Archive for April, 2009

The Recession is Over!

No, not really, but is sure feels like it.  The foreclosure properties are flying out of inventory even faster that we can get out and see them.  I have had the following showing success this week:

Monday I scheduled 8 foreclosure property showings in Saint Paul, 5 were already sold.
Tuesday another customer wanted to see 9 [...]

No, not really, but is sure feels like it.  The foreclosure properties are flying out of inventory even faster that we can get out and see them.  I have had the following showing success this week:

• Monday I scheduled 8 foreclosure property showings in Saint Paul, 5 were already sold.
• Tuesday another customer wanted to see 9 single family homes in Minneapolis, 6 were sold.
• Tomorrow I was supposed to do second showings of available properties we saw in Burnsville on Monday night.  Both of those properties are now sold!

In the last 2 weeks I have seen incredible competion for properties across the twin cities:

• Full priced offer, cash buyer, $5k earnest money ends up losing house in multiple offer situation by $10k.
• 14 offers on North Minneapolis home the first day it is on the market.
• Two properties that a customer was interested in were both on the market for 120+ days and they sell the day after they drop in price by 10%.

If you are competing in this market for any property, you need to be quick on your feet.  Get out and see it the day it comes on the market.  Be prepared to write an offer on the spot.  Go big or go home early in the game.

Building Strong Relationships with the Neighbors

I have written about screening your tenants and tenant application red flags.  I have even written about screening your tenants using MySpace.  Generally, if a tenant is going to be a problem, they have some history of being problems.  When I wrote “Once a Bad Tenant, Always a Bad Tenant“, I was mostly talking about [...]

I have written about screening your tenants and tenant application red flags.  I have even written about screening your tenants using MySpace.  Generally, if a tenant is going to be a problem, they have some history of being problems.  When I wrote “Once a Bad Tenant, Always a Bad Tenant“, I was mostly talking about payment history.

I recently had an interesting situation with a tenant in one of my duplexes.  She is a single mom, very well spoken.  Her rental application was pretty clean except for a 5th degree misdemeanor from 4 years ago.  She has lived in the apartment for about 9 months.  Whenever I have stopped over, the place is clean.  Her previous landlords gave her a decent referral.

She did have some problems paying rent about 3 months ago and after I filed the eviction, she promptly found emergency assistance to pay her past due rent.  Despite that, there have been no complaints from the neighbors below her or the homeowners on either side, until now.

This weekend, I received an email from a neighbor with whom I have built a strong relationship.  She is motivated to keep her neighborhood safe, but also understands that it is better to work with me initially, than to just call the police.  She said that recently this tenant  “is showing all the signs of criminal activity”.  The neighbor went on to document multiple visits per day of a few minutes by differing men in fancy tricked out cars.  The neighbor is suspecting drug activity.

By having this good working relationship with this neighbor, it allows me to address the situation immediately.  I can demonstrate that I am good landlord and want to be a good neighbor.  Alternatively, if she had not contacted me, I could have a powder keg on my hands that would blow up with the police getting involved and my rental license in jeopardy.

I will be stopping by this apartment and discussing the situation with the tenant.  I will tell them that I received calls from the police and neighbors (never divulging who told me).  While I am not naive enough to believe that this will instantly cure the problem or that the tenant will openly admit to dealing drugs, I have always found that talking with the tenant will reduce the problem in the immediate future.  When they know they are being watched and the heat is on, the dealers will usually find an easier place to work.

I encourage you to know who the neighbors of your rental properties are.  Give them your phone number.  Ask them to report anything suspicious.  With all of us working together, we can keep the problems out of the neighborhood.

Pet Deposits and Roomates

John Gall shot me a question:
Is the amount paid as a pet deposit the only amount allowed to be used for pet related damage, or is it just a safety measure expecting that damage will occur. So if you have a $1500 deposit + $400 Pet deposit and $500 in damages, can you take [...]

John Gall shot me a question:

Is the amount paid as a pet deposit the only amount allowed to be used for pet related damage, or is it just a safety measure expecting that damage will occur. So if you have a $1500 deposit + $400 Pet deposit and $500 in damages, can you take the overage out of the general damage deposit? Similarly, if one party of say three other adults in the house who are on the lease owns the pet and paid the deposit for the pet and signed the addendum allowing the pet, are they the only one responsible for damages or can all tenants be held responsible for pet damage?

I am not sure there is a correct answer here, but here is how I would handle this:

1. The pet deposit is in addition to the standard deposit.  I look at it that I don’t care where the damages came from.  As in John’s example, I am taking $500 out of their $2000 deposit.  Some subtle differences is that the pet deposit does not accrue interest like the standard deposit.  Also, some of it can be non-refundable for cleaning carpets or such after the pet.
2. I tell roommates (and they must be reminded) that they all rise and fall together.  They can be more difficult to work with.  I am not going to worry or keep track of who paid what and who’s dog it is and such.  They need to work it out amongst themselves.  They are all on the lease and took that risk.  If there is a hole in the wall upon move-out, I don’t care who made the hole.  I am taking it off the deposit.

Now, maybe I am wrong in how I do it (if so, please drop me a comment on this post), but I have never had much complaint.

The Cat House of Blaine

I am in houses every day.  I often find it a little interesting seeing how people decorate their houses.  Is is especially interesting on foreclosures as often the homeowner has made no attempts to go to a neutral decor or remove the more strange things they like.
Steve Howe at Minnesota First Time Home Buyers found [...]

I am in houses every day.  I often find it a little interesting seeing how people decorate their houses.  Is is especially interesting on foreclosures as often the homeowner has made no attempts to go to a neutral decor or remove the more strange things they like.

Steve Howe at Minnesota First Time Home Buyers found a very strange cat house that he shared with us at his First Time Home Buyer Blog.

Investment Property 201 Seminar

[ April 28, 2009; 6:30 pm to 8:00 pm. ] Everything you wanted to know about how to grow a big investment property business or live off your rental income, but were afraid to ask.

Are you someone that learns by example?  Do you love to hear the story of how someone made it big?

Do you own some investment property and wonder how you buy more?  [...]

Everything you wanted to know about how to grow a big investment property business or live off your rental income, but were afraid to ask.

Are you someone that learns by example?  Do you love to hear the story of how someone made it big?

Do you own some investment property and wonder how you buy more?  Maybe you want to learn what it is like to own them free and clear and put that rent in your pocket each month.  Or how about retiring on your rental property income?  If you could sit across the table and ask Donald Trump how he did it, would  you?

If you answered yes to any of those questions, this next Investment Property 201 is for you.  We will be having a panel discussion involving several successful investment property owners that have either amassed a large quantity of properties and/or have paid their properties off and are living on the rental income.  They will tell us how they got to where they are today.  Let them give you the inspiration or the knowledge of how to be a successful real estate investor.

Join us on April 28 at 6:30 pm for this round table discussion where you can ask these experienced investors the questions you have always wondered.  Learn from their successes and mistakes.  Click Here to Register For Seminar or call 612-281-5419.

Investment Property 101.5 Seminar

[ April 23, 2009; 6:30 pm to 8:00 pm. ] This no-frills/no fluff information packed seminar is offered regularly as a follow-up to our introductory Investment Real Estate 101 seminar. Using a case study format, you’ll review how to calculate cash flow. We’ll learn about and discuss the important financial analysis tools an investor needs to have; cap rates, before and after tax “cash on [...]

This no-frills/no fluff information packed seminar is offered regularly as a follow-up to our introductory Investment Real Estate 101 seminar. Using a case study format, you’ll review how to calculate cash flow. We’ll learn about and discuss the important financial analysis tools an investor needs to have; cap rates, before and after tax “cash on cash” return, and 1st year return on investment. You’ll also be introduced to the Internal Rate of Return, a powerful tool which measures not only current cash flows, but also future cash flows, as well as tax benefits, appreciation, mortgage reduction, and selling costs over the entire projected life of the investment.

This seminar is designed for the novice investor, but old pros are welcome as well.

Your instructor, Rolfe Kurtyka, is a member of The Minnesota Real Estate Team and an experienced investor. Rolfe has been teaching these concepts to real estate professionals throughout the Midwest for over a decade, and we are delighted to now offer his expertise to you in this free seminar! Bring ALL your investment real estate questions!

Topics include rental rates, vacancies, operating expense ratios, cap rates, the impact of financing and interest rates, cash on cash returns, potential tax benefits for the investor, capital gains treatment, calculating seller’s net at sale, and anything else we have time for!

You’ll leave with a better understanding of how to analyze an investment, giving you more confidence to compete with the sharks and approach today’s opportunity rich investment market.

Click Here to Register For Seminar or call 952-649-1456.