On Friday I have attended Minnesota Real Estate Journal’s 2019 Apartment Summit.
Lot’s of great info was covered during the summit.
Here are some interesting stats and trends:
1. Rent growth has been 3% in Twin Cities in 2018. Eden Prairie, Minnetonka and Golden Valley had the strongest rent growth.
2. High single family house prices and increasing mortgage rates made it difficult for first time home ownership, making rentals more favorable.
3. Multifamily prices keep increasing. 90% of units constructed in 2018 have been class A luxury units. The high cost of goods and labor makes it very difficult to build affordable housing. This trend most likely will continue in 2019 and upcoming years. We are in early stages of workforce housing crisis.
4. Investors see lots of potential for rent growth. More outside capital is flowing to Twin Cities. There is a high demand for class C units. These units have a potential of $200-300 a month rent increase.
5. Twin Cities cap rates are mid 4’s-5’s. Value add high 4’s mid 5’s. Value add light B+ class (older product, light rehab) mid 5’s-6’s.
6. Twin Cities doesn’t have lots of inventory built between 1990’s – 2000’s.
7. Twin Cities has a low inventory of multifamily. These properties are held for long term and many are passed to generations. The market is defined as low velocity (good old boys club), although it is picking up in velocity.
These are very interesting trends and stats but nevertheless multifamily real estate is still one the best if not the best investment vehicle that can provide wealth and true financial freedom.
Investors, operators, newbies, brokers and anyone else, let’s connect and make 2019 best year ever.