Archive for March, 2009

Tenants and Short Sales

Jesse Grumdahl is a Minneapolis Real Estate Broker and Realtor with Re/Max Advantage Plus is our guest blogger.

If you own an investment property, and you need to do a short sale there is one topic I hear regularly – what do I do with my tenants? Keep collecting rent? Give them notice to vacate? [...]

Jesse Grumdahl is a Minneapolis Real Estate Broker and Realtor with Re/Max Advantage Plus is our guest blogger.

If you own an investment property, and you need to do a short sale there is one topic I hear regularly – what do I do with my tenants? Keep collecting rent? Give them notice to vacate? Let them stay at reduced rent? or – gasp – for free?

Every situation I have encountered with an investment property, tenants, and a short sale is different. To really know what to do, there are a few basic questions that need answers.

• How much time do I have before the bank takes possession?

If you are not delinquent on payments you generally have nine to ten months from the first missed mortgage payment before the lender takes possession, from my experience. It is up to you when you will inform your tenant to vacate. With many of my clients, who have good tenants, I have witnessed that open communication helps keep those good tenants happy through the process. Keep in mind that if an investor buys the property, the tenants may not have to move.

• Are your tenants “good” tenants?

Are your tenants paying rent on time? Will they allow showings? Do they complain everyday about nothing? Sometimes it is best to give notice to vacate if you do not have decent tenants. Why? They will slow the whole process down by not allowing showings, scaring off potential buyers, and refusing to pay rent on top of it. Why keep them there? You want to market the property in the best possible light, because the sale price will have a direct influence on the consequences of short selling your property.

• Should you offer incentives to keep “good” tenants?

If you have good renters it may be worth it to entice them to stay during a short sale by offering incentives. It could vary from slighty reduced rent to no rent at all, and I have had investor clients choose points all across that spectrum. Let’s start with free rent. It’s not actually free. The tenant still pays the utilities (or starts if they were not before), keeps the property maintained, and always allows showings.

I had one client of mine stop charging rent, and give his tenants a sense of ownership by giving them more responsibility (he knew they could handle it). They were so empowered by this that they signed a three year lease with the new owner at closing, and that owner never has to do any work (and charges more than the previous lease). This helped sell the property incredibly quickly, and removed the headache from the previous owner asap.

The majority of my clients will charge reduced rent. From what I have seen, the discount is usually 10-15%. Most tenants are thrilled to save that much, and many will stop complaining about little things as they contemplate the value they are getting. Are your tenants going to throw a wrench in the short sale gears, or are they going to be willing participants? That is the main question you will need to ask yourself.

Jesse Grumdahl is a Minneapolis Real Estate Broker and Realtor who is a short sale listing expert in Minnesota (with the #1 Re/Max Team in Minnesota for the last three years) who sharply focuses his energy on short sale listings in the Twin Cities metro area. Mr. Grumdahl does so with the help of his full-time, in-house staff that will always put his clients’ best interests first and foremost. Jesse’s goal is to get you out of your distressed situation with minimal damage so that you can move on with your life as quickly as possible. Jesse can be reached directly at Jesse [at] MnShortSale [dot] com or 612-968-2161.

Free Investment Property Seminar

[ April 21, 2009; 6:30 pm to 8:00 pm. ] Have you been thinking about investment properties for years.  Have you spent $1000s on books, tapes, even seminars?  Are you unsure where to start?

Attend this FREE one and a half hour seminar. There is no charge at all, no contracts you sign with us, no consultation fees, no hidden agenda.  It is a great opportunity [...]

Have you been thinking about investment properties for years.  Have you spent $1000s on books, tapes, even seminars?  Are you unsure where to start?

Attend this FREE one and a half hour seminar. There is no charge at all, no contracts you sign with us, no consultation fees, no hidden agenda.  It is a great opportunity to meet a team of professionals that specialize in helping new investors get started.  We can hold your hand through the finding, financing, buying, renting and owning your first investment property.

Let us get you started on your road to owning investment property!

Register for the seminar by filling out this quick registration form or call 612-281-5419 for more information.

Losing $189,834.04 in 3 Years

Everyday I show bank-owned/foreclosed properties.  I never think too much about how much money the bank is losing on this deal.  I am just concerned with how to get the best deal for my customers.

If you watch the news, you might be wondering why the banks need the bailout money.  Why are pumping billions into [...]

Everyday I show bank-owned/foreclosed properties.  I never think too much about how much money the bank is losing on this deal.  I am just concerned with how to get the best deal for my customers.

If you watch the news, you might be wondering why the banks need the bailout money.  Why are pumping billions into them to take care of these “toxic assets”.  Here is my own personal realization of the money lost.  Read it over at my Saint Paul Real Estate site.

Stupid Property Repairs #11

My previous posts have mostly been about one house that was particularly stupid.  I have not seen one house that takes the entire cake, lately.  Consequently, it has been a while since I posted any new pictures.  So here is a montage from Saint Paul Homes to Apple Valley Townhomes.

They didn't want to change the [...]

My previous posts have mostly been about one house that was particularly stupid.  I have not seen one house that takes the entire cake, lately.  Consequently, it has been a while since I posted any new pictures.  So here is a montage from Saint Paul Homes to Apple Valley Townhomes.

They didn't want to change the door height, so they cut into the floor for the door.	This shelf is in the main traffic flow of the kitchen at 5 foot high!@
You can cook and do laundry in the same motion without moving you feet!	My electrician customer just about had a stroke when he saw this one!
Who needs tile when a little duct tape and plastic will do! Otherwise, nice tile!	Commercial bathroom garbage can on wall in basement bedroom. Why?
More pictures of caulk used as filler.	You think you have enough on there?

I love my job!

Fannie Mae 10% Down For Investors!

I remember the good ole days when you could buy a 4 unit building for 5% down.  Ahh…that was the day.  Recently you need 25% down.  Now Fannie Mae has changed their regulations as a way to stimulate the economy.  They have set up a program called Fannie Mae Home Path to allow investors to [...]

I remember the good ole days when you could buy a 4 unit building for 5% down.  Ahh…that was the day.  Recently you need 25% down.  Now Fannie Mae has changed their regulations as a way to stimulate the economy.  They have set up a program called Fannie Mae Home Path to allow investors to buy Fannie Mae properties with only 10% down. Read about this the Fannie Mae Home Path on Rob Bonahooms blog.

How’s the Market?

I get this question all the time when I tell people what I do.  They are surprised when I tell them that it is very good right now.  In fact, I am busier than I have ever been.  The volume of foreclosed properties has made this an amazing buyer’s market.
And I am not the only [...]

I get this question all the time when I tell people what I do.  They are surprised when I tell them that it is very good right now.  In fact, I am busier than I have ever been.  The volume of foreclosed properties has made this an amazing buyer’s market.

And I am not the only agent busy.  Just about every investment property we are looking at these days has multiples offers on it.  In fact, a customer of mine made a cash offer the 1st day a property was on the market for 40% above list (about $10k).  We quickly were told that they were in a multiple offer situation and they asked for highest and best.  We found out 2 days later that we were not the highest bidder.

It turns out there were 24 offers on this property and there were several more they turned away.  The listing agent did not tell me the winning bid, but described it as “ridiculously high”.  Low ball offers on Bank owned properties are no longer the norm.  Over asking price is now becoming the norm.  As the banks want to dump the REO properties, they put them on the market almost too low.  That coupled with the glut of investors is making for stiff competition.

Are you searching for investment properties on your own and running into similar situations?