Minnesota Rental Property Value

[Corey Blane]

Question: In Minnesota what cap rate are investors looking for (generally speaking)? I'm in the process of securing a duplex (up down). It's 3/1 up and 3/1 down. The leases are 1500/mo each for a total of 3000/mo. 

I'm wanting to sell the property to an investor almost immediately after the purchase. 

In looking at comps there's a duplex (up down) 3/1 and 2/1 that recently sold for $300k a few blocks away. It's renting at 1000/mo and 850/mo. Same age, location...etc. 

Thoughts on how to price this property with the limited information you have?

[Nicholas TenBrink]

Large factor of course is also in what region of Minneapolis.
At $1500 for a 3/1 unit in a duplex; you are just bellow market in South, above market in North, and probably about spot on for North East.

If you comps are looking at $300k, and your NOI is at $36k, you are coming out at a 12% cap rate, thats decent if you are concerned with cap rate.

For an investor @ 25% down:
36000/75000 ~= 48% cash on cash return, IF you require no repairs (obviously excluding closing costs in this calc as well).
IF you have $75k burning in your pocket this could be enticing.

For a owner occupier  @ 5% down:

18000/15000 ~= 120% cash on cash return. People will climb over each other for those numbers.

@Tim Swierczek is right, a Homeowner is going to view the deal very differently than a person that is looking purely for investment, target the Homesteader, not pure investor. 
Duplexes are hot, anyone looking to buy a house and are paying attention are targeting duplexes because they generate income. In a homeowners eyes, it is subsidizing their mortgage and allowing them to build equity faster and recoup their initial investment fast. An investor will be interested in cash flow or cash on cash return, and locking up that $75K for a period will cost them.