16 Minnesota cities ranked by estimated cap rate. The average cap rate across Minnesota markets is 3.1%, with median home prices averaging $310K and rents averaging $1,353/mo. Duluth leads with a 5.8% cap rate at a $250K median price. Property taxes average 1.12% across Minnesota markets.
Minnesota offers 16 investable rental markets tracked by CapRateCity. The state average cap rate of 3.1% is near the 3.81% national average. No cities pass the 1% rule at median prices, so value-add strategies are essential.
Prices and rents: Minnesota home prices average $310K, which is 7% below the national average of $333K. Rents average $1,353/mo. The most affordable entry point is Austin at $195K, while Duluth offers the highest cap rate at 5.8%.
Taxes and costs: Property taxes average 1.12% across Minnesota, above the 1.08% national average — investors should model tax expense carefully. Duluth has the lowest rate at 1.08%.Vacancy averages 4.8%, tighter than the national average — favorable for landlords.
Growth outlook: Population growth across Minnesota averages 0.51% per year, led by Rochester at 1.2%. Home values are appreciating at 2.6% annually on average. Moderate growth provides a stable demand foundation.
Bottom line: Minnesota is primarily an appreciation market. Cash flow investing requires below-median purchases or value-add strategies. Consider whether the growth and appreciation potential justifies tighter margins.