One thing I like about the market is that it makes people work harder. If you provide value to the market, then the market will reward you. Right now the south Minneapolis housing market is making home buyers work harder for their equity. Prices are going up very quickly, interest rates just dropped again (that means home prices are going to go up because demand is high) and with cheaper money more people are going to jump into the market. We only have a 1 month supply of homes on the market under $300,000 in south Minneapolis so finding that deal is going to be really tough. However, I have a couple of ideas that will make it easier for you to find that deal and build equity.
1. Buy a house and build a granny flat in the back yard. I am really bullish on granny flats. Tear down your garage, build a mini house for $100,000 and rent it out for $1400 a month. You would receive a cash flow of about $1,000 a month. Over time that is a very good return. Plus, you increased the value of your lot by about $150,000.
2. Convert your basement to a studio apartment. The more homes I go through in south, the more I see a huge opportunity for this. Most basements have enough space for a bedroom, bathroom and small kitchen. I am finding that a lot of buyers right now value freedom over material possessions, and they would rather have the ability to rent their basement out for $1000 a month and live mortgage free than have more space for storage. Converting your basement to a studio apartment is perfect for this type of life style, and as prices go up I see more people doing this to build equity and lower their monthly payment.
In the end, there are not a lot of options for homes under $300,000 in south Minneapolis. To be honest, I could see a day in Longfellow and Nokomis where the median value is $300,000. Minneapolis is the hottest destination in the country right now for the typical buyer in their 25-40s, so be ready for it.