Multifamily owners and investors:
If you are looking to purchase a 2-4 unit multifamily property in Minneapolis, don’t forget to add $450 to your budget.
Well, Minneapolis passed a regulation stating, “Whenever a valid rental property changes ownership, it must be inspected for compliance with minimum housing standards.” See the Change of Ownership page in Regulatory Services
If you are like me, you are asking yourself, “I don’t get it. The property I purchased already had a rental license. Why the extra $450? That is a good chunk of cash flow for the year!!”
Sorry, but there is no easy answer except the obvious–Minneapolis has the upper hand–forget about years of clean inspections at your new property–you are new so pay up! Sure, there are exceptions such as an inspection in the last 6 months, etc. that effectively waive the fee. Regardless, if you have any question, you should call 311 (or (612) 673-3000 outside Minneapolis) prior to your purchase agreement to determine if any of the exceptions apply at the given property.
We at InvestProp recommend addressing this high fee with your council member or the Minnesota Multi Housing Association. Notably, Minneapolis has made a concession to their single family home conversion fee if you take one of their Rental Property Owner Workshops. That might be a good starting place for fee reduction discussion.
In closing, InvestProp recommends no matter the location, contact the City before the purchase about any “change of ownership” fees (other than the standard rental license fee). You will thank yourself for setting the proper budget ahead of time and being more informed about how aggressive or reasonable your community is with its fees pertaining to rental property owners.
Questions? Contact InvestProp. We are happy to help!
Thanks again for reading and stay tuned for more great content at InvestProp.com.
-Brad Schaeppi, founder and CEO.