Bill would prohibit real estate investors from flipping Minnesota single-family homes to rentals
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Loading... - Richard Patterson
- 10 Mar 2023
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A proposed bill that would prohibit corporate entities, developers and residential contractors from flipping single-family homes into rental properties is making its way through the Minnesota Legislature.
The bill seeks to address a trend of real estate investors snapping up opportunities for homeownership, chief author Rep. Esther Agbaje, D-Minneapolis, said in an interview with the Business Journal. The phenomenon makes it difficult for individuals, particularly those in communities of color and those financially disadvantaged, to buy homes that might have been good options for them, Agbaje said. The proposal “is meant to level the playing field in a way."
Investor-owners — defined as entities that own at least two nonhomesteaded homes in the seven-county Twin Cities region — own about 3.4% of single-family homes, according to a recent report by the Federal Reserve Bank of Minneapolis. That rate is twice the figure it was in 2006, though it has stabilized in recent years, the data show. Another report by the National Rental Home Council shows a decline in single-family rentals in Minnesota.
Still, the effects of investor ownership are important to address as such entities can price people out of their communities, or, as absentee owners, show a lack of care for tenants or the properties, Agbaje said.
Last year, the share of investor-owned, single-family rentals was higher in lower-income neighborhoods while it was lower in neighborhoods with more white and non-Latino populations, the Minneapolis Fed data shows.
As proposed, the bill would stop real estate entities from acquiring single-family homes to convert them into rental units. Certain entities, such as nonprofits and family LLCs of up to five members, would be exempt from the law. Read More…
