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Hi there, and welcome back to another real estate market overview. Today we will be diving into a real estate market it Minnesota as well as discussing how you can navigate season real estate markets. Enjoy!

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Disclaimer: The content of this newsletter is for informational and educational purposes only and does not constitute financial, investment, real estate, legal, or business advice. All opinions expressed are those of the editors and contributors and are provided solely for general guidance. Any decisions based on the information provided herein are made at your own risk. Always consult with a qualified professional before making financial, investment, or real estate decisions.

Real Estate Investing

Market Snapshot:

Duluth, Minnesota
Duluth’s real estate market is experiencing steady growth due to its thriving port economy and tourism. The median home price currently stands at $270,000, reflecting a 3.2% year-over-year increase. Demand for housing has risen, especially in neighborhoods near Lake Superior, driven by remote workers seeking affordability and scenic views. However, the market faces challenges with limited inventory, as active listings are down 7% compared to last year. Investors are eyeing short-term rentals, a segment growing due to the city’s popularity among vacationers.

Median Home Price: $270,000
YoY Price Growth: 3.2%
Active Listings: 1,200 (down 7% from last year)

Deal Of The Day:

Duplex in Lincoln Park, Duluth
Price: $280,000
Units: 2 (2-Bed, 1-Bath Each)
Monthly Rental Income: $2,000
Cap Rate: 8.4%

This fully renovated duplex in Duluth’s Lincoln Park neighborhood. Each unit rents for $1,000/month, appealing to both long-term tenants and short-term vacation renters. Located near breweries and restaurants, this property benefits from growing neighborhood revitalization efforts, making it a solid investment for cash flow and potential appreciation.

Deal Rating: 6/10

This property is situated in a low rent area compared to other parts of Duluth, and has not seen as great of appreciation as other areas in Duluth. The low rent in this area makes it difficult to find properties that cash flow enough to offset the low appreciation.

Real Estate Tip:

Investment Strategy:

The Equity Swap
An equity swap involves trading equity in one property for equity in another, allowing investors to diversify without selling outright. For example, an investor might trade a $500,000 commercial property with equity of $200,000 for a multifamily building with similar value. This strategy can improve cash flow, reduce risk, or align better with your investment goals. It works particularly well when both parties want to avoid capital gains taxes through a 1031 exchange.

Current Interest Rates:

Duluth, Minnesota
30-Year Fixed Residential: 6.9%
15-Year Fixed Residential: 6.4%
Commercial Rates: Starting at 6.5%

Mortgage rates remain elevated, making it crucial for investors to prioritize cash flow-positive properties. Duluth’s moderate price points and high rental demand help offset these higher borrowing costs.

How to Navigate Real Estate Investment in Seasonal Markets

Duluth’s seasonality impacts both residential and short-term rental markets. Investors can leverage this by diversifying their rental offerings. During summer, properties near the lake command premium short-term rental rates, while year-round tenants provide stability in winter months. Property owners can also capitalize on the growing popularity of extended-stay rentals for remote workers. For example, a lakefront cabin rented for $3,500/month in the summer and transitioned to a 6-month lease at $2,000/month during the off-season, maintaining consistent cash flow. Diversification and flexibility ensure returns regardless of seasonal demand fluctuations.

Economic Conditions

Duluth’s economy is buoyed by its role as a transportation hub. The Port of Duluth-Superior is one of the busiest on the Great Lakes, contributing $1.4 billion annually to the local economy. Unemployment is at 2.7%, well below the national average, thanks to a mix of shipping, healthcare, and education sectors. Inflation has pushed construction costs up by 4%, slowing new builds, but existing properties in desirable areas are seeing steady appreciation.

Market Rating: 7/10

Aside from the increasing construction prices and high interest rates, this market shows great potential as it has a low entry cost with the median house being just under $300k, on top of this, the market shows great YoY appreciation. This markets economy is showing steady growth.

Key Takeaways:

• Market Snapshot: Duluth’s market is growing, with a median home price of $270,000 and YoY growth of 3.2%.

• Deal of the Day: A $280,000 duplex in Lincoln Park generating $2,000/month in rental income.

• Tip: Know local short-term rental regulations to maximize returns and avoid penalties.

• Strategy: Use equity swaps to diversify and align with long-term goals.

• Interest Rates: Residential mortgages at 6.9%, emphasizing the importance of cash flow-positive deals.

• Economic Conditions: Duluth’s economy thrives on shipping and tourism, despite rising construction costs.

That’s All For Today

I hope you enjoyed today’s issue. If you have any questions regarding today’s issue or future issues feel free to ask. Come back tomorrow for information on how to grow your income and wealth. I hope to see you.

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Disclaimer: This newsletter is for informational and educational purposes only and reflects the opinions of its editors and contributors. The content provided, including but not limited to real estate tips, stock market insights, business marketing strategies, and startup advice, is shared for general guidance and does not constitute financial, investment, real estate, legal, or business advice. We do not guarantee the accuracy, completeness, or reliability of any information provided. Past performance is not indicative of future results. All investment, real estate, and business decisions involve inherent risks, and readers are encouraged to perform their own due diligence and consult with qualified professionals before taking any action. This newsletter does not establish a fiduciary, advisory, or professional relationship between the publishers and readers.