All Forum Posts by: Michael Schraepfer

Hey Kalli!  

Good luck, Duluth is a great place to invest!  Happy to grab coffee if you'd like sometime and help where I can!  Heirloom will be hosting a regular local investor focused meet-up starting in May when we move into our new office space.  We've already got a series of guest speakers and sponsors lined up.  I'll be sure to message you closer up, but at least there is a local event for investors on the horizon!

Cheers!

Very cool.  Congratulations on the first house!  Happy to connect and help if you'd like in the future.

Cheers!

Killer!  I'm totally game, see you at Perkins!

Heirloom will also be hosting a monthly investment club in our new office once our renovation is complete this February.  

This is long overdue - I'm glad someone threw something out there! 

@Amanda Wirch Happy to help if you look further in the Superior WI / Duluth MN market area.  Good luck with your first deal, real estate investing is a rewarding experience!  

Cheers!

Hey Bradley,

Welcome to the game!  BP is a great place to learn and meet people.  I'd be happy to grab coffee sometime if you'd like. 

Cheers!

Hey Justin!  

Yes, the Duluth market is pretty high right now in the single / duplex type homes.  Often the ones worth fixing that will actually net some equity are more in the "unlivable" state - so your realtor is probably accurate on those.  We do a lot of renovations in town, and my experience is if you want to create equity you definitely need to get into a larger project.  

What you might want to look for in town is just something that is an easy project that is undervalued.  I often find gem's that look really ugly but really just need painting, carpet and surface work.  You'll need vision for it, but that might be a good route - you could make decent equity re-selling in a few years being it sounds like you want to move.   Just a thought.

Hey @Christine Kankowski, it was nice to meet Paul last week - glad to see you're looking at Duluth!

Cheers!

Hey Cory! I might be able to help. I own one in Duluth and our company manages a few of them in the area. Vacation rentals are pretty lucrative up here in the summer - which is really mid-June through October fall colors. There bleak in the winter, but you can get them rented to cover costs. The big issue is licensing. Duluth has a specific short term rental license. It takes several months to get, and will cost 3-4K to get through it. Most importantly the city of Duluth limits how many are permits are allowed and currently there all taken. They require a commercial fire department inspection, health department inspection, property survey, change in zoning application, and an appearance at the planning Commission and a city council hearing. It takes 4 months with no hiccups just to get the license if there is one available. Lastly, it doesn’t transfer with the property if later you decide to sell - so you can’t “sell” a vacation rental. Most of the surrounding communities up here don’t license these things, but up the north shore it’s starting. Lakewood township which covers the majority of the shore between Duluth city limits and Two Harbors has a short term permit now too. Also further up around Grand Marais, Tofte, Lutsen area there are new regulations, but I’m not as well versed in their specific process / requirements. Hope that helps!

There is a little red tape with the rental license in Duluth, but all major cities in the Midwest have them - it common in the region anyway. Duluth definitely is more of a cash flow market than an appreciation market. You won’t see a property double in value in 10 years often here (I have had several, but yes it’s rare). That said, there is more normal appreciation at least in the past 10 years - everything is up 20-30%. Cash flow is the ticket here. It’s easy to find a 9% or better cap rate here and with some effort and patience / willingness to do a little remodeling you can find 10-11 % cap rates. That is literally unheard of by several % in the high appreciation markets. You typically get one or the other. The reason as to why Duluth is a cash flow market has to do with our costs of construction. Duluth has next to zero vacancy which is driven by the housing shortage that exists (in both rental and homeowners housing) and that is due to our cost of construction locally. The city is permit heavy, topography/bedrock for new housing can often add cost, and Duluth is very pro union in the trades. All together it costs 20% or more to build new here than in the Minneapolis area. It’s almost double the cost of new construction in Florida! Anyway - those the forces that create the housing shortage and what drive rent rates up here locally! It is an old housing stock, so yes there is a little sharper due diligence needed on potential capital expenses - but there is also a boatload if opportunity if you’re good at sizing up those costs. There are so many lanes for success investing in real estate, it really comes down to your individual skills set.

Hey Bruce! Happy to help, I’ve been investing in Duluth for a long time. Our management company helps property owners from all over buy and manage rental property here in Duluth. Shoot me a message if you’d like to connect! Cheers!

Hey Jesse! Happy to grab coffee and connect sometime. It’s always exciting to meet a new wholesaler in Duluth. I wish we had more of them here! Cheers!