Location, location, location. The real estate mantra. Why are certain locations better than others when it comes to investing in real estate? What reasons push real estate investors to invest in a particular city? In this article, we will answer these questions while focusing on the Minneapolis real estate market as one of the best examples in the US housing market right now.
Together with Saint Paul, Minneapolis is the second largest economy in the Midwest, behind only Chicago. This makes Minneapolis a melting pot for various industries and sectors, which for sure has a great positive effect on the real estate market. Minneapolis’ solid economy is based on commerce, health, electronics industry, and automotive manufacturing. Rule #1 in real estate investing: Invest where the jobs are.
The strength of the Minneapolis real estate market is braced by its robust economy and impressive job sector. The diversity of the well paying Minneapolis jobs has helped to bring down unemployment rates to 2.6%, well below the national average of 4.0%. Therefore, we can conclude that the robustness of Minneapolis’ economy and its diverse job sector remains the main driver of supply and demand in the Minneapolis housing market.
Related: Should a Minneapolis Investment Property Be Your Next Purchase?
6 Reasons to Invest in Minneapolis Real Estate Before 2019
1- Minneapolis/Saint Paul ranks #1 in buy recommendations
PwC’s annual Emerging Trends in Real Estate Report lists Minneapolis and the other twin city, Saint Paul, as the number 1 city to invest in multifamily property. Higher than any other city, the study shows that real estate investors should BUY in Minneapolis without second thoughts.
However, the Minneapolis real estate market is clearly a seller’s market. The average amount of days a property spends on the market in Minneapolis is around 43 days according to Mashvisor data. A market is considered to be a seller’s market if days on market is less than 180 days. In the case of the Minneapolis real estate market, we have a super seller’s market.
Buying an investment property in a seller’s market is not an easy task since the market works in favor of the seller. This means that property buyers are forced to move quickly to close a deal and sellers are less likely to go below the listed property price.
Related: It’s a Seller’s Market But You Can Still Invest in Real Estate
2- Minneapolis/Saint Paul is #22 on “Markets to Watch” list
From the same report, the Minneapolis housing market ranks 22nd in the “Markets to Watch” list. Featured on this list are the top markets with potential for growth in 2019. The Minneapolis real estate market should indeed be watched. With continued population growth in 2019 higher than that of the national rate and booming real estate development, this top market in Midwest real estate is surely worth investing in.
To start looking for and analyzing the best Minneapolis investment properties, click here.
3- Development prospects: Lots of multi-family construction
Real estate market trends show that Minneapolis suffers from a shortage of supply and increase in demand. However, the Twin Cities appear to have a new construction boom that will create some equilibrium in the housing market. PwC’s report shows that Minneapolis and Saint Paul rank in the top 15 best real estate markets with the highest investor demand and development opportunities.
4- Potential for appreciation
Minneapolis investment properties are on a year to year appreciation. Some skeptics say that Minnesota is likely to be sitting on a housing bubble, but that’s far from the truth. Housing market forecast shows that property prices will continue to appreciate in Minneapolis, which goes hand in hand with the strong economy, low unemployment rate, and shortage in the housing inventory.
Related: How to Calculate Real Estate Appreciation
5- Higher than average population growth
Now is the time to invest in Minneapolis real estate. Minneapolis is projected to have a population growth in 2019 that is greater than the national rate. Such positive net migration increases the robustness of the Twin Cities’ real estate market.
6- High per capita incomes
Compared to Minneapolis, cities in California and New York are famous for their higher housing prices. But what might not be as clear is that the average income of a California or New York resident is just a tiny bit more than the average income of a Minneapolis resident. This means that real estate investors in Minneapolis have a higher financial margin to pay for investment properties.
Best Neighborhoods to Invest in Minneapolis Real Estate
The following is a list of the best neighborhoods in Minneapolis real estate market. Our data is provided by Mashvisor’s investment property calculator– The ultimate tool that every real estate investor should have. To know more about our unique investment property analyzer and to discover its great features, read this.
1- Cleveland
Median property price: $222,931
Airbnb rental income: $2,785
Traditional rental income: $1,325
Airbnb cash on cash return: 6.53%
Traditional cash on cash return: 2.38%
Airbnb occupancy rate: 54.57%
2- Cooper
Median property price: $347,943
Airbnb rental income: $2,748
Traditional rental income: $2,004
Airbnb cash on cash return: 4.27%
Traditional cash on cash return: 3.14%
Airbnb occupancy rate: 75.86%
3- Hiawatha
Median property price: $389,243
Airbnb rental income: $2,112
Traditional rental income: $1,799
Airbnb cash on cash return: 1.98%
Traditional cash on cash return: 1.31%
Airbnb occupancy rate: 52.27%
4- Calhoun
Median property price: $278,280
Airbnb rental income: $2,415
Airbnb cash on cash return: 2.26%
Airbnb occupancy rate: 60.52%
5- Diamond Lake
Median property price: $294,179
Traditional rental income: $1,562
Traditional cash on cash return: 1.71%
Final Thoughts
The Minneapolis real estate market is surely one of the most attractive housing markets to invest in today. Our advice to beginner real estate investors is to carry out a real estate market analysis and to use an investment property calculator when looking for the next real estate investment opportunity.
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