Minnesota Rental Portfolio Guide
What you need to know before building or growing a rental portfolio in Minnesota: property tax burden, state income tax, security-deposit rule, source-of-income law, and the metros that actually cash-flow after accounting for local taxes.
Tax burden on Minnesota rentals
Property tax
1.11%
effective rate on median home value
At 1.11% effective, the property tax burden is above the national median (rank 32 of 51). Bake the full annual tax bill into every underwrite; a 2% effective rate on a $400K home is $8,000 a year that has to come out of rent before mortgage.
State income tax
9.85%
top marginal rate
A top marginal rate of 9.85% is high nationally. Rental portfolio income at scale takes a significant state hit on top of federal, so serious operators lean hard on depreciation, cost segregation and 1031 deferral. Long-term hold economics reward staying under the top bracket where possible.
Security deposit rule
No statutory cap on security deposits. Landlords set the deposit at whatever the market accepts, typically one to two months' rent, sometimes more for higher-risk applicants or pets. Local ordinances may still apply.
Deposit rules change; verify current statute before drafting a lease.
Best cash-flow markets in Minnesota
Modeled monthly cash flow on a median-priced single-family purchase at 20% down, 30-year fixed, using Minnesota’s 1.11% effective property tax rate plus 25% of rent for insurance, maintenance, vacancy and management.
| Market | Median price | Median rent | Annual property tax | CF / month |
|---|---|---|---|---|
| Austin, MN | $205,004 | $977 | $2,276 | $-532 |
| Bemidji, MN | $267,412 | $1,457 | $2,968 | $-557 |
| Duluth, MN | $264,350 | $1,381 | $2,934 | $-594 |
| Rochester, MN | $343,121 | $1,693 | $3,809 | $-846 |
| Winona, MN | $282,286 | $1,191 | $3,133 | $-848 |
| Mankato, MN | $309,967 | $1,326 | $3,441 | $-917 |
State median across the metros: $318,864 home, $1,313 rent, $-961/mo modeled cash flow.
Track your Minnesota rental portfolio
The Pro Portfolio Tracker rolls up every property in your portfolio, auto-revalues them monthly against local price data, and flags DSCR risk and equity milestones. Each Minnesota property carries the state-specific tax burden shown above through to the cash flow calculation.
Property tax rate: Tax Foundation. Security deposit rule: state statute. Verify current law before making decisions. Statutes change and this page is a planning reference, not legal or tax advice.