New Minneapolis Rental License Fees
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For those of you buying single family houses in Minneapolis, this may affect you, please read on. On March 18, the Minneapolis City Council enacted a new rental license fee called a “Rental Dwelling Conversion Fee“. This new fee is a one-time fee of $1000 when you convert a property from homestead to non-homestead. You will pay it the first time you apply for a rental license. Here is the definition from the Minneapolis Rental License website:
Dwellings Converted to Rental: Whenever a dwelling is converted to rental usage, the dwelling shall be promptly inspected for compliance with minimum housing standards. The fee for this required inspection is one thousand dollars ($1000.00). This fee shall be in addition to the annual license fee. Exemptions: buildings containing 6 or more units; dwellings owned by nonprofit entity (as defined); new construction.
Recently, there are a significant number of single family houses in Minneapolis being purchased by investors and converted into rentals. This new fee will affect some of those purchases. Be prepared for it.
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April 20th, 2008 at 9:47 pm
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April 21st, 2008 at 7:34 pm
These are the same people that would complain that the oil companies are “gouging”. $1000 to convert a property from homestead to non-homestead? Now that’s what I call gouging. Coon Rapids gives you a two year rental license including inspection for $60.00 I think they are playing on the low price of entry into the real estate investment world in Minneapolis. While that is a steep fee to pay if you can get a house for $30k I’m guessing it won’t stop or slow things down too much and the thieves in the Minneapolis Government know that. Your thoughts?
April 21st, 2008 at 7:39 pm
I agree. Just one more example of big government sticking it to the people trying to get ahead in this world. They take from the rich and give to the lazy.
May 28th, 2008 at 7:00 pm
So if we already obtained our mpls license for 2008, do we need to get this? I own a unit in a 4-plex - I previously lived there, and I’m now renting it out - I never moved it from homestead to non - I didn’t know. Thoughts on this?
May 28th, 2008 at 8:49 pm
Thanks for the message.
You probably should have a rental license. If you tell them that you have been renting it for 2 years, they will ding you for a $250 fine. As for the $1000 rental conversion fee, I would guess that they are going to make you pay that. This new ordinance is very new and not everyone down at the city is familiar with all the parts of the rule.
To check on rental licenses, go to: http://apps.ci.minneapolis.mn.us/AddressApp/SearchByAddress.aspx?AppID=PIApp and see if the rental license area is filled in and/or it is still homestead.
June 11th, 2008 at 9:23 pm
This affects more than you investment property owners. This $1000 is really sticking it to people who are forced to convert their property to rental to cover some of their mortgage payments. My wife and I relocated for work last September and have been unable to sell our house because of sharp drop in housing prices. Since we had only lived in the house for about 2 years we barely had any equity so our asking price was pretty inflexible. So we opted to rent it out to help cover the mortgage until the market turns around and we can sell off the house without destroying our credit. And I know this is a situation that a lot of people face: relocating or needing to sell a home for reasons other than being a sub-prime sucker and not being able to. Convert to rental to cover your costs. And that’s where the city steps in and squeezes the people that are already bleeding. I’m paying a rent in New York and a mortgage in Minneapolis. Even with a renter, the market is so flooded with new rental properties that we’ve even had to drop our rental asking price down to nearly 2/3 of the monthly mortgage, so we’re still taking a major hit on the place. But what can you do? It’s a scam. Last year we paid for our HUD inspection when we put the house on the market. It cost $150. Do you think their $1000 inspection will be 10x better than that HUD inspection? No.
June 11th, 2008 at 10:09 pm
smoovew-
Great point. Although I don’t like it, I understand why I have to pay it as I am the “big bad investor/landlord”, but you are absolutely right. The city is kicking you when you are down.
It is just like the IRS sending you a tax bill after you lose your house to the bank (thankfully someone woke up and put a stop to that).