Thirty Years of Investing Meets Targeted Geographic Farming

Alex Mysinek welcomed Sharon Murphy of Epic Realty to the podcast for a conversation that covered a lot of ground. Sharon has built her real estate business through very targeted geographic farming, has about thirty years of personal experience investing in real estate, and has more recently expanded from traditional long term rentals into furnished midterm rentals. Her story shows how a single family decision can grow into a lifelong wealth building strategy.

How a Duplex for a Family Member Started It All

Sharon’s investing journey began in 1998, well before she became a realtor. Her husband’s sister needed a place to live, and her husband had always toyed with the idea of buying a duplex. They found one in Maplewood, and his sister moved in. That first property taught Sharon an important lesson: rental real estate often produces little income at the start and works more like a wealth building business than an income business. Because they charged their family member below market rent, they bought a fourplex with better cash flow to offset the negative cash flow. Her husband, Mike Murphy, later earned his real estate license, another family member needed a place, and a third property, another duplex, followed. Sharon joined the business in 2008. She says the portfolio grew naturally rather than from a grand plan.

Know the Local Rules Before You Buy

One of the biggest lessons Sharon shares is that city regulations matter. Maplewood did not have a rental license program until about five years ago, so she never paid a fee or went through an inspection there. When the couple moved some investments into St. Paul, they found a highly regulated environment with detailed inspection requirements. She now makes sure clients go in with eyes wide open about what the city requires.

Rent Control and Resale Value in St. Paul

Sharon explains that St. Paul limits annual rent increases to three percent, which may not keep pace with insurance, property taxes, or a new roof. There are ways to request increases of up to eight percent through the city, and rental demand in St. Paul is strong. Her advice is to raise rent by the maximum allowed every year and never skip one. Skipping increases can hurt resale value, because buyers run the numbers, and low rents can limit the price a property can bring. She admits she was too nice to some great tenants in the past, leaving rents unchanged for five or six years, which you cannot do in a rent controlled setting. Alex adds that the buyers most likely to purchase a duplex that does not cash flow well are owner occupants who want to house hack. Sharon notes that the two St. Paul properties she sold recently were bought by owner occupants, who also sidestepped the certificate of occupancy inspection requirement.

Furnished Midterm Rentals Explained

Sharon describes the main difference of a midterm rental as providing all of the furniture. She keeps utilities in her name, since guests usually stay 30 to 90 days, often on a work assignment. She got into it because she wanted a getaway place for herself, family, and friends without paying for a cabin out of pocket. She bought a duplex in Amery, Wisconsin, steps from lakes and a 14 mile non-motorized trail, with a long term tenant upstairs who keeps the rent low, mows the lawn, and stays quiet. She earns her income from the downstairs unit, visiting between stays to clean, paint, repair, and wash linens. Her insurance premium stayed the same as before because the upstairs tenants are long term.

Pricing for Midterm Tenants and Why Furnished Finder Works

Sharon uses Furnished Finder, which costs about two hundred dollars a year. Because she already had many years of long term rental experience, she did not need its support services. She finds it less hands-on than Airbnb, which demands strong turnover crews, extra lodging taxes, and high platform fees. She says she overimproved the unit after buying it in 2019, since the typical Furnished Finder client is price sensitive and often traveling for work with housing costs elsewhere. She priced her two bedroom, one bath unit at $1,425 a month with all utilities included and has had no trouble keeping it rented. Alex notes that investors near the airport could serve flight crews who need short stays.

Why 1031 Exchanges and Depreciation Matter

When you sell a non-owner occupied investment property, you generally owe capital gains tax on the gain. Depreciation, which Sharon calls a fake expense because no check is written, helps offset rental income each year, but it is recaptured when you sell and adds to the tax bill. A 1031 exchange is a way to defer that tax by moving proceeds into another investment property. Sharon stresses that you must identify a qualified intermediary before the sale, because the intermediary holds the proceeds in trust. She also says her understanding is that heirs may receive a stepped up basis, which can erase deferred tax, though she is not a tax professional and encourages investors to consult one.

Build a Team Early and Use Good Resources

Both Sharon and Alex emphasize the value of a referral network. A first-time investor benefits from working with a realtor who knows investing, a lender, a CPA, and an intermediary who communicate early. Sharon suggests the Minnesota Attorney General’s office as a starting point, which offers a plain language booklet on landlord and tenant laws of about thirty pages. She also gives her investor clients lifetime advice, with her phone always on for questions.

How Geographic Farming Builds a Business

Sharon credits her husband Mike as the engine behind their farming strategy. They live in Eagan, and local depth gives them an edge at listing appointments and open houses, where boots on the ground matter. For about twenty five years they have used oversized open house signs, with a goal of around eleven signs in their farm area every weekend during the busy spring and summer months. Mike has also hand delivered materials, sent postcards, advertised on grocery carts at the local Cub, and coached youth sports, building relationships while having fun.

What a Realtor Wants From a Lender

When asked what matters most in a lending partner, Sharon says availability. She tries to stay in her lane with buyers, so she values a lender who can answer questions on a Sunday afternoon, especially on FHA loans or when she is unsure how much a buyer is putting down. Alex agrees that credit unions have good loan officers and competitive rates, but weekend availability can make a big difference.

Connect With Sharon Murphy

Sharon’s favorite Eagan restaurant is Andiamo, a neighborhood Italian spot. To talk about buying, selling, investment properties, or 1031 exchanges, you can reach her at 651-399-7124 or at [email protected].

Alex Mysinek helps Minnesota buyers and investors with mortgage financing and is always available to talk through your options. Reach out to Alex to start planning your next purchase.

Sources

MNAttorneyGeneral.gov
IRS.gov
StPaul.gov
FurnishedFinder.com
Realtor.com