So, you’re thinking about investing in property on the North Shore of Minnesota? That stunning stretch of land along Lake Superior is an absolute dream for real estate investors. With its breathtaking views, vibrant tourist scene, and year-round appeal, it’s easy to see why so many people are eager to buy property in this picturesque area.
But before you take the plunge, let’s talk about the ten key things you should consider to make sure your investment is as solid as the iconic rocks along the shore. Whether you’re eyeing a charming lakeside cabin for vacation rentals, a cozy home for long-term tenants, or a property that could become your next big project, these factors can make all the difference.
1. Location, Location, Location! (Yes, It Really Matters)
If you’ve heard it once, you’ve heard it a thousand times—but it’s true: location is everything. The North Shore has a lot of charm, but some areas are more desirable than others. Is your property near popular attractions like Gooseberry Falls or the Superior Hiking Trail? Or is it tucked away in a more remote spot? Consider how close it is to amenities, local businesses, and transportation routes.
Pro Tip: Always consider the seasonality of tourism in the area. While summer may bring in the crowds, winter can be an underrated gem for those who love winter sports and cozy getaways.
2. Know Your Target Market: Vacation Renters or Long-Term Tenants?
Before you buy, ask yourself who you’re planning to rent to. Are you aiming for short-term vacation rentals (STRs) or long-term tenants? Vacation renters are drawn to the North Shore for weekend trips, while long-term tenants might prefer the quieter areas and longer stays.
Real-World Example: A property just outside of Duluth might do better as a long-term rental due to its proximity to the city’s job market, while a lakeside cabin closer to Lutsen Mountains could be a prime spot for vacation rentals.
3. Understand the Market Demand
The North Shore isn’t just a summer paradise—it’s a year-round destination. However, it’s essential to know whether your property will be in demand during off-seasons. Some areas thrive during the winter months, with activities like skiing, snowshoeing, and ice fishing attracting visitors, while others are only popular in the warmer weather.
Pro Tip: Research local trends by looking at Airbnb occupancy rates or talking to local property managers. Knowing demand patterns can help you make a more informed decision about your investment.
4. Property Taxes: Know What You’re Getting Into
North Shore properties come with their own set of tax regulations. It’s important to understand local property tax rates and how they could impact your bottom line. Some areas may have higher taxes based on the property’s location or usage, especially if it’s in a prime tourist area.
Quick Tip: Work with a local tax professional to get a clear breakdown of potential taxes for your property—especially if you’re purchasing a second home or vacation rental.
5. Waterfront or Not? The Pros and Cons of Lake Superior
Owning property near Lake Superior is undeniably a great investment, but there are some things to consider. Waterfront properties tend to be pricier and may come with stricter regulations. On the flip side, they can offer spectacular views and appeal to a broader range of renters.
But if you’re considering a non-waterfront property, don’t discount it. Many properties in the area offer fantastic lake views without the waterfront price tag.
Pro Tip: Properties directly on the water are subject to more stringent zoning regulations and may face limitations on development or renovations. Make sure you understand these before making an offer.
6. The Cost of Maintenance: Is the Property Lake-Ready?
Maintaining a property on the North Shore can be more expensive than you might think. The salty air from Lake Superior can lead to wear and tear on buildings, and snowstorms and freezing temperatures in the winter can result in additional maintenance needs. Factor in things like snow removal, roof inspections, and general upkeep for harsh weather conditions.
Real-World Example: One of our clients who purchased a second home on the North Shore quickly learned that the heavy snow accumulation meant hiring a snow removal service year-round—not just in the winter!
7. Get to Know the Local Regulations
North Shore communities are known for their natural beauty, but they also have strict zoning laws and short-term rental regulations. Make sure you’re clear on what you can and can’t do with the property you’re considering. For instance, some areas have rules about vacation rentals, noise ordinances, and building codes.
Quick Tip: If you’re planning to rent your property out, check local short-term rental restrictions. Some areas have limits on how many days per year you can rent out your property, which could affect your potential income.
8. Financing Options: Know Your Loan Programs
Purchasing a property on the North Shore can come with unique financing challenges. If you’re looking for a second home or vacation rental, there may be specific loan options to consider. From conventional loans to second home mortgages, talk to a mortgage broker like Kyle at KTR Loans to help guide you through the process.
Pro Tip: A property purchased as an investment may have different down payment requirements and interest rates than one you’re buying for personal use, so be sure to explore your options before committing.
9. Budget for the Unexpected
Real estate investments are full of surprises—some good, some not-so-good. Be sure to budget for unexpected repairs, vacancy periods, or changes in rental demand. It’s always better to plan for these costs than to be caught off guard.
Real-World Example: One investor learned the hard way when a hot water heater broke during the peak winter season, leaving them with a hefty repair bill and no renters for a month.
10. The Return on Investment (ROI): What’s Your Goal?
Last but not least, consider your financial goals. Are you looking for a steady stream of rental income, or are you hoping for long-term appreciation and a future sale at a profit? The North Shore offers opportunities for both, but having a clear goal will help you make smarter decisions about your property and your approach to managing it.
Ready to Take the Next Step?
Purchasing an investment property on the North Shore of Minnesota is an exciting venture—but one that requires careful consideration. By thinking through the key factors outlined above, you’ll be in a better position to make an informed, confident decision.
Need help financing your North Shore property? Call Kyle at KTR Loans at 651-492-1402 or email kyle@ktrloans.com to discuss your options. Let’s work together to find the right mortgage for your next investment!
Pro Tip: When financing investment properties, consider the cash flow potential. If you’re planning to rent out your property, make sure your monthly rental income will comfortably cover your mortgage payment and other expenses.
