Minneapolis Rental Market Continues to Improve

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Assortment of potted plants on a shelf

More People are Renting in Minneapolis

According to RentCafe, an apartment listing service and researcher, the average rent for a 2 bedroom, 972 sq. ft.  apartment in Minneapolis is $1,543. According to this statistic, rents are up 4-7% in Minneapolis.

The Star Tribune has reported that there have been 16,000 rental units added to the Twin Cities market from 2010 to 2016, and yet the average rental rate has continued to climb.  

Rental rates continue to grow in the Twin Cities area for many reasons, but the overwhelming trend is that the city is attracting Millennials, Baby Boomers, and others that are purchasing properties with condo-like features.

The bottom line is that owning rental real estate puts you in a strong position in Minneapolis – St. Paul.

Think about this average 2-bedroom rent of $1,543 – what if you were to buy a duplex at $300,000 and rent it out for that same rent?

We jumped into Zillow’s Mortgage Calculator to find the results for a $300,000 property with a $60,000 down payment. We selected a 30 year fixed loan at 4%.  

In this case, the mortgage payment would be $1,667, and the average rent could be about $1,543.

This means, of course, that a large portion of your rent could be paid by your tenant. Imagine if you took the extra cash and put it toward the principal of your mortgage. You could end up paying it off quickly.

Once the property is paid off, it turns into an annuity-style investment, kicking out cash in a tax advantaged way.

Remember, unlike regular income from a business, a traditional IRA, or capital gains; the income from rental real estate is considered “passive income.”  This passive income has some incredible tax advantages.

A Minneapolis or St. Paul duplex can be incredible investments for millennials or anyone that likes the idea of having someone else pay a large portion of their mortgage.