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.