Archive for January, 2010
Stupid Property Repairs #13
Ahhh. Lucky number 13.
I always wonder why anyone buys a house that has fundamental problems like crumbling foundations or less than legal headroom in the 2nd floor. I see this all the time. Then to make matters worse, I have no idea why they will then spend a considerable amount of money cosmetically renovating this [...]
Ahhh. Lucky number 13.
I always wonder why anyone buys a house that has fundamental problems like crumbling foundations or less than legal headroom in the 2nd floor. I see this all the time. Then to make matters worse, I have no idea why they will then spend a considerable amount of money cosmetically renovating this property.
About 12 months ago a customer was interested in a duplex by the U of M. This building had been completely renovated down the to studs with new wiring, furnaces, siding, plumbing, and nice interior finishes. We thought this was too good to be true. When we did the inspection, we found that you could literally pull the foundation blocks out with your hands. The contractor estimated the house needed to be jacked up, dug out and a new $50,000 foundation installed!
Just the other day I got a call from a friend of mine who said he knew a guy that wanted to sell his duplex he just renovated in Saint Paul. He was selling it non-MLS for $90k and it generated $1600 per month in rent. I spoke to him on the phone and he said he had installed new furnaces, re-sided the house, installed new windows, a new sewer main, new electrical and all interior cosmetics. I figured for $90k this could probably be a good opportunity.
I am sure you can see where this is going! I go into the downstairs unit, which was vacant. As I walk around, I am getting this strange sensation of vertigo. I feel like I am walking uphill. Well I was! The entire building is probably 4 inches out of plumb. In other words, the entire building is leaning 4″-6″ to the west. Here are some pictures I shot.
There were no camera tricks used in the making of this article!
Reminder: Investment Property 201-Getting Started with Quickbooks
This is a must attend for all landlords. Learn how to make your bill paying and record keeping much more organized. This free seminar will launch you down the path of watching your costs and income much closer. If you are new to Quickbooks, this will help you get started.
This seminar is held in Burnsville [...]
This is a must attend for all landlords. Learn how to make your bill paying and record keeping much more organized. This free seminar will launch you down the path of watching your costs and income much closer. If you are new to Quickbooks, this will help you get started.
This seminar is held in Burnsville at 6:30pm on January 26. Click here to register.
FHA 90 Day Flipping Rule Waived
With so many foreclosed properties on the market right now, the time has been ripe for rehabbers to get into the market. They can take these properties that may be otherwise unlivable (and can not have a mortgage put on them), buy them, fix them up, and then resell them making a profit. It is [...]
With so many foreclosed properties on the market right now, the time has been ripe for rehabbers to get into the market. They can take these properties that may be otherwise unlivable (and can not have a mortgage put on them), buy them, fix them up, and then resell them making a profit. It is a win for the rehabber, the buyer of the new beautiful house, the neighborhood, and even the economy (as we put people back to work and buy materials).
One speed bump in the sale of these newly rehabbed houses to the end buyer has always been that if the buyer is using FHA financing, (with certain exceptions) FHA currently prohibits insuring a mortgage on a home owned by the seller for less than 90 days. With many of these rehabs taking 60 days or less, this can mean that you must lose an additional 30 days of interest while you wait with the property empty until the 90 day mark. The loan process can not even begin (and the purchase agreement can not be dated) until day 91.
Many of the rehabbers were unwilling to wait the 90 days to resell to anyone with FHA financing. HUD realized that this restriction was shutting FHA buyers out from newly renovated homes, many of which were priced for first time home buyers. This week HUD announced a temporary waiver that removes this restriction. The policy change will permit buyers to use FHA-insured financing to purchase HUD-owned properties, bank-owned properties, or properties resold through private sales. This will allow homes to resell as quickly as possible, helping to stabilize real estate prices and to revitalize neighborhoods and communities.
The waiver will take effect on February 1, 2010 and is effective for 1 year, unless otherwise extended or withdrawn. This is good news for everyone.
IP 101.5 Seminar-Cash Flow, Profitability, and Investment Ratios
[ March 9, 2010; 6:30 pm to 8:00 pm. ] This seminar is meant to delve into the Cash Flow of a property and the different ways to analyze investment potential of a property, future cash flow, or current price. Brian Peterson, who has been analyzing investment properties for years, will go over many of the ratios and ways to look at your property financially. [...]
| March 9, 2010 | ||
| 6:30 pm | to | 8:00 pm |
This seminar is meant to delve into the Cash Flow of a property and the different ways to analyze investment potential of a property, future cash flow, or current price. Brian Peterson, who has been analyzing investment properties for years, will go over many of the ratios and ways to look at your property financially. This seminar is meant for people wanting to take the next step, maybe looking to have several properties, or those who need a refresher on the tools and methods to analyze these properties.
There will be a special interest in multi-unit properties and commercial properties and ways to come up with prices, cash flows, or to compare to other investment properties. We have special guest Rob Bonahoom to talk a little about the current financial environment for approving loans. Come take it to the next level with this anticipated seminar on January 12th. You never know what you can take away from these events, but they have proved very valuable to investors in the past.
Partnerships and Rent Collection
Partnerships in investment property is a fairly common practice. I was never one to want a partner initially, but after watching some successful investment property partnerships, I am convinced more than ever that there is at least one place they can be a huge benefit. This place is in rent collection.
I am often amazed at [...]
Partnerships in investment property is a fairly common practice. I was never one to want a partner initially, but after watching some successful investment property partnerships, I am convinced more than ever that there is at least one place they can be a huge benefit. This place is in rent collection.
I am often amazed at how far a landlord will let a tenant go on paying their rent. I even fall into this siren song occasionally: “if I evict them today, I will get nothing, but if I wait just one more week (like the tenant says they need), I might get paid”. While it rarely works out that you get paid, it always seems like the smoother path to wait another week that go to through the ugly process of filing and eviction. Most individual landlords make this mistake. Call it Minnesota nice or just the fear of confrontation, I have not met many individual landlords that are really as hardcore at rent collection as they need to be.
When watching several successful partnerships recently, I noticed that they seem to be much more business-like and unwavering at rent collection. It is due on the 5th, by the 6th they send letters and statements, by the 11th they are filing evictions. Maybe it is male ego or something, but it seems like one partner will not allow the other partner to deviate from the rental collection rules. I suspect that individually, they might make exceptions if they weren’t accountable to anyone else. Together the partners make a stronger team.
Rent collection is necessary part of being a landlord, but also one of the least enjoyed or maintained. This is how you get paid, this is how you pay your bills. If you don’t have a partner in the business, be accountable to your spouse to collect all the rent and in a timely manner.
Tenants and Toilets
If you are a landlord long enough, you will have tenants that just don’t seem to have any common sense when it comes to maintaining a property. And I love the fact that they always claim that they didn’t do anything wrong. No ownership of the problem. This landlord gives a great account of one [...]
If you are a landlord long enough, you will have tenants that just don’t seem to have any common sense when it comes to maintaining a property. And I love the fact that they always claim that they didn’t do anything wrong. No ownership of the problem. This landlord gives a great account of one such tenant interaction: http://www.realestatewindfall.com/2010/01/05/plumbing-problems-by-careless-tenants-how-to-handle-them/
