Two New North Minneapolis Listings

Check out our Investment Property Seminars under upcoming events or click the button to search the MLS. Scott

I am excited and pleased to be representing 2 different sellers in North Minneapolis.  Both of these owners have done extensive renovations to their properties:

3443 Washburn Ave N-This home was formerly a TJ Waconia property and has lost its rental license for good.  It is in a very quiet part of north Minneapolis.  It features 4 bedrooms and 2 baths with all the original hardwood floors and woodwork.  It has new kitchen, bathrooms, paint, carpet, plumbing and many other changes.  See more about it here.

2726 Sheridan Ave N-It took 18 months, but this home was skillfully rebuilt from the walls up.  The current owner purchased it and tore it down to the studs.  Over the last 18 months they have replaced literally everything inside and out.  All work was done with full permits and inspection and the attention to detail is second to none.  You must see this home.  See my listing site for more pictures.

If have any interest in these homes, please contact me for a private showing.

Landlord/Tenant Law Training

I was thinking about using some cliche’ to start this post off with like:  “You can’t teach old dogs new tricks” or “you are never too old to learn”, but I just couldn’t bring myself to do it!  I was invited to a training course about a month ago that was sold as landlord training.  The cost was $45 but the speaker wanted me to attend to see if it was something that I could recommend to my investors and blog readers.

I attended this seminar last week.  I was very skeptical that this wasn’t going to be much more than a very basic landlord class.  Boy was I wrong!  This class was informative and interesting, even for me (a guy that has owned lots of rental properties and helps investors get started as landlords almost daily).  This class is actually taught by an attorney from the Home Line Tenant Hotline.  They provide free legal advices to tenants and will even help them in court in certain situations.

The speaker was one of the attorneys from Home Line.  He was engaging and interesting, but what I found fascinating was how he and his peers looked at different situations that we as landlords encounter every day.  He was able to show how they defend the tenants by using the landlord’s ignorance of the laws and statutes.  A couple quick examples were:

• They are often able to have leases invalidated because the landlord has a PO Box as the mailing address (when the state statute requires a physical address).  I realized that I was taught as a landlord to use a PO Box to get your checks.  I am sure there are many other landlords out there that are breaking this rule.
• If your lease converts to a month to month lease for a tenant, you legally must send them a written notification 75-90 days prior to the expiration of the lease telling them about the automatic renewal. This notification can only be sent during that 75-90 window and must be sent via certified mail or personal service.  How many landlords do you think actually do all those steps?
• If you have  tenant that stays on past the end of the lease, they are a hold-over tenant.  If you accept money from them, you have entered into a new oral lease and you can not evict them.
• We also discussed many other legal issues such as fair housing and discrimination.

These and many more gaps/problems in landlord procedures were pointed out to us in class.  I was writing furiously because I could see places that I needed to shore up my processes to keep myself protected.  Not only could this information help you be a better landlord, it may help you stay out of court!  I recommend that every landlord take this class.  It was invaluable.

The next class is coming up on September 11, 9am-3:30 at the William Mitchell College of Law.  Lunch is included.  Contact Please contact Alex at (612) 728-5770 x 112 or alexh [at] homelinemn [dot] org with any questions or to register.

Returning the Security Deposit

I attended a landlord seminar today that was hosted by an attorney that represents tenants.  It was a fascinating look at landlord issues, but with a tenant advocate teaching it.  He spoke about many of the loopholes and other places that landlords have a tendency to not follow the law or the letter of their leases and how the tenants can win lawsuits or defend against evictions.

There was quite a discussion about security deposits and I thought it made sense to lay out some of the gotchas and give you some reminders on how the process is supposed to work.

• If possible, take pictures of the unit prior to the tenant moving in and store them on your computer.  The attorney explained that often the “move-in” form is simply filled in with OK and a line through the entire column for each room.  He stated it was easy to defeat this in court as meaningless.  Pictures before the move-in will give you considerable ammunition if you get pulled into court by the tenant for the amount withheld from the security deposit.
• A landlord has 3 weeks from the date that the tenant moves out or the receipt of the tenant’s new address, whichever is later, to get the security deposit or security deposit disposition letter in the mail.  That is the law, but the attorney recommended that even if you do not know the new address of the tenant, you should still put the letter in the mail to the old address.  If that letter forwards to the new address, great.  If it is returned, put that in your file so you can show you tried.
• Even if at the end of the lease or tenant’s occupancy, there is nothing left of the security deposit, you must still send a written disposition letter.  Even if the tenant owes you 3 months of rent, do not neglect this.
• If you fail to send the letter or security deposit within 21 days, the tenant can take you to court.  If they win, you owe them double the entire security deposit, plus interest (without any deductions for missed rent or damages), plus $500 as  a penalty.  For example, if the damage deposit was $1000 and the tenant lived there 1 year, the amount would be $1000 + $5 + $1000 + $5 + $500 = $2510.  That is a lot of money!
• You can only deduct for physical damages beyond “ordinary wear and tear”.  So what is wear and tear?  Although that is somewhat subjective, repainting and cleaning carpets is NOT considered excessive, normally.  If they are really worn or dirty, you could make a case that it is excessive damage (and I have seen excessive).  Make sure to document this fully.
• When you put amounts on the security deposit disposition letter, make sure to use real numbers.  A friend of mine was sued by a tenant for the damage deposit money withheld.  The tenant won the case.  The judge said that if my friend would have had receipts he would have easily won.  Do not put round numbers for supplies and repairs.  Did you really spend $20 on cleaning supplies?  Was the carpet cleaner really $60?  Use the exact figure.  It may help convince the tenant that you have receipts and you may not end up in court.  Use a time sheet if possible to account for your time if you do the work.  Do not round the hours.
• Before you start any work or cleaning, take pictures of all the problems.  Then you can use those pictures to compare to the before photos if you get to court.  As a side note, if your tenant leaves the property a mess and they are on rental subsidies, like Section 8, send the after pictures to their case worker.  It may help the next guy (and you can get some secret pleasure out of getting the tenant in trouble).
• Do not always assume you are keeping the security deposit.  I know some landlords that are keeping the deposit despite having a good tenant.  They find anything they can not to give it back.  Be honest and fair.  Otherwise you may end up in court.
• Effective August 1, 2010, the time you as a landlord are required to store your tenant’s left over stuff has been reduced to 28 days.

Following the letter of the state law and the details in your lease is the proper way to keep yourself out of court fighting over the disposition of security deposits.

Free Investment Property Seminar

This is not an education seminar where you will be prompted to purchase more extensive coaching in the future for an exorbitant fee.

THERE IS NO REGISTRATION FEE!! TO ATTEND.  WE ARE NOT SELLING TAPES, BOOKS, OR COACHING!

Come and spend about an hour with us in a no pressure presentation about investment properties.  Learn about the financing, the difference between different types of properties, and even some landlord tips.  At the end of the seminar; you can leave with nothing more.  If you are still interested in investment properties, we would be happy to help you achieve your goals.  If not, no big deal, it was nice to meet you.

This seminar is held in Burnsville.  You can register here.

Tips for First Time Landlords

When it comes to being a first time landlord, there are plenty of things that need to be considered aside from purchasing flats to rent. Being a landlord is a great way to bring in some extra money and even make a living; this, however, is not to say that it is easy or stress-free. Dealing with tenants can be rather difficult, and ensuring that they pay on time and do not cross you can be plain impossible. Fortunately, proper planning will ensure that you can make a prosperous career out of being a landlord.

That said, here are a few tips for first time landlords.

1.) Purchase the Right Properties
Buying the right flats to rent is one of the most important things that any landlord can do, and is usually the first step in the process of becoming a successful business person. You may also want to purchase a house, as many people would prefer to live in a house over a flat. Once you have purchased at least one property, you can begin fine-tuning your business.

2.) Choose Your Tenants Wisely
Choosing the tenants that you will rent to is one of the most important decisions you can make as a landlord. Remember that the majority of the money (most all of it, actually) in this business will come from your tenants, so you will want to be sure that they are good for it from the very beginning. Doing a credit check and holding a lengthy interview is the best way to ensure that a potential tenant is worth renting to. It is highly ill-advised that any landlord rents to a random tenant.

3.) Be Firm
One of the most common mistakes that first-time landlords make is that they let their tenants take advantage of them by allowing them to pay late (or not at all) for their rent. This is terrible practice, and can set you up for disaster in the future. Always be firm when it comes to rent.

Protecting Yourself When Buying Tenant Occupied Properties

Most of us are so used to buying REO properties in the last couple years, we forget all the details of buying a home with tenants in it!  I know I do.  In fact, I am so used to showing vacant houses that I recently showed up 2 hours late to a house (assuming it was vacant and not a big deal to be late), only to walk up the sidewalk and find the lights and TV are on!  Oops.

Writing offers on tenant occupied properties needs a little more attention to ensure that you get what you think you are getting when the closing is over.  If you miss something or simply assume everything will be fine, you may get a rude awakening after closing.

Here is one example:  my client put in an offer on a short sale in February and the seller accepted our offer.  During that process, we got copies of the lease and confirmed the rent amount.  We showed up at the closing today to find out that the landlord had signed a new lease with the tenant in March, dropped her rent by $300 and let her use the damage deposit to cover the March rent when she was out of work.  Now we received a much smaller amount of cash at closing, no damage deposit, and need to have a delicate conversation with the tenant that we’ll be raising the rent $300 (and she needs to pay a new damage deposit). I can see I need to update my boilerplate rental addendum.

Here are some tips on how to craft your purchase agreement when buying investment properties with tenants in them.  Most of these will take the form of an additional addendum on the purchase agreement.

• Write into the purchase agreement that the seller is not allowed to sign any new agreements with the existing tenants without written approval from the buyer. This would have fixed our problem today or at least have given us more notice than 1 hour before closing.
• In the purchase agreement addendum, write in the amount of the security deposit and language that effectively says:  “Seller will provide the buyer the security deposit in the amount of $xxxx at the closing in certified funds, regardless of the disposition of those funds between the tenant and seller, as long as tenant remains in the property”.
• Do not allow the old landlord and his bad rent collection skills to start you off in the hole.  Add language that the rents will be prorated at the time of closing between seller and buyer, again regardless of the collection status of the rents.
• Also, make sure the seller understands that you want to be notified instantly of any tenant issues at the property, such as rent collection, notice to move out, or other problems.  This can be especially important when dealing with short sales that can take months to close after you offer on the property.
• Do not allow the landlord to sign any lease extensions as it is a good idea to let them roll month to month so you can see how the tenant perform with everything prior to signing a new lease.  Worst case, if you don’t like them, give them the 60 days notice and move them out.

Buying an investment property that has tenants in it takes some additional due diligence and purchase agreement language to insure that you get what you think you are getting.