Archive for March, 2008

7 Questions to Ask Your Realtor About Investment Property-My Response

Several days ago, I referred to a great post by Chris Lengquist’s at Kansas City Real Estate Investing named: 7 Questions To Ask Your REALTOR Before Looking For Investment Property. If you have read my blog for any length of time, you may have noticed that I don’t do much (if any) self promotion. Without [...]

Several days ago, I referred to a great post by Chris Lengquist’s at Kansas City Real Estate Investing named: 7 Questions To Ask Your REALTOR Before Looking For Investment Property. If you have read my blog for any length of time, you may have noticed that I don’t do much (if any) self promotion. Without selling myself too heavily, I thought it would be interesting for me to answer those 7 questions so you can see how a full-time investment property Realtor would respond:

1. Are you an investment property owner and/or do you take any specialized classes to assist you with evaluating real estate investment property? I have been an investment property owner since 2002. I own and manage almost 30 units from single family to multi-family in many different parts of the Twin Cities. Additionally, I have attended numerous classes and seminars over the years both as an investor and a Minnesota Real Estate Agent.
   
2. How long have you been working with investment properties? As I mentioned above, I have been an investor since 2002, but I have specialized in investment properties as a Realtor since I started. I sell only about 1-2 owner occupant houses per year.
3. Can you show me how you evaluate an income property, numbers wise? I use a customized spreadsheet that I built over the years to analyze large volumes of investment properties. It allows me to pull down up to several hundred properties at a time from the MLS and find the best values for my customers in a matter of minutes. See the spreadsheet on the right (click to see a larger version).
4. What are your feelings about cash flow or appreciation? Cash flow is a must. I know that there are other “gurus” out there that say negative cash flow is OK. I disagree. In this market, you can absolutely buy a nice property at a great price and have cash flow also. Appreciation is what we are all in this game for. I like my tenants, but I would rather be spending that time with my family. The cash flow is fine, but I am waiting for the pot of money at the end of the rainbow when I sell everything!
5. What are your hours of availability? I carry a PDA and check it most of the day. I also spend about 2-4 hours per day on my laptop. Typically, I am available from 8am to 8pm during the week and weekends by appointment. This might not be normal for most real estate agents, but it is just how I work.
6. Do you require a Property Management agreement in addition to an Exclusive Buyer’s Agency Agreement? No. We simply sign a Buyers Representation Agreement once we begin to work together.
   
7. Who do you work with concerning inspections, repairs, maintenance and property management? Over the years, I have accumulated many contractors and repairmen that I always refer to my customers. I also always try to have at least one inspector and property manager that I can recommend to my customers.

The above questions are important to ask your Realtor when venturing into Investment Real Estate. I hope my answers give you some insight into what a full-time investment Real Estate agent can offer. Why not work with someone that specializes in investment property?

Stupid Property Repairs #2

I will be the first one to admit that I am not very good at sheetrocking and taping. I don’t do it often enough and it takes a bit of finesse that I just don’t have. Well, whoever was attempting to do this repair is obviously not qualified to even pick up a taping knife. [...]

I will be the first one to admit that I am not very good at sheetrocking and taping. I don’t do it often enough and it takes a bit of finesse that I just don’t have. Well, whoever was attempting to do this repair is obviously not qualified to even pick up a taping knife. This was inside next to the front door of an investment property in Minneapolis.

Here is the wall they were trying to repair (click on the picture to make it larger):

Now the wall repair is not why it ranks as a Stupid Property Repair. Take a look at this next picture. They didn’t even bother to remove the switch plate when they mudded in the sheetrock. They figured just a little more taping mud around the switch plate was what they needed! It is actually inset in the wall about a 1/4″. Nice!

If you have a Stupid Property Repair, take a picture and send it to me. It just might make a post of shame!

Have you always wanted to buy investment property, but never knew where to start? Don’t Wait! Get Started now.

7 Questions to Ask Your Realtor About Investment Property

I have always preached that if you are going to buy investment property, you must work with a real estate agent and a mortgage broker that both own and specialize in investment property.  Chris over at Kansas City Real Estate Investing had a short but great set of questions that all new real estate investors [...]

I have always preached that if you are going to buy investment property, you must work with a real estate agent and a mortgage broker that both own and specialize in investment property.  Chris over at Kansas City Real Estate Investing had a short but great set of questions that all new real estate investors should ask their agent before working with him/her.  Read his post at Kansas City Real Estate Investing.

Power Lease Clauses for your Investment Property

Landlords: When is the last time that your read your lease from start to finish? Do you really agree with and enforce everything that is on your rental lease? Did you download your lease from the internet when you bought your first investment property and have never looked back? Here are some extra add-in clauses [...]

Landlords: When is the last time that your read your lease from start to finish? Do you really agree with and enforce everything that is on your rental lease? Did you download your lease from the internet when you bought your first investment property and have never looked back? Here are some extra add-in clauses that will give you extra leverage or reduce your headaches with your tenants. Feel free to cut and paste them directly into your leases:

Disclaimer: I am not an attorney in your state, nor do I play one on TV. Your should seek competent, local legal advise regarding these suggested lease clauses.

1. All drains, waste pipes, and plumbing are accepted as clear by the tenant at the time of occupancy and any material blocking them after occupancy shall be repaired by the tenant except blockages caused by roots or backups from the street.
2. Glass breakage is the responsibility of the tenant unless caused by landlord or nature.
3. Leak in pipes, unless caused by negligence of tenant are to be repaired by the landlord within a reasonable time after notice, but the landlord shall not be liable for any damages resulting from such leaks and/or overflows.
4. No signs (including political signs) shall be placed on the premises by the tenant or at the tenant’s direction without the prior written consent of the landlord.
5. Light bulbs are the tenant’s expense and responsibility.
6. The unit is accepted as insect, rodent, and pest free by the tenant at the time of the occupancy. Tenant is responsible for insect, rodent, and pest control. If tenant choses not to correct problem, landlord may pay for pest control and bill tenant applicable costs.
7. Use of property for business is prohibited: The premises shall be used and occupied by the resident(s) exclusively as a private residence. Neither the premises nor any part thereof shall be used at any time during the term of this lease by the tenant for the purpose or carrying on any business, profession, or trade of any kind.
8. No auto repairs lasting more than 1 hour may be performed on the premises nor on any city street adjacent to the property.
9. Resident(s) agrees not to park or store a motor home, recreational vehicle, or trailer of any type on the premises without prior written consent of the landlord.
10. Resident(s) agrees to use said dwelling as living quarters only for ____ adults and ____ children and to pay $____ for each week for any other person who shall occupy the premises as his/her living quarters.

Again, check with your local attorney about the legality of these clauses in your area. Plus some may not apply or be contrary to local rental standards/customs. While not a complete list, many of these clauses will give your investment property leases extra teeth to insure compliance from your tenants and keep your rental units is the best shape possible. Take the time to power up your leases!  You will be happy you did.

Stupid Property Repairs

I have always preached that if you are going to do a repair on your investment property, do it correctly. You don’t need to put in top notch materials, but do it right. When you skimp and try to get by with a cheap repair, you are always going to be back a second time.
As [...]

I have always preached that if you are going to do a repair on your investment property, do it correctly. You don’t need to put in top notch materials, but do it right. When you skimp and try to get by with a cheap repair, you are always going to be back a second time.

As I tour Minnesota investment properties, I see some absolutely ridiculous repairs. I thought it would be fun to take pictures when I see these and we can all get a good laugh. I will keep this as a running topic.

Our maiden voyage comes to us in a South Minneapolis single family house. This is a picture of the vanity in the main bath of the house. I am not sure if the landlord just had this cabinet sitting around or got it cheap, but it extends into the tub almost 6 inches! Instead of buying the correct size, the landlord just cut the vanity around the tub!

Click on the picture for a larger view.

Have you always wanted to buy investment property, but never knew where to start? Don’t Wait! Get Started now.

Prepping to Sell your Investment Property-Revisited

I believe that most real estate investors are probably more excited about the day they will sell their investment property, than the day they buy it! I first wrote about this topic back in August 2007. After seeing about 500 more properties since then, I thought I would revisit my original prepping to sell list [...]

I believe that most real estate investors are probably more excited about the day they will sell their investment property, than the day they buy it! I first wrote about this topic back in August 2007. After seeing about 500 more properties since then, I thought I would revisit my original prepping to sell list and make some additions. On the original list, I talked about items that you should fix, repair, or update yearly on your Minnesota investment property to make it easier once it comes time to sell.

Below are some of items that you must do prior to putting your property on the market:

1. Clean out that basement or garage! Are you still storing the stuff from the evicted tenant from 5 years ago?
2. Tune up the furnace and water heater. The mechanicals in an investment property are typically the most neglected part of the building. At least try and pretend you paid attention to them while you owned it.
3. Have your leases up to date with future lease end dates.
4. If you have any vacant units, fill them immediately!
5. Raise the rents to make your property show better cash flow.
6. Lastly, if the front steps are crumbling, fix them. This is often the first impression of the property maintenance history of your building!

While not an exhaustive list, doing these will actually help your investment property stand out from the competition.  And when trying to sell your investment property, every little bit helps!