can find properties at a discount and then fix-and-flip will likely find eager buyers when their renovation is complete. The flipping model is also well-suited to a bellwether market because it allows for a fairly fast turnaround. With appreciation of 4.5 percent in 2015 and a projected 3 percent to 4 percent in 2016, an efficient flipper can monitor the temperature of the local market effectively while remain- ing relatively safely involved in it. PICKING OUT THE SWEET SPOTS: FOLLOWTHE RAIL One thing that Minneapolis does well is transit planning and promotion of its Metro Blue Line light rail, which not only runs throughout much of the city
Minneapolis-St. Paul before you invest. Thanks to Millennial homebuyers’ interest in walkability and transit access, the importance of this type of well-es- tablished, well-run transit is on the rise. Historically, buyers might have avoided areas with easy access to mass transit, but in today’s market, it is a selling point that clearly adds serious value. Because of fears that rising home values in these areas will “price out” lower-level buyers, there are a number of affordable housing programs in place to encourage the development of affordable single- and multifamily housing along these rail lines. Investors should be aware of these programs not just because they might assist with funding deals or financing renovations, but also to ensure
lifestyle, family size or budget indicates the time has come to do so. According to RealtyTrac, Minneapolis is one of four major metro areas exhibit- ing this positive trend. The others were Atlanta, Georgia; Washington D.C.; Cleveland, Ohio; and Charlotte, North Carolina. While these are certainly not the only healthy housing markets in the country, the added bonus of affordabili- ty and growth potential certainly makes this market attractive. While low interest rates are keeping housing prices within reach for many Americans, even in areas where housing costs are outpacing wage growth, rising interest rates could stall those markets while Minneapolis remains somewhat insulated from such a trend, at least in the short term. This is one way in which Minneapolis’ market could provide a bit of “cushion” for investors during market changes despite its “crystal ball” status. TWO OF A KIND: A BEAUTIFUL FIND While the Twin Cities certainly started off together in a mutually antagonistic fashion, the area now is thriving because of the symbiotic relationship between Minneapolis and St. Paul. Not only does the area offer hundreds of organized outdoor recreational festi- vals to lure nature lovers to the area, it is home to multiple colleges, hospitals and research institutions, technology innovators and professional sports teams. (It is one of only a dozen metro areas with all four major sports). It also boasts the second-largest economy in the Midwest, trailing only Chicago, and it played a major role in CNBC calling Minnesota the “Top State for Business” in 2015. All of these positive facets combine to create a great market for investing in 2016. •
THANKS TO THE LOW INVENTORY, QUALIFIED BUYING POPULATION, LOW CRIME RATES AND STEADY EMPLOYMENT, THE TWIN CITIES ARE CERTAINLY THE PLACE WHERE THE LOCAL POPULATION PREFERS TO BUY.
and some suburbs, but was designed specifically with home value and appre- ciation in mind. As a result, the 19 stations presently on the Blue Line route represent unique architectural styles reflective of the sur- rounding community (the same is true on a lesser scale with many area bus stops) and appreciation rates of homes located near the Blue Line are higher than those in the surrounding areas. According to the Minneapolis Area As- sociation of Realtors (MAAR), homes in close proximity to the line sold for about $26,000 more than those that were not. Not surprisingly, a number of locales are campaigning for light rail lines and stops in their areas as a result, making it worth- while to track transit planning trends in
that plans for an investment are, in fact, realistic in light of local regulations.
THEWAGE-GROWTH ANOMALY One of the most attractive things about the Minneapolis-St. Paul area is its econom- ic strength and stability. This is obvious in a unique way that the bellwether market is presently “bucking” a national trend. In Minneapolis, as is the case in only a few major metro areas at this time, wage growth is actually outpacing the cost of housing. This means that new buyers are likely not only to be able to access the lend- ing they need in order to buy, but that existing homeowners are likely to actually have the option of a move up when their
Carole J. Ellis is the host of Real Estate Investing Today, a daily nine-minute investing podcast, and the editor of the Bryan Ellis Investing Letter.
www.investing.bryanellis.com
thinkrealty . com / mag | 91
Made with FlippingBook Online document