How to find deals in smaller cities?

Question

Im looking to start investing in real estate and mainly I want to start by acquiring rentals in the mankato Minnesota area. This is a city that is a huge college town of 40k people and is growing a steady place. The city is really stick on approving new rental licenses so it would be best to buy SF/multi family homes that already have a license.

What would be the best way to market to find off MLS deals in a city of this size?

Troy Southerland · Answer

There are some creative suggestions here, which is exactly why I signed up.

Eric Mayo · Answer

@Zach Romashko, you might want to look at the Blue Earth county website and go to the Taxpayer Services page then go to Property, Taxes & Maps. From here select Beacon Property Information System and then select Comp Search on the bar at the top of the page. Check the Occupancy box and select property types you're looking for. Note that you'll want to either do only one type at a time or select an area of the city because it limits the search to 200 entries & there is tons of redundancy. There is A LOT of info including owners names & mailing addresses, history of building permits and more. This should give you plenty of owners to contact.

Dylan Barth · Answer

@Zach Romashko

I'm currently shopping in the Mankato market as well. You are correct that they are strict about the 25% rental concentration rule and purchasing in a place that either already has a license or you know you an get one is key. Another rule you may not know about is that if your address is greater than 30 miles from Mankato, you are required to have property management within a 30 mile radius. You can find more details on the city website. I haven't looked into it too much but I'm concerned that rule might drive the price of property management up (especially with the bigger property management companies in town).

I agree with @John Woodrich that deciding where you'd like to invest and who your target market will be will be a decision for you to make. There are opportunities for student and non student rentals.

Finally, I was talking to a real estate agent last Friday and he mentioned a few duplexes that may be coming on the market for the $110-125 range. There are opportunities in town, you just have to find them!

Good luck in your search!

John Woodrich · Answer

In case John's advice wasn't clear, he is saying drive around town to look for places to purchase.  Every property is for sale, it just takes enough money to buy it.  I would call Mankato a pretty big city, down there you will have to determine whether students are your target market or if you are looking for other residents.  Students may bring on additional criteria to consider such as are normal leases 9 months, damage deposits, etc.

I would talk to someone who invests in that area, I can't imagine a rental license being hard to get...  A rental license typically requires a home inspection looking for code compliance and safety issues.  These should already be addressed before applying for a rental license.  Townhome and condo associations can restrict rentals but I haven't come across it with any cities.

John Van Uytven · Answer

Drive for dollars.

Or better yet, Walk or Bicycle for dollars.

Then take down addresses, and find then try to contact the owners.

Find REI meetups.

Talk to other local investors.

Account Closed · Answer

Another way is to look for rentals on craigslist that meet your criteria and call the landlord to gauge if there is any interest in selling

Daniel Sprague · Answer

Hey Zach,

I actively invest in Mankato.  Feel free to reach out to me.

Mankato can be tough due to rental license restrictions.  This has the affect of keeping prices pretty high (along with rents), so there are positives and negatives.

That being said there deals are out there, you just have to be ready to act same day.  If you get in front of a deal you cant hesitate if it meets your standards for condition, cash flow, etc.

Mankato is an expanding town, with good leadership and good prospects for jobs, etc., which all take a lot of sweat off the brow for landlords, but that comes with a hot real estate market which drives prices up.

Good Luck.

Zach Romashko · Answer

@Eric Mayo Followed your directions and you're right, there is a lot of information on any type of property you can buy in blue earth county.

What is the best way to go about using this information?

What are things I should be keeping a look out for while going through the property types I am interested in?

How do you go about using this information?

@Troy Sutherland Thank you for the article, it was a great read!

Have you bought properties from a foreclosure auction like they listed? I know they can be risky but something about them kind of intriguers me and makes me want to learn more about them.

Zach Romashko · Answer

@Eric Mayo Thank you for the great advise Eric! I am going to check that out right now actually. I really appreciate it!

Zach Romashko · Answer

Thank you all for the advise! What do you guys think about direct mailing in a city of this size? Would it be a waste of time and money?

To go along with the mailing question, I've heard some people have a lot of success mailing landlords who have recently filed an eviction. What's the best way to get an evictions list from the county?

How to find deals in smaller cities?

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