Where Does Minneapolis Duplex Rent Go?
One of the main reasons many would-be and current tenants want rent control is the mistaken belief that the housing provider keeps 100% of the rent they’re paid.
Nothing could be further from the truth. In fact, a 2023 report from the National Apartment Association broke down just exactly what every dollar of rent is allocated for.
In Minnesota, 42 cents of each dollar is earmarked for the property’s mortgage payment. Utilities, repairs, maintenance and supplies eat the next biggest chunk, at 30 cents.
Property taxes eat 13 cents. Employee payroll, or the costs associated with hiring people to manage and maintain the property take 6 cents. Long-term capital expenditure reserves consume another 2 cents. And finally, the housing provider earns the remaining 6 cents of each dollar of rent paid.
Minnesota was slightly less profitable than the nation. Across the country, mortgage expenses on rental properties averaged 46 cents of every rental dollar. Operating expenses consumed another 27 cents. Property taxes ate up 11 cents. Payroll was 7 cents and capital reserves another 2 cents. The average national profit, however, was 7 cents.
In other words, it’s less profitable to own a rental property in Minnesota than many other parts of the country.
In fact, Wisconsin, New York, and Illinois were the most profitable for housing providers, who averaged 9 cents profit on every dollar of rent. This may seem impossible considering cities like New York and Chicago, where the cost of living is higher. However, both states also have large swaths of agricultural and industrial communities where the cost of real estate is substantially lower.
The least profitable states to be a housing provider were surprising as well. Alabama, Kentucky, Maryland, Mississippi, Tennessee, Texas, Utah and Washington D.C. were the least lucrative locations to have rental property. There was not a common reason. Some states saw higher percentages allocated for mortgages, others for labor.
To read the full report, CLICK HERE.