Archive for October, 2007

Why Buying Properties at Sheriff Sales in Minnesota is a Bad Idea

There is so much information out there in books, television, and seminars about buying properties going into foreclosure. Many “experts” recommend that you buy the properties at the sheriff sale or “on the courthouse steps”. There may be great opportunities in other states, but in Minnesota, buying properties at the Sheriff sales is typically not [...]

There is so much information out there in books, television, and seminars about buying properties going into foreclosure. Many “experts” recommend that you buy the properties at the sheriff sale or “on the courthouse steps”. There may be great opportunities in other states, but in Minnesota, buying properties at the Sheriff sales is typically not a good idea and it can turn out to be a terrible situation. Here’s why:

At the Sheriff Sale:
You, as the investor, would need to show up at the Sheriff sale with the entire amount of the outstanding mortgage amount to “buy” the house. The foreclosing bank would be excited! Unfortunately, you do not receive the deed at the sheriff sale (and therefore do not own it). You will receive a certificate of redemption. After the sheriff sale, you will enter the next phase, which is:

The Redemption Period:
In Minnesota, the owner of a house in foreclosure has 6 months after the sheriff sale to “redeem” the property by securing new financing and paying off the bank that foreclosed on the property. This is not the area of concern, because if the owner secured new financing, you would simply receive your investment back. The concern is that during the redemption period, the owner still has full use of the house. They can remove all the cabinets, the furnace, and even plumbing pipes. They could kick holes in all the walls and doors. At the end of the redemption period, the bank (or the investor) receives the deed to the house AS-IS. That cute house could now be a rehab nightmare. You just overpaid for a destroyed house.

Alternatives:
1. Wait for the house to go into foreclosure and for the bank to own it. In Minnesota, 99% of all bank-owned property listed through real estate brokers and can be found on the MLS.  Buy it then.
2. Contact the homeowner directly and work with them to sell the house to you in a short sale. You way want to work with a qualified Realtor that is experienced in handling short sales as there can be many speed bumps along the way.

Minnesota Investment Property Search

When I am looking for Investment Property for customers, I am not only looking for properties that have the best prices, I am also looking for investment properties that have certain features.  Some of those features are:

Tenant paid utilities:  Almost always, each apartment will have separate electrical, but in Minnesota, many investment properties have one [...]

When I am looking for Investment Property for customers, I am not only looking for properties that have the best prices, I am also looking for investment properties that have certain features.  Some of those features are:

• Tenant paid utilities:  Almost always, each apartment will have separate electrical, but in Minnesota, many investment properties have one heat source.  Whenever possible I pass on those buildings and find the ones where they have separate heat for each apartment.  If you have lived in Minnesota in January, you understand why!
• On-site laundry:  This may be free or paid laundry.  Even if it is free, it will help sell the unit when you are renting.  Most tenants do not want to haul their laundry to a laundromat in the snow in Minnesota.
• Near bus-line:  I frequently am asked about the nearest bus line when renting properties in Minneapolis.  The closer you are to a central bus line the more attractive your apartments will be to prospective tenants. 
• Large rooms and architectural details:  There are many properties that have hardwood floor and old woodwork, especially in Minneapolis.  Many tenants are looking for that old-world charm and will pay a small rent premium for it.
• Good or updated windows:  Many of the properties that I look at in Minneapolis have windows that are 75+ years old.  I am especially excited when I see they have replace some or all of them with newer vinyl or aluminum units to keep out the Minnesota wind!

Although this is not an exhaustive list of features, many of these are important when searching for investment property in Minnesota.

How to Subscribe to a Blog

Have you come across a blog that you love to read (such as this one!), but hate having to check back every day to see if there is an update?  Most blogs have what is called an RSS feed that allows you to get the information pushed to you.  You can receive these updates into Outlook [...]

Have you come across a blog that you love to read (such as this one!), but hate having to check back every day to see if there is an update?  Most blogs have what is called an RSS feed that allows you to get the information pushed to you.  You can receive these updates into Outlook 2007, Internet Explorer 7.0 or specialized news readers such as Bloglines, Google Reader, and rss reader.  Some blogs even have an option to subscribe to an email version that you would receive in any email application. 

Jan O’Brien has written a great article on How to Subscribe to a Blog Using RSS.  Take a minute to read it and please subscribe to my RSS Feed today at:  http://feeds.feedburner.com/MinnesotaInvestmentProperty 

Landlords: Watch your Water Bill

When is the last time you examined your water bill? Are you sure it is correct? How much water should an apartment building, duplex, or 4-plex be using? Allowing toilets to run on and faucets to drip can add $50, $100, even $400 per month in extra expenses. I even had an $800 water bill [...]

When is the last time you examined your water bill? Are you sure it is correct? How much water should an apartment building, duplex, or 4-plex be using? Allowing toilets to run on and faucets to drip can add $50, $100, even $400 per month in extra expenses. I even had an $800 water bill at a single family house because the tenant never told me the toilet starting running all the time.

Excuse the pun, but that was just money down the drain. Never to be recovered. Not put back into the property.

A rise in the water bill can be triggered by several items:

• Dripping faucets
• Running Toilets
• Malfunctioning washing machines
• Outside spickets that are not turned off
• Even more people living in the apartment than you expected (and may be on the lease)
• I even had one police detective tell me that illicit drug manufacturing in a home can use large amounts of water!

Call you municipality and ask them how many gallons or units should be used per month per person. Do the calculation to see how close you are. If your water usuage is outside the norm, stop by at your apartment immediately and hunt around for the offending appliance.

Additionally, don’t assume the water usuage you have been seeing on your bill for years is the lowest it can be. You may be sitting on some cost saving opportunities. Replacing shower heads and toilets older than 10 years can dramatically cut your water bill. Many of the older toilets used 3.5 gallons per flush compared to many today that use 1 gallon! These improvements can pay for themselves within 1 year as well as protect you against the $800 water bill (since the unit is brand new).

Read your water bill the next time it comes in the mail and see if you can stop those pennies, dimes and even dollars from going down the drain.

Flipping Houses Training

I have been asked to do the featured seminar at the upcoming Construction Expo in Minneapolis on October 31 and November 1 about Flipping Properties 101.  If you are interested in learning about Flipping Houses, it will be a great opportunity to get a lot of information in a short 2 hour training.  And best of all, [...]

I have been asked to do the featured seminar at the upcoming Construction Expo in Minneapolis on October 31 and November 1 about Flipping Properties 101.  If you are interested in learning about Flipping Houses, it will be a great opportunity to get a lot of information in a short 2 hour training.  And best of all, the Expo and seminar are FREE!

Some of the topics we will be covering are:

• Can you flip?
• What type of flip are you doing?
• Before you flip!
• Financing your flip
• Developing your flipping budget
• Finding your flips
• Setting your offer price
• During your flip
• Exit strategies
• Plus 30+ minutes of Q&A to answer your questions.

I look forward to meeting you there.

Renting to Celebrities!

Have you ever rented to a celebrity? Maybe your tenant became a celebrity after they moved in. On the blog Landlord Shmandlord, the author writes about phenomenon that can only happen in San Francisco! A guy by the name of Justin started wearing a webcam around on his head 7×24 and streaming the video across [...]

Have you ever rented to a celebrity? Maybe your tenant became a celebrity after they moved in. On the blog Landlord Shmandlord, the author writes about phenomenon that can only happen in San Francisco! A guy by the name of Justin started wearing a webcam around on his head 7×24 and streaming the video across the Internet. Justin has a cult following. This has lead problems with the other tenants in the building and subsequently the landlord looking to evict Justin!

Read the entire here article at What do you do when your tenants are Internet TV celebrities.