As a financier supporting real estate investors in the Minneapolis and St. Paul Metro Area, Security Bank & Trust Co. remains committed to monitoring and assessing the dynamics of the local real estate market. Single-family home rentals and investment properties have seen a steady rise nationwide, and our local market is no exception.
In previous posts, we have discussed what to consider when you reached your secondary market limit of ten 1-4 family rental properties. In today’s post, we’ll dive into some of the top and emerging neighborhoods for rental properties across the Twin Cities, explore real estate lending opportunities, and provide key resources for investors.
With a focus on business loans and real estate lending, it’s essential to keep an eye on market trends while considering the best financing options for property investments.
Identifying the Highest-Rent Areas in the Twin Cities
Real estate investors often seek high-demand areas where rental income can be maximized. Whether you're focused on single-family home rentals or multi-family properties, knowing where the highest rents are can significantly impact your return on investment (ROI).
Using tools like Trulia.com, which features a heatmap of rents by zip code, investors can identify areas with the highest rents. Some of the top areas for single-family rentals include:
- Central Minneapolis
- Calhoun-Isles
- St. Paul’s Capitol-River
These areas consistently show high rental rates, making them attractive to investors seeking stable cash flow from rental properties. When evaluating these markets, it's essential to consider both rental income potential and the overall investment climate, including interest rates for real estate lending.
For a broader view of the Minneapolis/St. Paul metro area, RentJungle.com reports that neighborhoods such as Cedar-Isles-Dean, West Calhoun, Downtown East, and North Loop offer the highest rents. Conversely, areas such as Seward, Ventura Village, and Whittier tend to offer lower rental rates, which could indicate higher risk but also opportunities for long-term growth and development.
Which cities in the Minneapolis/St. Paul Metro Area have a higher percentage of rented single family homes?
According to data from U.S. Census Bureau and American Community Survey prepared by the Star Tribune, Minneapolis and St. Paul lead the metro area; however, Brooklyn Center, Columbia Heights, and Anoka Twin Cities rental markets have surged over the past several years to put them in 3, 4, 5 places. A surprising fact is that of the 93 cities tracked, all but 32 saw their single-family rentals grow at least 100% (double) from 2000 to 2013.
| City | Single Family detached homes as rentals 2013 | 2013 Percent |
| Minneapolis, MN | 10,278 | 14% |
| St. Paul, MN | 7,416 | 13% |
| Brooklyn Center, MN | 867 | 12% |
| Columbia Heights, MN | 610 | 12% |
| Anoka, MN | 449 | 11% |
*Data does not include attached single-family homes such as townhomes, duplexes or condominiums, or multi-family buildings such as apartment complexes. Get the data from the Star Tribune Article.
Source: U.S. Census Bureau, American Community Survey, Star Tribune
Pricing Your Rental Property Based on Market Trends
To maximize cash flow, investors must price their rental properties accordingly. Understanding where your property is located within the Twin Cities rental market will help you set competitive rent prices while factoring in factors like local demand and real estate lending terms.
For instance, neighborhoods with higher rents, like Cedar-Isles-Dean or North Loop, can often sustain higher rental prices due to the demand for quality properties. In contrast, emerging neighborhoods with lower rent may require more strategic pricing, but they also provide an opportunity to grow property value over time.
Maximizing Free Cash Flow Yields
The key to successful real estate investing is balancing rental income and expenses to achieve positive free cash flow yields. Cash flow is vital to long-term success in real estate investment, and this is where effective business loans and real estate lending can play a significant role.
Acknowledge market limits, trends, and projections to maintain stability in cash flow. For example, the depreciation of assets and capital gains tax savings are critical factors that influence the profitability of your investment. Understanding your cash flow and working with a financial institution like Security Bank & Trust Co. will ensure that your investment properties generate consistent returns.
Get Involved with Real Estate Investment Groups
One of the most valuable resources for real estate investors is joining a community of like-minded individuals. Whether you’re a seasoned investor or just getting started, networking and sharing insights is essential for success.
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Minnesota Multi Housing Association (MHA): MHA is a key industry association promoting best practices in the development and management of rental properties. The association serves members who own or manage fewer than 20 units, making it an excellent resource for smaller investors.
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BiggerPockets.com: This online community is an invaluable tool for real estate investors. With an active forum discussing everything from financing options to market trends, it’s a great place to engage with others and learn from real-world investment stories.
Additionally, don't forget to talk to your banker. A local lender, such as Security Bank & Trust Co., has a deep understanding of the Twin Cities real estate market, and can provide insights into lending rates and help you navigate the financing process. Our team is committed to helping investors achieve their financial goals with custom business loans and real estate lending solutions tailored to your needs.
Resources to Monitor Market Trends
Investors who stay informed are best positioned to capitalize on changing market conditions. Monitoring local market trends allows you to spot up-and-coming neighborhoods and identify when it's the right time to buy, sell, or adjust rental prices.
Key Resources:
- U.S. Census Bureau & American Community Survey: Data from these sources helps investors track long-term trends in rental property growth.
- Star Tribune: Local news outlets such as the Star Tribune offer regular updates on the Minneapolis/St. Paul metro area real estate market, providing insights into rental trends and housing statistics.
For example, the U.S. Census Bureau data shows that between 2000 and 2013, rental rates in certain Twin Cities areas saw a 100% growth. Cities like Brooklyn Center, Columbia Heights, and Anoka are now seeing significant increases in single-family rentals. Investors can use these insights to strategically adjust their portfolios and capture emerging opportunities.
The Future of Minneapolis/St. Paul’s Rental Market
Looking ahead, the Northeast Minneapolis neighborhood has been a prime example of a community that saw tremendous growth in recent years. By capitalizing on gentrification and development, many investors were able to generate significant returns on rental properties.
However, as the market evolves, the next opportunity could be anywhere. With the right business loans and understanding of local real estate lending trends, investors can take advantage of emerging opportunities in less-established markets.
Why Choose Security Bank & Trust Co. for Real Estate Lending?
At Security Bank & Trust Co., we pride ourselves on providing personalized service for investors in the Minneapolis/St. Paul metro area. Our team understands the unique challenges and opportunities in real estate lending and business loans and offers tailored solutions to help you achieve your investment goals.
Whether you’re investing in single-family rentals, multi-family properties, or commercial real estate, we offer the financial tools and expertise you need. Our commitment to your success includes:
- Customized business loans for real estate investors.
- Timely service with certainty in lending terms.
- Industry knowledge that makes us a market leader, even against larger financial institutions.
Contact us today to discuss how our real estate lending solutions can help your investment strategy succeed!
Conclusion
The Minneapolis/St. Paul metro area offers a dynamic real estate market with opportunities for both new and seasoned investors. By staying informed on local trends, leveraging the right business loans, and utilizing resources like Security Bank & Trust Co., you can maximize returns and minimize risks.
Ready to take the next step in your real estate investment journey? Reach out to us today to learn more about real estate lending and how we can support your goals.
