Frogtown neighborhoods discussion

[Adam Widder]

Hey Minneapolis and Saint Paul investors! I'm currently out of state but last time I was there I was looking at 3 properties in the Frogtown neighborhoods.  Here's a couple perceptions:

1- Properties can cash flow

2- Currently a rough neighborhood.  When I was driving around it was rough, police were out though a lot but it was rough.

And a speculation:

1- With the soccer stadium going in near it, the neighborhood's location between the 2 metros, and the low price to enter for young millennial's, do you think this will change the neighborhood?

Love to hear your thoughts! Thanks for reading!

[Tim Swierczek]

@Adam Widder I think you're on to something.  I do think parts will improve but like Payne Phalen I expect it to be a block by block situation.  I would stay close to the development and near the light rail.  The further you get from those two areas the less likely it will rebind.  Also look for the bigger places with good floor plans.  Most of them are chopped up crap.

[Nathan Platter]

Hey @Adam Widder ,

You're on point with the cashflow and crime. When they're selling for $170,000 and renting for 1600/month, they can approach too-good-to-be-true.

I do think the stadium will generate more commercial investment to the area, but I'd have to ponder more how that would play into appreciation/rent/demographic changes.

[Jordan Moorhead]

@Adam Widder I think the money they're pouring in to develop the area can't hurt. I already know millenials that are buying homes over there since they can't afford to buy homes anywhere else.

[Amber Gonion]

My husband is from Frogtown, and that is one of the areas that he sees growth. Areas like NE and Uptown are like the hot fashion trend your dad knows about (hint if your dad knows about it you missed the trend), everyone knows they are popular and they are overpriced. Frogtown however has more risk, but it is the a great buy for those that are equipped to handle the area. We have had many listings in the area and find that after rehab the units rent for good rates. The thing about it right now is that many of the renters are from out of state. Once perceptions of locals change for Frogtown the prices will go up quickly.
Unfortunately the current interest rate increase from the fed and the 4 more expected increases may put a damper on MF properties in the near future. Frogtown may benefit from the higher interest rates being that the higher returns will fuel investment.

[Adam Widder]

@Tim Swierczek Yes block by block is the exact terminology.  Looking on Trulia, the crime rate / bubbles depict that.

@Nathan Platter One would hope the stadium would generate bars and restaurant scene with some thrifty shops.  We'll see how the county planners update their website accordingly and what developments they could potentially slot.

@Jordan Moorhead good to know! As a millenial, I'm hesitant to put us in that neighborhood just because the proximity to crime and starting a family.  However, it could just mean updating the property appropriately with lights and security systems.  We had friends move close to Frogtown in the Como neighborhoods, not sure which but that could also be a possibility. Not sure on what the MFRs are like in that area though.  Off the top of my head I don't recall many for a potential house hack.

@Amber Gonion yeah the prices are absolutely ridiculous.  just under a million in Uptown and 400k in NE?? i think you're spot on, with the rehab and then finding good tenants, which holds true everywhere!

[Jordan Moorhead]

@Adam Widder there's tons of small multifamily in that area!

[Nathan Platter]

Agreeing with @Jordan Moorhead , there are easily 15 duplexes for sale in that area, 5 of which are nice enough to require minimal touchups.

[Brad Schaeppi]

To All:  

Positive: You might source a great off market deal at a crazy low GRM: like 3-5. You are your block. If you can stay to best of breed (original 1920s units) vs. chopped up house.

Neighbor problems are your problems.  If you don't have a thick skin, not for you.    

A well kept and well managed property in any neighborhood will outperform the competition.  

Good luck!  

[Adam Widder]

@Brad Schaeppi thanks for those comments, a good source to think through a "gut check" on what one is willing to own and manage

@Jordan Moorhead Are specifically speaking Frogtown or Como?

[Jordan Moorhead]

@Adam Widder I was referring to Frogtown. I see them pop up in Como too