Leif Jonasson just recently became a homeowner, but that’s not all: he became a landlord, too. In less than a year, the 28-year-old mechanical engineer went from living in an apartment in St. Paul with roommates to buying a duplex in Minneapolis and renting out the bottom floor to a couple. “It made sense to me to have half of the mortgage be paid by somebody that was living in half of my house [with] a wall separating us,” Jonasson told Fortune.
It’s a new experience for him—to say the least. Since he lives there himself, he said, he has an even more vested interest in maintaining the home, and he’s learning a lot about that. “Whenever something goes wrong, it’s a little bit of a crash course and figuring out how to best solve it,” he said.
Still, his tenants are essentially his neighbors and vice versa, which makes for an interesting situation with different responsibilities. In some ways, he says he’s had to pull back financially because it always feels like there’s something to fix or another bill coming due. As we finished up our phone call, he said he was going to the hardware store because there was yet another thing he had to fix—and trips to the hardware store can get expensive, he added. He now has to budget around landlord expenses coming down the pike. For example, Jonasson has to get a new water heater, and the installation price isn’t cheap.
Even getting to the stage of being a 28-year-old landlord required Jonasson jumping through the hoops of what, four years after the pandemic began, remains a very heated sellers’ market.
‘It was not cool’
Jonasson bought his first home nearly a year ago, in March, three years after the pandemic began and home prices had boomed by 40% nationwide—and, let’s not forget, mortgage rates more than doubled. He wanted a duplex, and, like some members of his generation, he said he couldn’t get on the housing market ladder without help. “I was able to get a gift from my family to assist in a down payment,” he said, without elaborating. But even with that help, it was a tough market at first. His housing market was still hot; “it was not cool—everything was going fast,” he said.
One time, while Jonasson was looking, he was the first to see a duplex that had only been on the market for four hours. “By the time I got an offer in, I was the 12th offer,” Jonasson said. The offer that ended up beating his had an unlimited escalation clause, he added.
With the duplex that eventually became his home, he was one of the very first people to see it. He attempted to negotiate with the owner about aspects of the house he wanted the sellers to change, and he heard back: “we have 10 other offers on the table and we don’t really care to do anything.”
“I walked into this house that I wound up buying, and within five minutes, I was like, I have to put an offer on it,” Jonasson continued, “because if I don’t there’s going to be multiple offers, potentially better than mine.”
He bought his six-bedroom, two-bathroom, 3,000 square-feet duplex in south Minneapolis for around $390,000, with a mortgage rate in the 6% range, he told Fortune, without elaborating. Roughly seven months later, mortgage rates reached a more than two-decade high at just above 8%, so in hindsight it seems like a good move. Still, he remembers right before locking in, mortgage rates jumped half a percentage in only a day. “I really needed to pull the trigger,” he said.
The average home value in Minneapolis has been roughly flat over the past year, increasing 1% to $303,761, according to Zillow. Over three years, however, from March 2020 to March 2023, the average home value jumped almost 10%. Meanwhile, the median rent for all bedrooms and all property types in the city is $1,500, which is 25% lower than the national average, per Zillow.
Either way, he’s glad he paid what he did, rather than buying a much larger and more expensive place. When he was looking, the entry point for most duplexes in the neighborhoods he preferred were around $350,000, and the nicer ones were around $500,000, which he said was out of his price range. But he said, “everything works that’s supposed to work…it wasn’t as polished as some of the other houses I looked at.”
And Jonasson said that the sellers’ market didn’t burn him too much from trying again, some day.
“I would buy another house,” he said, “if it ever came down to it, it’s not a horrible experience.”
