to let any home owner who wanted  to stop paying their mortgage for 6 months with out a clear cut plan on what happens at the end of the 6 months.  During this same period of time unemployment shot up to 8% when prior to that it had consistently ran at 2%.  This is the world we are currently living in.
The 12 months (or however long it ends up lasting) would create a bubble even if unemployment were still at 2%.  Some homes are always in default!  I believe this to be a government induced bubble of foreclosures and their has to be a reckoning.  I am still picking up a cash flowing property here and there, but I believe the prudent thing to do is to get cash for 6 months to 1 year after evictions turn back on.  
I disagree with the “people will just sell the house because they have equity now” argument.  What’s the old saying?, “in investing values go up the stairs and down the elevator”.  
this is different than the prior few years when things just felt frothy.  There is with out a doubt a backlog of foreclosures to come created by the government.