St. Paul, MN best Househacking Neighborhoods?

Question

Hello Biggerpockets,

My girlfriend and I are planning a move to the Twin Cities in early 2021 (possibly later depending on the pandemic) and we will be looking to house hack. I have been collecting rent information off of Zillow for duplexes in Payne-Phalen, Dayton's Bluff, North end, Frogtown, and West 7th for almost a year now and I just added West St. Paul to the list. I just wanted to get some investor/resident perspective on these neighborhoods. West 7th seems to be the investor hotspot in St. Paul and I'm afraid it might be nearly tapped out by early 2021 given that it isn't the biggest neighborhood. Crime statistics also point to West 7th and West St. Paul being better neighborhoods with stronger rent. Please let me know what you think of these neighborhoods and their housing stock as I hope to call one of them home soon!

I am also open to moving to areas around Minneapolis as well, initially I thought we would struggle to save up enough for a down payment in those neighborhoods but we have been fortunate enough to land good jobs out of college and we have enough to put at least 10% down (with 6mo cash reserves) in almost any neighborhood and we will save some more before we move.

Thanks in advance!

Adam Tafel · Answer

@Nathan Christensen - Here's my two cents on off-market vs. MLS:

"Off Market" is a hot term on BP and beyond, but don't confuse it with "good deal". We are finding great cashflowing properties on the MLS all the time, I also have hundreds of off-market "deals" hit my inbox every week, many of which I'd never buy. My main gripe with off-market sellers is lack of motivation. Many times the owner wants a full offer at market value, otherwise they'll either keep it or list it. I'm about to list one of my homes in a month, and I'm entertaining a few off-market offers before I do. Am I going to accept a lower offer and get someone a great "deal"? Of course not.

Listed homes are owned by sellers who need to sell. Nobody lists a home for fun. Don't get into an MLS bidding war on a hot property in a cool neighborhood, look for the homes that need work, sitting on the market for a few weeks, overpriced, smelling of cat pee, etc. I'm not anti-off-market or pro MLS, just offering some perspective. Typically when someone hits a home-run deal it's off market, and the seller is unaware of the home's potential value. Thanks to Zillow and Redfin this is happening less and less often, as anyone with internet access has a good idea of what their home is worth.

Are you going to find a turn-key duplex in a cool neighborhood on the MLS that cashflows $350/door? Nope. I approach my investment search from all angles. I have wholesalers emailing me listings all the time, Realtors sending me "coming soon" and off-market opportunities, and I check the MLS multiple times every day. I do some cold calling on distressed properties and write the occasional hand written letter to potential sellers.

David Barnett · Answer

@Nathan Christensen I'm a huge fan of West Seventh (I own two duplexes in West Seventh).  My opinion on West Seventh and the east side of West 7th close to downtown (Banfil, Goodrich and Goodhue) aren't as nice as the other side of the street.  As you get closer to the airport down West Seventh, there are some nicer pockets.  The other area that I like and seems like a good area is the Riverview area in West Saint Paul.  I wouldn't invest in anything East of Cesar Chavez, and I really like the area West of S. Robert Street (Winifred, Robie, Stevens, etc.).  There are some really nice pockets just over the river from downtown Saint Paul.

Tim Swierczek · Answer

@Nathan Christensen I've lived in the Phalen area for 19 years.  I was in a great part of Phalen and liked it a lot.  That being said if I was to buy now I would look to West 7th.  I don't believe its tapped at all.  I think it has a lot of room to run.

Noah Chappell · Answer

@Nathan Christensen This is really personal preference, so I'll give mine.. don't mean to offend anyone!!

I lived briefly in Payne-Phalen & my brother owns property there, & it seems like an "up & coming" neighborhood thats still somewhat early in this process.. there's still some problems with crime and riff- raff, etc.

North End neighborhood is where I own property and my brother lives, stable and blue collar, can get a great property at a good price, about 1mile straight down to Downtown & the river area, close to light rail. I like the area but you have to be comfortable with a somewhat "transitional" area, some patchy areas with crime, etc, but confined to certain blocks - check Trulia heat map.

Frog Town just NW of & very similar to North End. I know ppl who love it there, but it can be patchy too.

West 7th would be my choice, great feel & still accessible prices.

Macalester Groveland very nice but really really expensive.

Don't know much about W St Paul..

I personally prefer Minneapolis > St Paul, send me a DM & we can discuss those neighborhoods further!

Best of luck.

Adam Tafel · Answer

@Nathan Christensen - I have investments in both West 7th and the West Side of St. Paul, big fan of both. West 7th isn't nearly tapped out, plenty of opportunity there. The appreciation on the West Side has been incredibly strong for the past 7 years or so, well above the Twin Cities average. Both are good picks for househacking.

John Roesler · Answer

I think in reality you can house hack most anywhere. We live in a suburb of Saint Paul, called North Saint Paul (not to be confused with the northern part of the city Saint Paul). And we recently finished our basement into a separate unit and successfully renting it out to pay off the finishing costs and then be cash flow until we decide we need more space for the kids.

If you plan to house hack and then possibly move somewhere else, then I think the neighborhoods others are suggesting make a lot of sense to buy a duplex! I have a couple duplexes in Dayton's bluff area. It's a rougher neighborhood than somewhere like West 7th, but very much a block by block area. One of my duplexes is on a nice block and rents for a few hundred more a month than my other duplex that's just 3 blocks away.

Corey Hawkinson · Answer

@Nathan Christensen you’re moving from Hawaii to Minnesota? Don’t do it! Ha. If I were to live in St. Paul I would personally go with the W 7th area from that list. But it’s all personal preference. You might see better numbers in the Payne/Phalen area or even West St Paul. But for house hacking I personally would pick W 7th, Highland Park, Como, or Macalester-Groveland. Maybe a few other areas. I’m not a St Paul expert.

Bjorik Mutize · Answer

@Nathan Christensen welcome to the forums. West St.Paul/7th, Highland, and also opportunities around the Energy Park area.

Nathan Christensen · Answer

@Corey Hawkinson @Tim Swierczek @Adam Tafel @Bryan Tinajero Thank you all for your input I definitely have West 7th at the top of my list. It's encouraging to hear that there are still deals to be had there. Have you found that you need to find "off market" deals in order to find something that cash flows or have you still been successful with the MLS? I hope to do some very basic value add cosmetics but I also plan to buy something livable.

@Noah Chappell I would love to talk more about Minneapolis neighborhoods with you, I have looked much less over there so I have a lot to learn for sure.

@Alyssa Strom I have heard from a couple investors now that they liked Capitol, I will definitely keep my eye out for that neighborhood as well.

@James Hamling You're totally right, the markets could change a lot in the next year, I won't set in stone the neighborhood I want to be in but it's good to hear that the research I've been doing does seem to line up with what investors think of the areas. I'll keep myself updated as I get closer to making my move.

Thank you everyone for your advice and input, it helps a lot!

Alyssa Strom · Answer

@Nathan Christensen Honolulu sounds nice but St. Paul is a close second ;-) Depending on what the market looks like in 2021, inventory is limited enough that it's not a bad idea to have your top preferences but keep your options open. You may find a great property and block in an area that you weren't considering. My husband and I are in Capitol Heights which we weren't even looking in at the time but we've really liked it.

St. Paul, MN best Househacking Neighborhoods?

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