Small Multi‑Units by US‑14/61: Inspection & Underwriting Tips

Thinking about a duplex, triplex, or fourplex along US‑14/61 in La Crescent? With river views, bluffside trails, and a short hop into La Crosse, this corridor can deliver steady rental demand and a lifestyle you love. To make a smart buy, you need a clean inspection plan and underwriting that fits 2–4 unit properties. This guide gives you the local checks, loan basics, and red flags to watch so you can move forward with confidence. Let’s dive in.

US‑14/61 advantages in La Crescent

La Crescent sits right across the river from La Crosse, which creates a quick commuter path that supports rental demand. Median gross rent is about $1,059 according to Census QuickFacts for La Crescent. Inventory here is thin, so asking rents can swing month to month. Use multiple sources for comps and keep your rent estimates conservative.

Permits and rental rules in La Crescent

Start by confirming if the property is inside city limits. Inside the city, the Building & Zoning office manages permits and code, which you can check through the City of La Crescent Building & Zoning page. Properties outside city limits often rely on septic systems and fall under the county’s planning and SSTS rules, outlined by Houston County Planning & Zoning.

Minnesota has statewide landlord‑tenant requirements that matter for inspections and operations. For example, from Oct 1 to Apr 30 you must maintain minimum heat levels in rental units, detailed by the Minnesota Attorney General’s landlord‑tenant guide. La Crescent also runs local initiatives like Crime Free Multi‑Housing. Ask about any current rental licensing or inspection requirements.

Inspection checklist for 2–4 units

Use this framework to scope issues, set repair budgets, and avoid lender surprises.

Flood risk and drainage

• Pull a FEMA flood map for the exact parcel and note any Special Flood Hazard Area. Lenders require flood insurance for properties in SFHAs with federally regulated mortgages. Start with the FEMA Flood Map Service Center.
• Check grading, downspouts, sump pump discharge, and basement moisture. River towns often see seasonal water pressure on foundations.

Structure and moisture

• Inspect foundations for cracks, bowing, and frost heave. Note efflorescence or past water intrusion.
• Verify basement bedrooms have compliant egress and that any finished space is permitted.

Roof and insulation

• Confirm roof age, flashing, and remaining life. Ice dams are common in Minnesota, so assess attic insulation and ventilation.
• Look for condensation staining that points to airflow or insulation gaps.

Mechanical, plumbing, electrical

• Heating must reliably meet legal minimums during the heating season. Review age, service records, and whether systems are shared or separated by unit.
• Verify carbon monoxide protection near sleeping areas, which is required under Minnesota’s CO alarm statute. Test smoke alarms and confirm proper placement.
• Check electrical service size, panel condition, and wiring type. Older 60‑amp service or knob‑and‑tube often triggers lender repair requirements.

Unit safety and compliance

• Each unit should have a legal kitchen, safe ingress and egress, and proper fire separations where required.
• For homes built before 1978, provide the federal lead disclosure and plan for RRP‑compliant work during renovations. See the EPA’s lead disclosure guidance.

Septic and wells

• If the property is not on city sewer, obtain the septic permit, as‑built, pump records, and any compliance letter. Learn the rules and inspection process through the MPCA septic systems page and coordinate details with Houston County Planning & Zoning.
• For wells, test for potability and document any shared well agreements.

Documents to collect

• Photos of all elevations, roof, basement, mechanicals, and panels.
• Current leases, rent roll, and security deposit records.
• Permit history and any Certificates of Occupancy or septic compliance letters.

Underwriting basics and loan options

Owner‑occupants can use FHA financing for 2–4 unit properties when living in one unit. FHA enforces minimum property standards and requires an appraisal that will flag health and safety repairs. Learn program basics on the FHA 203(b) page.

Conventional loans also allow 2–4 units. Lenders often count a portion of market or lease rents from the other units to help you qualify. Fannie Mae’s guidance explains how rental income is documented and calculated, including common 75 percent treatments for subject property income, in the Selling Guide for rental income.

Build a conservative pro forma. Many underwriters assume 5 to 10 percent vacancy and expense ratios that can range from 30 to 50 percent depending on who pays utilities, maintenance scope, and management model. Investor loans may also look for a reasonable DSCR, while owner‑occupied loans focus on your DTI.

Due diligence timeline

• Market check. Pull local rent comps and recent small multi‑unit sales. Use Census data for grounding and keep rent projections realistic.
• Permits and title. Request a permit history through the City of La Crescent Building & Zoning page and confirm any additions or conversions were permitted.
• Appraisal early. Order a 2–4 unit appraisal and use it to confirm market rent and repair needs.
• Full inspection. Add specialists as needed: HVAC, electrical, sewer/septic, and water testing.
• Lease and deposit review. Verify rent amounts, terms, and deposit handling under Minnesota law.

Red flags to avoid

• Property in a high‑risk flood zone without practical mitigation or with repeated flood losses.
• Illegal unit conversions or missing egress in sleeping rooms.
• Undersized electrical service or obsolete wiring that cannot support separate unit loads.
• Failing or non‑compliant septic with no feasible repair area.
• Unpermitted work that changes bedrooms, kitchens, or exits.

Local contacts and help

• City of La Crescent Building & Zoning for permits and local code questions.
• Houston County Planning & Zoning for septic, shoreland, and properties outside city limits.
• A 2–4 unit appraiser who knows La Crescent and La Crosse micro‑markets.
• A local property manager for real rent, turnover, and maintenance estimates.

Ready to walk a duplex or fourplex along US‑14/61 and make the numbers work? Get local guidance that blends lifestyle with smart underwriting. Reach out to Cam Kelly | OneTrust Real Estate to start your due diligence and tour properties with a plan.

FAQs

What flood checks do I need in La Crescent?

• Pull the parcel on the FEMA Flood Map Service Center, confirm if it sits in a Special Flood Hazard Area, and price required flood insurance before you write your offer.

How are rents verified for a duplex or fourplex purchase?

• Lenders look for leases, an appraiser’s small residential income property report, and sometimes a portion of projected market rents per Fannie Mae’s rental income guidance.

What should I check if the property has a septic system?

• Ask for the permit, as‑built, pump records, and any compliance letter, then confirm rules and next steps with Houston County Planning & Zoning and review the MPCA septic overview.

Can I use an FHA loan to buy a fourplex and live in one unit?

• Yes. FHA allows 2–4 units with owner occupancy, applies minimum property standards, and requires an appraisal, as outlined on the FHA 203(b) program page.

What safety items do lenders often flag before closing?

• Working smoke and CO alarms per Minnesota statute, adequate egress for bedrooms, reliable heat during the heating season, and obvious electrical hazards are common repair conditions.