The government recently reported a rebound in home construction as new home cont ruction permits across the nation jumped 22% in February over the previous month. Previous to this increase we had seen seven consecutive months of decline in new construction home permits.
Nationwide, single family home construction climbed just 1.1% in February. However, multi-family housing permits increased 82% in the same time period. Rochester, MN reported just one single family home building permit in the month of February. Overall, Rochester construction numbers have faired well as the commercial building sector has been healthy.
So what's happening here?
In the late 1990s to early 2000s home loans were easy to obtain. Some loans were given with no money down, sometimes with no documentation to verify a borrower's income. Renters could easily become home owners in such a lending climate and many did. In the Rochester market, this drove rents down and rental vacancies up. Single family housing demand soared.
Welcome to 2009. Now credit is much more difficult to obtain. Banks require a larger down payment, sometimes 20%. Loan qualification is much more stringent. As the lending institutions tightened credit, more people turn to home rentals. As the demand for rental housing increases, investors are trying to rush to market first with their new rental housing. This is driving the phenominal increase in the multi-housing construction sector.
If you'd like to catch this wave of multi-housing investment, we have several opportunities:
15 7th Ave NW: priced over $30,000 below tax assessed value. Built as a duplex, could easily be converted back from single family home to duplex. Priced according to work needed.
406 16th St NW: $189,900. Fully rented tri-plex. Great opportunity for an owner-occupied investment.
3008 and 3010 18th Ave NW: $189,900. Duplex with good rental history. Another great opportunity for an owner-occupied investment.
500 Ridgeway Lane, Pine Island: $2,990,000. Fully rented 32 unit town-home investment. The Pine Island to Rochester corridor along Hwy 52 is expect to boom over the next decade. Over 2 million dollars was recently award to the Pine Island bioscience project, Elk Run. Elk Run is being developed by Tower Development of California, which has just announced over $1 billion in venture capital for the project. This town-home complex is expected to be a solid investment over the years.
Many investment properties are offer via private sale and not available on Multiple Listing Services (MLS). If you are considering rental investments, please contact us for counsel and information. View all MLS lRochester area investment properties at www.DavidAndLoisMarris.com or contact us at DavidMarris@EdinaRealty.com, LoisMarris@EdinaRealty.com, 507-254-2291.
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