The Investment Appeal Of 18-Hour Cities

A significant part of an investment portfolio that is well-diversified and profitable is a real estate entry. And those who have extensive experience in real estate investment understand that the choice locations for putting in dollars are the big six cities: New York, Washington D.C., Boston, Chicago, San Francisco, and Los Angeles.

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For the past few years, though, the industry’s traditional focus on these metropolises is shifting because midsize, 18-hour cities have suddenly become appealing.

This type of city houses a rather large urban setting, characterized by an above-average increase in population, a booming economy, and a substantially lower cost of living compared to the aforementioned metro areas. Conducting business in these 18-hour cities commands less expensive costs.

Because of this, not only do businesses love investing, and companies prefer situating their offices in these locations, but millennials seek homes and jobs there as well. These cities are even targets for retirees who yearn for quality healthcare and urban living amenities.

There are a lot of locations that have risen as alternatives, with Minneapolis one of the leading cities.

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Its infrastructure woes have been solved creatively with rapid transit systems and public-private partnerships. And even if Minneapolis does not have as many universities as other cities, the metro, along with neighboring St. Paul, has benefited from a healthy growth in the medical and education sectors.

Led by Steve Liefschultz, Equity Bank is a Minnesota-based financial institution that helps its clients attain business and financial success. Visit this blog to read more about the economic condition of Minnesota.

The Minnesotan Taxation Structure on personal Income, Sales, Excise, and Real Estate

Almost all states impose tax depending on the business income derived from the state. How this income from a specific business is taxed will be determined in part by the business’ legal background. In most states, corporations are subject to a corporate income tax, while income from “pass-through entities” such as S corporations, limited liability companies (LLCs), partnerships, and sole proprietorships is subject to a state’s tax on personal income. Sales tax can also be imposed, but some states do not levy on items like clothing, some services, or food items for home consumption. Tax rates among states vary widely for both corporate income and personal income.

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 In Minnesota, taxation is slightly progressive. One could conclude that the state’s business-tax climate compares favorably with other states—even with South Dakota. Minnesota also ranks 4th highest among states levying an individual income tax at 9.8 percent. While there are state-wide tax laws that must be followed, the state legislature has made some exceptions and allowed municipalities to institute local sales taxes and special local taxes, such as the 0.5 percent supplemental sales tax in Minneapolis. The cities of St. Paul, Rochester, Duluth, and St. Cloud have same taxes. Excise taxes, meanwhile, are levied on alcohol, tobacco, motor fuel, and items purchased elsewhere but used within Minnesota.

Minnesota has two major taxes that apply to business entities: (1) a corporation income tax that applies to traditional (C-type) corporations and (2) a tax called the “minimum fee” that applies to traditional corporations, S corporations, LLCs, and partnerships.

Minnesotan property owners pay real estate tax to their county, municipality, school district, and special taxing districts. The overall state and local tax burden is calculated to average 11.9 percent in 2006, ranking 4th highest in the country.

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Banking and finance pundit Steve Liefschultz offers clients a diverse array of options on how they could maximize the value of their money. He is the CEO of Minnetonka, Minnesota-based Equity Bank. More on his credentials can be read here.

Amid spike elsewhere in US, Minneapolis rental prices going down

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Recent data from real estate company Zillow show that while rental rates have been rising at a steady rate for most of the US, the Twin Cities metro was one of the two major markets that saw decreases in rental rates. The other city that had a decrease in rental rate was Chicago. In January, rental prices increased a seasonally adjusted 3.3 percent compared to the same period a year ago.

The Great Recession had left many Americans with low incomes and difficulty in saving for down payment, and therefore unprepared for homeownership. Others, meanwhile, are just struggling with expensive housing. At the end of 2014, homeownership rate went down to 64 percent, which was the lowest level it has been at in 20 years.

With the job market improving, more millennials are expected to rent apartments. Developers, meanwhile, have started to respond to the increased demand and there has been a 24.5 percent increase in groundbreakings for apartment complexes.

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While rental prices increased for most of the country, the median price in Minneapolis went down 0.3 percent to about $1,500. Renters are reported to have been taking advantage of the fact that Minneapolis has deviated from the nationwide rental pricing trend. With the decrease in rental prices, people looking to rent can expect to find a robust market with several choices available.

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Steve Liefschultz is a banker, a real estate investor, and the owner of a real estate development and management company in Minnesota. For more news and updates on the Minnesota real estate market, follow this Facebook page.