All Forum Posts by: Tammy Ziegler

I live in the area 25+ years and own a triplex in a slightly more desirable part of the neighborhood a bit south. I’d say that rent is a bit borderline for 2/1 but probably doable for that square footage especially if you allow pets or include garage space. I looked at the listing pics and it says utilities are split and both have in-unit laundry so that is good. To me the finishes and condition look a bit worn, so without clean-up and light remodel (paint at least) probably more attractive to tenants with dogs. That’s a good area and Lowry Ave just north of there is slated for re-development eventually.

Hi Nick,

I can't claim to have many answers for you but I can bring up some details that may be important factors to include in your deliberations. I'm a small time investor in Minneapolis (triplex), with a long-term SFH rental in south Kona I hope to early-retire to, and my folks have been living in Naples, FL since the mid-90s where they've funded their early retirement with long-term rentals of condos. You are smart to consider all this as a choice of your own home, with potential to off-set your personal living expenses with rental income.

#1: Warm water and warm weather

It all comes down to personal preference but to me, as an avid snorkeler and SCUBA diver, there is no comparison between Hawai'i and these locations in FL. Some parts of the FL Keys would compare. Have you spent time in all these places and feel like you have a sense of the local culture? Are you going to regret moving very far away from friends and family to HI? Life on an island, especially one as small as Maui or as small population as Hawai'i is very different in subtle ways that you might not notice while on vacation. Many Hawaiians don't bother making friends with newcomers because it is so common they can't hack it and go broke or get too home sick and return to the mainland within a year.

Remember to factor in that with warm weather and warm water also come risks of storms, flooding and hurricanes. FL has taken a real beating in the last few years and looks like it will continue as the climate warms. With some elevation on west Maui and west Hawai'i it more rarely has these issues but do have a history too. Look at insurance rates, and the uncertainty of future insurance costs and factor it in.

#2. Schools

I don't have kids or work in Ed so don't know much about this but can tell you I see a lot of educators in HI complain in the neighborhood FB groups etc. about low wages compared to the cost of living. COL in HI is a huge issue in general. Food, utilities, gasoline and housing are all extremely expensive. There are online calculators to show you the comparative COL. Be prepared that you may need to make major lifestyle changes in order to make HI affordable. Buying is similar cost to southern CA though I feel there are better deals and less competition to be had for places needing remodeling. Try to reach out through professional and neighborhood groups and get a real sense of what pay vs. COL in HI is like.

#3. We MUST house-hack

There are lots of investment properties that meet the 1% rule to be found in FL. But they may not be MFH or a place you want to live with your family but finding cash flowing properties should not be a huge challenge. HI meanwhile is much more expensive to buy and local incomes can't generally support reaching the 1% rule. Vacation rental will get you much closer though but there it gets sticky with local regulations/neighborhood covenants, changing regulations and tying your priorities for a personal residence together with properties that are good performing vacation rentals. The prevalence of "ohana" units in HI opens up lots of flexible options though. I wouldn't want to buy a place if I MUST have the higher cash flow as a vacation rental or it would be unaffordable.

Things I learned are important to know when buying in HI:
1. types of utilities (solar? -- is it leased or owned, just for hot water, is there whole-house battery back-up?; is the water city or catchment?; Is the sewer city or cesspool or septic?; anything on propane?)
2. leasehold vs. fee simple ownership
3. is internet and cell service available and reliable?
4. is the area dependent on a single transportation route in and out (likely to get stranded when there is an accident on the main road)?
5. What lava zone is the property in and can I get HO insurance?
6. What are the local laws and neighborhood covenants on long and short term rentals? Are they considering changing them?
7. Dealing with stuff we don't have in MN - vog, termites and earthquakes


I can also recommend the podcast called Afford Anything. 50% of the episodes are answering listener questions and 50% of those are dedicated to REI. The host often walks through ways to think about options like this and how to wisely separate investment decisions from personal lifestyle decisions.

I hope this is useful to you. Feel free to message me if you want chat!

I bought a triplex in Mpls earlier this year that was fully rented, all 10-20%, below market. 2 on month-to-month and one had just signed a new 12 month lease. As @Bruce Runn said, treat people how you'd like to be treated. I talked to the 2 month-to-month folks right away and made sure we had common understanding of the existing lease and asked any problems they had with their units. Shortly after I was ready to start planning rent increases and first just asked what their plans were since they had been month-to-month quite a while. It is a very high demand area and felt confident I could rent both easily if needed. Both volunteered they were considering moving for various reasons so that made it easier to then explain rent would be going to FMR. I showed them rent-o-meter rates for the area and HUD FMR for the ZIP and neither were surprised at all but I do think it was useful to lay out evidence. I treated them respectfully and mostly got the same in return. One stayed and one moved. We remodeled the vacant unit a fair bit and 3 different parties asked about renting it during that process, unsolicited. I rented it for 5 weeks at higher FMR with improvements and am now getting ready to AirBNB it.

Hi Gordon! I am a fairly new landlord in Minneapolis and have had the benefit of some great advice from folks who are active on here. I'm happy to help pass along what I have learned in the last few months. 

First off, get a copy of this: 

https://homelinemn.org/publications/landlordsguidetomnlaw/

It will answer so many of your questions, both from understanding the letter of the law, but also for practical advice on what commonly happens in real life. Even better, it is MN specific! Thanks so much to Tim Swierczek at iLoan who helped me get a mortgage on my triplex and gave me a copy of this. I keep it on my desk and refer to it often. There is a chapter on abandoned property.

On your specific questions, 1. no, you certainly do not have to include garage access in your lease, or even off-street parking at all. My building is in an area with ample on-street parking and none of the tenants care about the garage. You can offer it to a tenant for extra, rent the garage to someone else (say, someone who needs to park a sports car for the winter), or just keep it for yourself. If it is a multi-space garage with no separation between the bays, consider that it will be difficult to rent just half to someone for their exclusive use. 2. yes, you will have to hang on to any abandoned property (whether in the garage or elsewhere). This is a state law and no, you can't legally immediately discard any abandoned property. You are legally required to hang onto it for 28 days and you can't legally hold the belongings "hostage" til they pay storage fees. Since you have to return security deposits within 21 days of the tenant vacating, you can certainly get stuck with storage or disposal fees that you can't deduct from the deposit and aren't worth going to court over. It is nice to think you could somehow avoid ever having to deal with abandoned property, but that just isn't realistic. This is a cost of doing business and frankly, it would be common to have to deal with some of this even when just buying a single family home.

Keep in mind if you buy a property with existing tenants on a lease you will have to honor that lease. So, you may want to ask the property is cleared of all tenants when you purchase it (making that the seller's problem to get them and all their belongings out before you take possession). In this competitive market, good luck with that. It would be great if some abandoned property was your biggest concern!

@Tyler Minkel - I recently bought my first local rental property which I'm self-managing. Here are a few things that really helped me: 

Work with a lender and buyer's agent who understand multi-family property in the area you are looking to buy in. I can recommend Ryan Luthi and Lauren Peterson at Fulton, Jordan Moorhead at Keller Williams and Alyssa Strom at Side by Side. @Tim Swierczek and Conor Hesch are great resources on the lending side and very generous dispensing solid advice. Nothing beats asking questions and getting advice from experienced people who have done it themselves. I believe the people I've mentioned are all active here on BP. They also put together local meet-ups to help educate and support multi-family investors in the cities. 

Get familiar with Home Line. They are a tenant advocate org which also provides some landlord training sessions on MN law and published a great book (see https://homelinemn.org/publications/landlordsguidetomnlaw/) written in plain language with pretty realistic advice. You can still sprinkle a little grain of salt on what they are saying, but the commentary about the law provided there is quite valuable as a new landlord. 

If you plan to own in Minneapolis check out the rental property owner's workshop (http://www.minneapolismn.gov/inspections/rental/rpow) provided by the city. I am going in June so I can't review it yet.

The MN AG office also has a handy publication (https://www.ag.state.mn.us/consumer/handbooks/lt/default.asp). 

You can think of being a landlord as essentially running a small business. No one else can make decisions about what you are willing to spend, what kind of return you require, what risks you are willing to take and how you mitigate them. You need to educate yourself about the local RE market, do your research on rent in order to run the numbers, and get comfortable with landlord law. Recognize that your situation as a prospective owner-occupied duplex buyer is different than others who are investors not "moving in" both on the financial and legal side. The market in Mpls is very competitive and highly time sensitive right now so being comfortable and 100% ready to move when the right property comes along is key. Good luck!