out-of-state investor in the Twin Cities?

Question

I currently rent in Minneapolis with hopes of moving to Wisconsin in the near-future. I am looking for investment opportunities in general, but am considering househacking a small multi-family when my lease is up this coming August; There is a possibility it would only be a short term househack though if I relocate to WI for work. I know property management would be a large expense in this case. Are there any out of state investors currently looking in the Minneapolis/St. Paul areas?

any other advices given my situation would be much appreciated

any other advices given my situation would be much appreciated

Alyssa Strom · Answer

@Levi Bartz It wouldn't hurt to also check out investing opportunities in Wisconsin. Depending on where you are looking to move you might find a better return there. Low inventory is still keeping prices high in the Twin Cities market. With interest rates approaching 6% and adding in property management expenses the numbers are usually pretty tight once you move out. That being said, you have to live somewhere so house hacking still remains one of the best ways to get starting in real estate investing.

Jeff Schemmel · Answer

@Jordan Moorhead is right.  I house hacked a condo my first two years and sold it (i regret this selling part).  here is a summary of the numbers and why it's a no-brainer to buy in my opinion.  The hurdle you need to decide to jump over is whether you'd like to be a landlord or not after house hacking - paying a PM after you move out is always an option and you can build that into your deal analysis but it's kinda expensive, in my opinion, and I'm biased about self-managing for the experience; I believe in it until a certain number of units.  I also believe that if you haven't self-managed, you don't know if you're hiring a good PM or if they're doing a good job for what you're paying them.

first househack example:

Paid 130k for a 2 bed 2 bath condo in Apple Valley.  rented 2nd room to friend for $500/m, paid $500/m for the remainder of the mortgage for exactly 24 months.  Rent for 2b/2b condo in that area in 2016 was ~$1,200.  (already saving 700)Sold 24 months later, net ~18k.  That's $750/m in my pocket - capital gains free.  So let's offset the 500 I paid per month to live there with the 750/m in gains for modest appreciation those two years 2016-2018.  that's a net gain of 250/m in total, and another $1,200/m for not having to pay someone else :) $1,450/m total gain for a total of $34,800 cash over those 2 years I saved and could invest in another asset or my lifestyle.I could talk your head off about all the ways you could house hack.  Hit me up if you want to get a coffee/beer and I'm happy to introduce you to some investor-friendly local lenders who can give you options if you get serious.

Jordan Moorhead · Answer

@Levi Bartz buy a househack! You won't be sorry you did and managing one property remotely isn't hard with a good handyman

Lauren Stark · Answer

Hi Levi, I completely agree with everyone else - house hacking is the way to go. I am an investor/real estate agent in the greater Madison, WI area. If you need any help figuring out where in WI is best for your investment please feel free to reach out!

Amber Gonion · Answer

@Levi Bartz if your lease is up in August it seems like being tied down on a househack might be one of the few times I would not recommend.  If it is a mortgage that requires you to occupy for one year that may limit your freedom to move, also if you end up wanting to move earlier filling a vacancy during winter is less desirable.  Most times a househack is the best route to go, just be cautious if you plan to move.  Management on a we maintained unit is not that expensive.  We have many units that we charge $75/mo and do not have much of any in maintenance costs (these are usually townhomes)

Cole Simpson · Answer

@Levi Bartz If the numbers hit your goals I would do it. Either way, make it about the numbers. Why did you want to buy there in the first place? In my experience better to get started. Best of Luck!

Andre Crabb · Answer

hey @Levi Bartz house hacking is definitely a good way to go I know a few people who have had good success with it.

if you want some help looking around at where specifically in Minneapolis/St Paul, I'm happy to help with your research! shoot me a DM and we'll start digging around.

out-of-state investor in the Twin Cities?

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