Suppose you buy a starter home in Montrose this fall and plan to keep it as a rental after you move up. The ordinance Montrose is drafting could decide whether that plan still works. The proposal started as a way to keep large outside companies from buying more of the town's single-family houses. Then the city's attorney weighed in. Since then, the version with the strongest legal footing, as described in the October 21, 2026 Planning and Zoning meeting agenda, counts rental houses across the city, regardless of who owns them. A citywide count limits ordinary homeowners as well as corporations.
The decision isn't made. Montrose's Planning and Zoning Commission tabled the item on September 9, 2026, and it's back on the agenda for Wednesday, October 21, 2026, at 7:00 p.m. at the Montrose Community Center. Before that meeting, it helps to understand how the proposal got here, because each version would land on different people.
Why Montrose Started Counting Rentals
The price gap explains part of the story. In August 2026, Montrose's median sales price was $314,950. Wright County's was $417,450. The same month, the median was $351,500 in Buffalo and $460,000 in Delano. A first-time buyer and a single-family rental investor run similar math, and in this part of the western metro, that math points to Montrose.
The city said as much at the start. At the November 12, 2025 Planning and Zoning meeting, the city planner estimated about 1,150 detached homes in town, including roughly 70 rentals. He described owner-occupancy as good for civic ties and for first-time buyers' access to homes. That night the commission floated three ideas: a citywide ceiling of about 70 single-family rentals, a six-home limit per owner, and grandfathering for an unnamed Arizona-based company then said to own 14 homes. Nobody voted on any of them.
Montrose already had a separate rental licensing program underway. In August 2025 the city adopted a licensing and inspection policy that took effect January 1, 2026. It called for registration, an initial inspection, a reinspection every three years, and a fee. The November 10, 2025 City Council agenda listed Ordinance 2025-06 regulating rental property. By May 2026, according to the May 13, 2026 Planning and Zoning meeting minutes, the license fee had been revised to $225 per rental home for three years, plus $50 when occupants change. Licensing gave the city something it never had before, which was a list of rental properties with owner names attached. Every cap proposal since then has relied on that list.
The July Version Was Aimed at One Kind of Owner
Once the registrations came in, the numbers got bigger. In January 2026, staff reported 146 rental homes and 38 apartments, with registrations still open until March 1. At the July 8, 2026 meeting, Council Liaison Joe Von Thoma went through the ownership data. The largest single-family holder appeared to be SFR Borrower, which the minutes describe as an entity connected to BlackRock, with about 14 to 15 single-family addresses in Montrose. Keystone and Danielson Real Estate LLC mostly held townhouses, cottages and condo-style units. The next-largest owner of detached houses had about six or seven. The BlackRock connection comes from those minutes. It hasn't been verified independently.
Those minutes also record that Commissioner Kendra Saylor proposed a cap of seven. That number would protect the largest local owner and stop large outside companies from adding more houses. The motion passed with three key terms:
- A limit of seven single-family detached rentals per entity.
- Apartments, townhomes, cottages and condos excluded entirely.
- Owners already over seven grandfathered, but not allowed to license any more houses.
Enforcement would have relied on an affidavit. Every license applicant would disclose how many single-family rentals they own in Montrose, under any name or entity. A false affidavit would give the city grounds to revoke the license. Under that version, someone with one or two rentals would never get near the limit.
Then the Attorney Weighed In
By August 12, the item still hadn't gone to the City Council. The city attorney was preparing the affidavit and registration form and reviewing what the city could legally regulate. On September 9, Alex Furcich of Kennedy & Graven came to answer the commission's questions. According to the minutes, both approaches are still possible. But the one with a court record behind it is a rental density cap, which limits the percentage of homes on a block or across the city that can hold a rental license. Winona's 30% block-by-block limit was challenged in court and upheld. Per-owner caps are on less-tested ground. Furcich called a citywide density cap the most advisable path.
Saylor then raised a point that shapes the rest of the story. Capping how many licenses one owner can hold doesn't limit how many licenses the city issues overall. A density cap does, so it limits every future landlord the same way.
| Question | July per-owner cap | September density-cap direction |
|---|---|---|
| What gets counted | Houses per owner | Rental-licensed houses citywide |
| SFR Borrower's existing houses | Grandfathered | Active, compliant licenses not revoked |
| Total rentals in town | No ceiling | Ceiling, with a waiting list once reached |
| Homeowner renting out a former residence | Far below the limit | Competes for room under the cap |
| Legal footing per city attorney | Less tested | Upheld in Winona |
Under either version, the corporate houses already in Montrose stay rentals. Furcich advised against revoking active, compliant licenses. He recommended that a license simply not be renewed if a property falls out of compliance, that new applications be denied once the cap is reached, and that the city consider a waiting list. A density cap stops growth in the total number of rentals. It doesn't shrink what corporate owners already hold.
Where the Number Might Land
The commission's working figures don't all measure the same thing. City Planner Stephen Grittman cited about 1,500 single-family housing units and an overall rental rate of about 22%. Deputy Clerk Marie Leistiko estimated about 270 rental units in total, including apartments and condos. Von Thoma estimated about 1,600 rooftops, put the single-family rental share at about 7.8%, and noted that 10% would be about 160 units. The 22% figure includes every kind of rental. The 7.8% figure covers single-family homes only. By Von Thoma's rough math, 7.8% of 1,600 is about 125 homes, which would leave room for about 35 more licenses under a 10% cap.
Commissioners clearly had homeowners in mind. Von Thoma recommended setting any percentage at least slightly above the current rate. He didn't want to block a homeowner who buys a new house and wants to keep the old one as a rental. Vice Chair George Schaust added that a hard cap could box in residents whose circumstances change. Several exceptions came up: renting to immediate family for financial reasons, snowbirds renting their homes temporarily, and deployed service members. Furcich noted that Winona's ordinance includes the service member exception.
None of those exceptions are written yet. The commission asked for exact counts of single-family rentals, rental rates by area, and examples of how Winona, Anoka, West St. Paul and Mankato structure their caps. It voted unanimously to table the item. Grittman suggested presenting the data in October and possibly holding a public hearing in November. The November meeting has moved from November 11 to Wednesday, November 18, 2026. Grittman also noted that the change would require a zoning ordinance amendment, a public hearing before the commission, and adoption by the City Council. As of the September meeting, Leistiko said the city had received no complaints about the proposal.
How This Shows Up in a Montrose Purchase
Montrose's August 2026 numbers point to a market with more choice for buyers than its neighbors. There were 33 homes for sale, 5.1 months of supply and a median of 55 days on market. Buffalo had 2.5 months of supply and Delano had 3.1. Montrose closed only six sales that month, so one month of data moves around easily. Even so, a buyer here has time to think about how long they'll keep the house.
That timeline matters more than it did a year ago. If you expect to own the home for ten years and live in it the whole time, a rental cap doesn't change much. If you're buying a starter home and planning to rent it out after you move up, your exit plan may depend on two things: a percentage the city hasn't set yet, and whether a license is available when you apply. If you're selling a house that's currently licensed as a rental, ask how a license would carry over before you assume an investor buyer can keep renting it. The ordinance isn't written yet, so the honest answer for now is that it's still being decided.
Investor activity in the wider metro explains why Montrose isn't the only city looking at this. A May 26, 2026 Minnesota Star Tribune report described investors buying in Maple Grove, Fridley, Brooklyn Center and Inver Grove Heights, including one firm that bought nearly 30 Maple Grove houses. The paper reported that some suburbs are responding with local-manager rules or caps on rental concentration. Montrose isn't named in that coverage.
FAQ
Is the Montrose rental cap in effect now? No. The Planning and Zoning Commission tabled it on September 9, 2026, and it returns to the agenda on October 21. Adoption would still require a public hearing and a City Council vote.
Do I need a license to rent out a house in Montrose today? Montrose's rental licensing program, which took effect January 1, 2026, requires registration and inspections. As of May 2026, the fee was $225 per home for three years. Confirm the current requirements with the city before you sign a lease.
Didn't Minnesota ban corporate ownership of single-family homes? No. The Star Tribune reported that a proposed restriction on owners of 100 or more homes did not pass in 2026. That leaves cities like Montrose to write their own rules.
If you own a Montrose home and are deciding whether to sell it or keep it as a rental, or you're buying with a possible rental plan down the road, The Realty Lab can help you think through the timing while the city works out its rules. Start with a clear number on what your house is worth today. Request Your Free Home Valuation.
This article is general information, not legal, tax or financial advice. Consult a qualified professional about your situation.