How To Flip Houses In Minnesota: Step By Step (2024)

Flipping houses has become a hallmark of modern real estate investing, allowing individuals to transform rundown investment properties into profitable assets. Among the diverse array of states that provide such opportunities, few are as intriguing as Minnesota. The Land of 10,000 Lakes boasts a real estate market that blends demand, diversity, and investment potential, attracting seasoned investors and newcomers nationwide.

If you're eager to tap into Minnesota's thriving real estate landscape and are interested in discovering the secrets to successful house flipping, you're in the right place. This article is your definitive guide on how to flip houses in Minnesota, offering insights into strategies, regulations, and the local market dynamic, starting with the following:

• What Is Flipping Houses?
• Minnesota House-Flipping Statistics
• How To Flip Houses In Minnesota (7 Steps)
• How To Find Houses To Flip In Minnesota
• Do You Need A License To Flip Houses In Minnesota?
• How To Flip A House In Minnesota With No Money
• Best Cities To Flip Houses In Minnesota
• Final Thoughts On Flipping Homes In Minnesota

*Before we begin our guide, we also invite you to view our video on How To FLIP A HOUSE For Beginners (Step-by-Step). Host and CEO of Real Estate Skills, Alex Martinez, & Stan Gendlin share how to flip a house in Minnesota as a beginner! 

Together, Alex & Stan have completed over 1,000+ house flips. What you learn in this video will give you the confidence and guidance to successfully complete your fix-and-flip project!

What Is Flipping Houses?

At its core, flipping houses is a strategic real estate endeavor that involves purchasing a property, making necessary improvements, and then selling it for a profit. Flipping is a three-stage process that includes buying low, rehabbing or renovating, and selling high. This real estate exit strategy demands a keen eye for potential, an understanding of market trends, and a flair for enhancing property value through renovations.

However, beneath the surface, house flipping transforms into a dynamic wealth-generation machine. It's not merely about buying and selling properties; it's about identifying hidden opportunities, revitalizing neighborhoods, and maximizing the potential of a property. The art of rehabbing, the crucial middle step, requires creativity and strategic planning to transform a neglected or outdated property into a desirable and marketable asset. Effective rehabbing involves a delicate balance of budgeting, design, and project management to ensure a solid return on investment.

Ultimately, house flipping and rehabbing entail much more than the initial buying and selling. They embody a dynamic process combining real estate expertise, strategic thinking, creative vision, and a commitment to improving properties and neighborhoods.

Minnesota House-Flipping Statistics

Whether you're a new investor stepping into the world of house flipping or a seasoned pro looking to refine your strategies, having a firm grasp of vital house-flipping statistics is paramount. Let's explore the figures investors need to understand if they want to transform properties into profitable deals:

• Average Home Prices: $331,869
• 1-Year Appreciation Rate:0%
• Median Days On Market: 18
• Active Listings: 17,920
• New Listings: 7,192
• Months Of Supply: 2
• Foreclosure Rate: One in every 6,570 households
• Population: 5,717,184
• Median Household Income: $77,706
• Unemployment Rate: 0%

*All Minnesota housing market statistics are as of Q3 2023.

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How To Flip Houses In Minnesota (7 Steps)

In the following sections, we'll unveil a comprehensive seven-step flipping process that offers a roadmap to success. From sourcing properties to final sales, these steps encompass everything investors need to know to flip properties in Minnesota:

1. Find A House-Flipping Mentor
2. Research The Local Housing Market
3. Find & Analyze Distressed Properties
4. Raise Capital To Fund The Deal
5. Close On The House
6. Renovate The Property
7. Resell The House

1. Find A House-Flipping Mentor

New investors looking to flip houses should consider finding a mentor before they do anything else. At the very least, a house-flipping mentor is an invaluable guide that can significantly impact investors’ journeys; think of them as a compass, steering investors through a complex industry.

A mentor is not just a teacher but a bridge between ideas and practical applications; they are seasoned professionals who have walked the path investors are attempting to tread, and their firsthand experience is an invaluable resource. Collaborating with a qualified mentor who has achieved what investors aspire to accomplish lays a solid foundation of knowledge and expertise that can’t be read in a book.

More often than not, mentors are the key to accelerating learning while minimizing mistakes. Their guidance can navigate beginners through potential pitfalls, helping them sidestep costly errors that inexperienced investors often make. Beyond knowledge, mentors also provide an unparalleled boost to confidence. The mentor-student relationship fosters a supportive environment that encourages mentees to take bold steps.

Finding a mentor is more manageable than it may seem. Networking events, real estate clubs, and online communities are excellent places to begin searching. Online platforms like forums and social media groups also offer connections to experienced professionals willing to share their insights. Remember, in the world of real estate, a mentor isn't just a luxury; it's a strategic investment in growth and success.

Ready to start house-flipping in Minnesota? Join Alex Martinez at his FREE training to learn how to get started with house-flipping and wholesaling!

2. Research The Local Housing Market

Learning how to flip houses in Minnesota requires more than just a simple understanding of the industry. It demands an entire toolbox of practical skills and deep market knowledge. To equip themselves for success, investors must tap into valuable resources. The following list highlights some of the best sources to shape investors' expertise and sharpen their acumen:

• Zillow Housing Data Research
• Zillow’s Minnesota Market Overview
• Redfin’s Minnesota Housing Market Data
• Realtor.com’s Minnesota Market Overview
• Realtor.com’s Residential Data Library
• Minnesota Realtors Association
• ATTOM Data Solutions’ Minnesota Real Estate & Property Data
• SoFi’s State Foreclosure Data
• U.S. Census Bureau’s Minnesota Data
• Bureau Of Labor Statistics’ Minnesota Economic Data
• Minnesota Commerce Department
• Federal Reserve Bank of St. Louis’ Minnesota Data

3. Find & Analyze Distressed Properties

Identifying and evaluating potential deals are critical skills for successful house flippers in Minnesota. The complexity of deal analysis might seem daunting for novice investors, but one powerful tool can simplify the process: the 70% rule. This rule offers a straightforward approach to determining the maximum sale price for a property.

Simply put, the 70% rule suggests that the home purchase price and the cost of repairs combined should not exceed 70% of the property's after-repair value (ARV). By following this rule, investors can calculate the maximum allowable offer that ensures a healthy margin for profit.

Using the 70% rule involves understanding the ARV – the property's estimated value after improvements are made. Accurate ARV calculation demands knowledge of the local market trends and property values, which can be learned through research and networking.

When assessing deals, the 70% rule is a safeguard, helping investors avoid overpaying for properties and ensuring sufficient room for profit. It's essential to remain meticulous and realistic during the analysis process. Remember, the goal is to find properties with the potential to generate substantial returns, and the 70% rule is the compass for achieving that objective.

Here is the formula:

ARV - Fixed Cost - Rehab Costs - Desired Profit = Maximum Allowable Offer (MAO)

Read Also: Free ARV Calculator: After Repair Value Calculation

4. Raise Capital To Fund The Deal

Securing capital to fund local real estate flips in Minnesota doesn't necessarily require tapping into personal finances. In fact, most investors opt for alternative funding sources, such as private and hard money lenders. These financing options are distinct from traditional banks or institutional lenders, offering unique advantages that can be particularly advantageous for house flipping.

Private money lenders and hard money lenders provide quick access to cash, which is crucial in the fast-paced and competitive real estate market. While the interest rates associated with these lenders might be higher than conventional financing options, the speed at which funds can be obtained is a significant advantage. In a competitive landscape where swift action can make or break a deal, having readily accessible capital can give investors a strategic edge.

These lenders are often more flexible in their approval criteria, focusing more on the value of the property and its potential for profit rather than rigid credit score requirements. This flexibility is particularly beneficial for new investors with a limited credit history.

By establishing relationships with private money lenders and hard money lenders, investors can access the necessary funds to acquire properties, make necessary renovations, and ultimately drive their house-flipping ventures forward. This approach allows anyone to leverage external capital while conserving their personal finances, increasing the potential for success in the Minnesota real estate market.

Read Also: Free Hard Money Loan Calculator: Quick & Accurate Results

5. Close On The House

Closing on a house with private or hard money lenders in Minnesota involves several crucial steps to ensure a smooth and legally sound transaction. As an attorney state, Minnesota mandates the involvement of legal professionals during the process, typically conducted through escrow. Here's a concise breakdown of the steps:

• Offer Acceptance: Once you've found a property and negotiated the terms, investors must make an offer and have it accepted.
• Loan Agreement: Work with a private or hard money lender to finalize the loan terms, including interest rates, repayment schedules, and associated fees.
• Escrow Opening: Escrow is opened with the involvement of an agent who holds funds in trust until all contractual obligations are met.
• Due Diligence: Complete property inspections, title searches, and necessary legal assessments to ensure a clear and valid transaction.
• Sign Loan Documents: The loan documents include the promissory note and any applicable security instruments.
• Fund Transfer: The lender transfers the agreed-upon funds to escrow, securing the necessary capital for the property acquisition and renovation.
• Title Transfer: Ensure that the property's title is clear and facilitate the transfer of ownership to the investor’s name.
• Closing Statement: The attorney prepares a closing statement detailing financial transactions, fees, and expenses for both parties' review.
• Sign Closing Documents: Attend the closing appointment, sign the necessary documents, and provide any required funds for closing costs.
• Title Recording: The property's title is officially transferred and recorded with the county.

6. Renovate The Property

Investors must strategically plan renovations for optimal returns and rehab costs. Instead of making arbitrary improvements, focus on projects with the highest ROI potential to maximize profitability and enhance the property's value.

According to Remodeling Magazine, the renovations that return the most money to investors in Minnesota (and the rest of the West/North/Central region of the United States) are:

• Electric HVAC Conversion: Recoups 93.7% of the original cost
• Vinyl Siding Replacement: Recoups 90.1% of the original cost
• Manufactured Stone Veneer: Recoups 89.8% of the original cost
• Minor Midrange Kitchen Remodel: Recoups 83.5% of the original cost
• Garage Door Replacement: Recoups 77.9% of the original cost

7. Resell The House

After rehabbing a house, a strategic selling approach is crucial. Enlisting a real estate agent or Realtor is a wise investment. These professionals bring expertise in marketing, pricing, and negotiating, ensuring a smoother and more successful selling process.

Professionals can effectively market the property to a broader audience, set a competitive price based on local market trends, and manage the intricacies of negotiations and paperwork. Their knowledge and network can significantly expedite the selling process and help secure a favorable deal. Working with an agent saves time and effort and increases the likelihood of attracting qualified buyers and maximizing the property's selling price.

How To Find Houses To Flip In Minnesota

When learning how to flip houses in Minnesota, new investors will quickly discover that these are the best ways to find homes to rehab:

• MLS Listings: Investors scout Multiple Listing Service (MLS) listings for potential deals, often targeting properties that have been on the market for an extended period.
• Auctions: Investors should attend foreclosure or public auctions, where distressed properties are sold at potentially lower prices.
• Direct Mail: Sending targeted letters or postcards to distressed homeowners can generate leads on properties yet to be listed.
• Wholesalers: Partnering with wholesalers who source and negotiate deals can provide investors with pre-vetted opportunities.
• Networking: Building relationships with industry professionals, such as real estate agents, other investors, and contractors, can lead to off-market deals.
• Driving For Dollars: Investors drive through neighborhoods looking for vacant or rundown properties that might be potential flips.
• Online Platforms: Utilizing real estate websites, forums, and social media platforms can unearth potential deals and connect investors with motivated sellers.
• Foreclosure Lists: Accessing foreclosure lists can identify distressed properties that offer opportunities for value-added short-term investments.
• Probate Properties: Investigating probate listings can reveal properties owned by heirs who might be motivated to sell quickly.
• Expired Listings: Exploring listings that were unsuccessful in selling could lead to negotiations with motivated sellers.
• Public Records: Researching public records can uncover properties with tax liens, code violations, or other financial distress.
• Word Of Mouth: Word travels fast in the real estate community, making networking events and local meetings valuable for hearing about potential deals.
• Online Advertising: Running ads or creating a professional website can attract sellers looking to offload their properties.
• HUD Homes: Exploring U.S. Department of Housing and Urban Development (HUD) listings can provide opportunities for affordable properties.

Check out our in-depth video on "How to Gain Access to the MLS Without a License." We cover key insights and practical tips to unlock potential property opportunities you might have been missing out on!

Do You Need A License To Flip Houses In Minnesota?

In Minnesota, investors can flip homes without needing a real estate license, as it's not a legal requirement. However, holding a real estate license offers advantages like access to MLS, industry insights, and potential networking.

It's crucial to weigh the costs and commitments of maintaining a license, including continuing education and fees, against its benefits to the flipping business.

Read Also: How To Get MLS Access: The (Ultimate) Guide

How To Flip A House In Minnesota With No Money?

Private and hard money lenders enable real estate investors to flip houses with little to no upfront capital. These lenders provide quick access to funds for purchasing and rehabilitating properties, allowing investors to capitalize on opportunities that might otherwise be out of reach. While the interest rates might be higher, these lenders' speed and convenience make them essential for investors navigating a competitive market.

Wholesaling presents a viable alternative for those who haven’t learned how to flip houses in Minnesota. Wholesaling involves securing a contract to purchase a property at a discounted price and then assigning that contract to another buyer for a fee. It doesn't require a substantial upfront investment, making it an attractive option for beginners. Leveraging their negotiation skills and market insights allows wholesalers to generate profits without extensive funding or renovations. This approach provides a pathway for those still honing their house-flipping expertise to enter the real estate market and build their knowledge and experience.

You can also check our video on "How To Get Into Real Estate With NO MONEY!", which outlines strategies and insights on navigating the real estate world without hefty bank account withdrawals.

Best Cities To Flip Houses In Minnesota

Learning how to flip houses in Minnesota requires strategically choosing cities to maximize opportunities. Whether you're a novice or an experienced investor, selecting the proper cities can significantly impact your success in the dynamic real estate market. Here’s a short list of the cities investors should look at first:

• Minneapolis: Also known as the Twin Cities, Minneapolis has become a great place to learn how to flip a Minnesota home. Due mainly to the city’s increased demand and lack of available inventory, deals are a hot commodity. Securing a property gives investors plenty of opportunities to work on their strategies with the comfort of knowing there will likely be many home buyers lining up for the listing.
• Saint Paul: The other half of the Twin Cities, St. Paul offers all the same advantages of flipping Minnesota property as Minneapolis, but at a more affordable entry point.
• Duluth: Home flippers are drawn to Duluth due to its affordability and strong demand. The city's reasonable property prices, coupled with a consistent demand for housing, make it an attractive investment opportunity, offering the potential for both steady rental property income and future appreciation.

Final Thoughts On Flipping Homes In Minnesota

By following the seven-step process outlined above, new investors can enter the world of house flipping in Minnesota with greater confidence and potential for profitability. Each step has been designed to simplify and streamline the process, allowing investors to navigate the complexities of real estate with a more precise roadmap. With these strategies, aspiring flippers can embark on their journey with a better understanding of the market, increased financial competence, and the potential to turn houses into lucrative investments.

Are you eager to learn how to flip houses in Minnesota? Don't navigate the complexities of the real estate market alone. Reach out to Real Estate Skills today for expert guidance and support. Our experienced team will provide the knowledge and tools you need to flip houses successfully in Minnesota. Contact us now to embark on your flipping journey with confidence and purpose.