Real Estate investors from across the country are flocking towards investment properties in Minnesota to build rental portfolios. The Land of 10,000 Lakes is a current favorite of real estate investors due to many factors including a strong economy, affordable prices and stable rents! Easy Street Capital is proud to be a leading provider of investment property loans for real estate investors looking to build rental portfolios in Minnesota!
Loan Types For Minnesota Real Estate Investors
When it comes to real estate investing in Minnesota, there are many markets and types of investment property loans to choose from. Many investors utilize long-term DSCR Loans for investing in turnkey rental properties. Turnkey refers to properties that are rent-ready and require no renovations. Move-in ready single-family homes and fully furnished short term or medium-term rentals are great for cash flow and price appreciation. Most DSCR Loans are fixed rate for thirty years, locking you into a fixed interest rate for the long-term. While, if historical patterns continue, rents and appreciation increase steadily each year.
Minnesota is an investor-friendly state. Prepayment penalties are not imposed on investment residential mortgaged properties, offering prospective investors the flexibility to refinance without financial restrictions. While some lenders may adjust interest rates slightly higher to accommodate this flexibility, the freedom to refinance remains a significant advantage for investors.
Where To Invest In Real Estate In Minnesota
Minnesota offers diverse real estate investment opportunities across its major cities. Minneapolis, the largest city in the state and fifth-largest market in the Midwest, provides a vibrant economy for long-term rental properties. St. Paul, the state capital and sister city to Minneapolis, offers a unique market with a rich history and demand for both long-term rentals and student housing. Rochester, home to the prestigious Mayo Clinic, presents a stable rental market fueled by the healthcare industry. Duluth, situated on Lake Superior, attracts tourists and provides potential for short-term and vacation rental properties. Lastly, Two Harbors offers a tranquil getaway and hidden gem market for short-term and vacation rental investors.
Minneapolis
Minneapolis, the largest city in state, has a thriving real estate market with a population of over 420,000 residents. The city’s economy is diverse, encompassing sectors such as finance, healthcare, and technology. Fortune 500 companies like Target Corporation, UnitedHealth Group, and Best Buy have established headquarters in Minneapolis, providing a solid foundation for employment and rental demand. The city is also home to educational institutions, including the University of Minnesota, attracting around 52,000 students which creates opportunities for student housing investments.
Real estate investors are drawn to Minneapolis due to its strong economic growth and population expansion. The city’s job market is thriving, attracting young professionals in need of rental properties. With a variety of housing options available, investors can explore opportunities in long-term rentals, medium-term leases, and short-term rentals to cater to different market segments.
Minneapolis offers a wealth of cultural and recreational attractions. The city is renowned for its vibrant arts scene, with renowned theaters, art galleries, and museums like the Walker Art Center and the Minneapolis Institute of Art. Additionally, sports enthusiasts can enjoy games by the Minnesota Twins, Minnesota Vikings, and Minnesota Timberwolves. The city’s beautiful lakes, parks, and bike trails provide ample opportunities for outdoor activities and recreation.
Overall, Minnesota’s strong economy and diverse attractions make it a great market for real estate investors looking to invest in single-family and multifamily properties.
St. Paul
St. Paul, the capital city of Minnesota, is an attractive market for real estate investors. With its blend of historical charm and modern amenities, St. Paul offers a unique investment opportunity. The city is home to a diverse population of over 300,000 residents and boasts a thriving economy.
Furthermore, this city presents a compelling market for investment properties, offering a distinct advantage of lower competition compared to other well-known cities in the region. Boasting a rich historical heritage and a variety of demand drivers, such as the renowned Science Museum of Minnesota and the iconic Landmark Center, the city offers investors unique opportunities for growth. St. Paul’s real estate market is notably affordable, making it an attractive option for savvy real estate investors seeking to expand their portfolios in a vibrant and thriving city.
Additionally, the residents of St. Paul actively foster a strong sense of community and take great pride in their city. Residents and tourists alike appreciate the city’s historic architecture, neighborhood charm, and friendly atmosphere. The diverse and welcoming environment of St. Paul makes it an attractive market for real estate investors looking to capitalize on both long-term and short-term rental opportunities.
Rochester
Rochester, located in southeastern Minnesota, is a thriving city with a population of over 120,000 residents. The city is renowned for its world-class healthcare institutions, including the Mayo Clinic, which attracts patients and medical professionals from around the globe. With a reputation as one of the nation’s most esteemed medical institutions, the Mayo Clinic employs around 63,000 people, including a steady flow of nurses, healthcare professionals, and more. This creates a strong demand for medium-term rental properties in the area.
Real estate investors can take advantage of the strong demand for housing in this city. With a growing population and a steady influx of visitors for medical treatments and conferences, there is a consistent need for both long-term, medium-term rentals and short-term rental properties. The city’s vibrant downtown area offers a variety of shops, restaurants, and entertainment options, contributing to its appeal as a desirable place to live and visit.
Rochester is also home to numerous cultural attractions, such as the Rochester Art Center and the Rochester Civic Theatre. The city hosts several annual events and festivals, including the Rochesterfest and the Thursdays Downtown Market, which attract residents and visitors alike. According to AirDNA, this city has an average occupancy rate of 64% meaning that Rochester is a great place for short term rentals.
Investing in Rochester’s real estate market presents opportunities for long-term appreciation and rental income. According to Zillow, the median home value in Rochester is $311,000, and a median rent price of $1,690 per month, providing options for investors. Rental properties can generate steady cash flow, particularly with the growing demand for housing in this thriving city.
Duluth
Duluth, located in northern Minnesota, is a thriving city with a population of over 85,000 residents. The city’s economy is diverse, with industries such as healthcare, education, and tourism playing significant roles. Duluth captivates with its breathtaking beauty, nestled on the shores of Lake Superior and surrounded by stunning parks and recreational areas. Real estate investors can capitalize on both long-term and short-term rental demand in this vibrant market.
Duluth offers a range of attractions and cultural experiences, including the renowned Lake Superior Maritime Visitor Center and the Great Lakes Aquarium. The city’s vibrant downtown area features a variety of shops, restaurants, and entertainment venues. Throughout the year, Duluth hosts events such as the Bayfront Blues Festival and the Tall Ships Festival, attracting visitors.
As part of the Duluth-Superior metropolitan area, Duluth benefits from its strategic location and connection to major transportation routes. Its proximity to popular destinations like Minneapolis and the North Shore of Lake Superior makes it a sought-after location for both residents and tourists. Real estate investors can tap into the city’s growing popularity and leverage its natural beauty to generate attractive returns.
In summary, Duluth’s diverse economy, natural attractions, and strategic location make it an enticing market for real estate investors. With a strong demand for both long-term and short-term rentals, as well as a vibrant cultural scene, Duluth presents promising opportunities for those seeking to invest in this dynamic Minnesota city.
Two Harbors
Situated along the picturesque shores of Lake Superior, Two Harbors is a delightful city renowned for its captivating lakefront views, serene parks, and impressive architecture. The downtown area thrives with a vibrant arts scene, housing galleries, museums, and theaters that showcase the local talent. Two Harbors beckons nature enthusiasts with its close proximity to the breathtaking Kettle Moraine State Forest, where they can indulge in thrilling fishing, boating, and hiking adventures.
Additionally, Two Harbors earned a Market Grade of A, including a 98/100 on “investability”, making it one of the best places to invest in short term rental properties. Furthermore, this town has a score of 79/100 for “market score”. Investors can expect annual revenue of $60,900 , an incredibly high amount when compared to the median sale price of a home of $605,000 as of March 2024! Investors that use DSCR loans from a forward-thinking lender like Easy Street Capital that qualifies the income of the property using AirDNA projections can likely rake in the cash flow.
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