Why Buy Investment Property anywhere but Minnesota?

Minnesota Investment Property

I know I am going to get some comments from readers in other parts of the country about this title! My point is not that anywhere BUT Minnesota is bad. It is just that I often get the question from new investors that ask: “I read investment property in [insert any state here] is a great buy, should jump in?”. My answer is always NO.

Buying and owning investment properties take time and work. Obviously, how much work is dependent upon how many properties you have, their age and condition, and even the type (single family versus multi-family). In the end, there is some time and work required to own investment property. Owning property in another state is probably 10 times more work and I would argue not as great of a buy as you have been told.

When buying investment property, you should be familiar with the market and even the neighborhood you are buying in. How familiar are you with that out of state neighborhood?
You will need to find a Realtor and potentially a new mortgage broker. Where will you find them?
How are you going to show the property to potential tenants?
Who will fix anything that needs repair?
Who will you call in an emergency at the property?
Can you get to the property at least quarterly to check on the tenants and condition?

The only answer to owning out of state is to use a management company, but that is not an excuse to simply forget about the property:

They will typically charge 7-15% of your monthly rent and then charge 1 month of rent to find a new tenant. Is that factored into your cash flow equation of this “great buy”?
Even with a management company, you should plan to check on your property at least every quarter to make sure the management company is keeping the property maintained and the tenants are not destroying the place.
If the property becomes vacant, how do you gauge how hard your management company is working to get your property filled?

Lastly, there are plenty of amazing investment properties for sale in Minnesota. Whether you want to do a flip, a short term hold, or a long term hold, we have all the “great buys” you would ever need, right here.

1 comment

#1louis lewisJanuary 3, 2010, 11:03 am

I’ve been a small real estate investor for years, and have done quite well, and I am an ex real estate broker from the USA. You don’t need spread sheets or real estate consultants to prosper. You just need common sense and then to go to MEXICO, or someplace like it. Invest in BEACHFRONT property. Meaning land for future speculation and single family homes you can rent by the week in tourist areas that are flourishing.NOT CONDOS! Case in point. I live near Cancun, and have turned over several properties at a profit over the years. I currently own a beachfront home valued at 1.2 million, and the lot next door, with a value of $600,000. The property generates 3-4 times what it costs to pay ALL operating expenses for the year, and the appreciation, though it slowed down last year, has grown an average of 30% per year for the last eight years since they began developing the area, with no let up in sight. I operate my properties myself, and have a full time caretaker to do the maintenance. Several of my neighbors are from guess where?… MINNESOTA!, and doing the same as myself. I also use the property when not rented. It’s in paradise. I’m probably going to sell this year because I’m retiring. The area is booming. Occupancy is terrific. Why don’t more people take advantage of this and places like it? Because they listen to the doom and gloomers who scream idiotic things like RISK!, FOREIGN COUNTRY! etc. What a crock! Who do you think is filling the resort hotels all year? Americans and Canadians, that’s who! Many from Minnesota and Wisconsin every year. Some of the smarter ones have decided to jump in and own down here. Chew on this…my property taxes for last year, 2009, was $200 US for both properties! The investment advantages are many, if the investor doesn’t subscribe to the media hype in the USA. If you could reason with real estate “PROS”, there would be no real estate “PROS”.

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