Minnesota Investment Real Estate

If you're new here (and you like what you read), you may want to subscribe to my RSS feed. Thanks for visiting!  Scott

Are you looking for Minnesota Investment Properties, but just can’t find a site that has MLS tools and features designed for investment properties? There really are no other websites in cyberspace dedicated to browsing the  Minnesota MLS for just investment real estate.

I have recently just launched such a site at www.mnirea.com. The search capabilities are top notch and comparable to any that you will find on other real estate sites. The best part is that I have pre-loaded some common searches. Go ahead and browse the Minnesota MLS here.

Scott Ficek is a Minnesota Real Estate Agent with RE/MAX Advantage Plus in Minneapolis and helps new and seasoned investors buy and own Minnesota Investment Property. Find his website full of useful information at Minnesota Investment Real Estate or use it to search the Minnesota MLS for Investment Properties.

Many landlords take a deposit from a prospective tenant to hold an apartment prior to move-in. I require a deposit when there is more than 1 week before the start of the new lease. State law is very clear on how this process must be executed when renting Investment Property in Minnesota:

1. The agreement must be in writing and signed by both the landlord and prospective tenant.
2. That agreement must specify under what circumstances the deposit will be returned to the prospective tenant.
3. If the above circumstances occur, the landlord must return the deposit within 7 days.
4. Once the landlord and tenant enter into a lease agreement, the money must be applied toward the tenant’s rent or security deposit. Any payments for tenant screening are not included in this requirement.

If the landlord violates any of these requirements, s/he is liable to the prospective tenant for 150% of the deposit amount. Once the landlord and tenant sign a lease and the landlord complies with #4 above, this law no longer applies. The moral of the story is: make sure everything is in writing!

See Minnesota Statute 504B.175 for more information

Scott Ficek is a Realtor with Keller Williams Integrity in Minneapolis and helps new and seasoned investors buy and own Minnesota investment property. He owns and manages almost 30 investment property units from single family to multi-family. Find his website at www.minnesotainvestmentrealestate.com or receive his blog via your RSS Feed or in your Email.

This is just a reminder to all the Minnesota Investment Property Landlords in the audience. You are required to send a Minnesota Certificate of Rent Paid to your tenants by January 31, 2008.

This is a simple form that your tenant can use when submitting their taxes. Depending upon their income, they may be eligible for a tax deduction for a portion of the rent they paid for 2007. Although you must send your tenant this form, this does not affect any taxes you pay or anything else. It is simply for their tax purposes.

The instructions are rather lengthy (and like any other government form, rather confusing). Without going into great detail, here are some of the tips and tricks that I have figured out over the years:

• Only rent paid by the tenants is used in the calculation (any Section 8 or other rent subsidies are not included). In my accounting system, I mark each subsidy payment in the memo field to make this easier at the end of the year.
• Do not include any damage deposits, late fees, or other non-rent payments.
• I typically only include actual rent paid, not rent billed (or accounts receivable).
• Fill in a copy of the form with your business information and make copies to save yourself time when completing many of them. With almost 30 rental units, you can imagine how much time this saves me!
• I do not try and track down past tenants and send them these forms. If they are interested, I let them call me (again, there is no penalty for not sending these forms of for them being late).
• You must divide the rent paid by the total number of adults (married couples are considered 1 person) in the unit regardless of how much rent each paid. You should then send a form to each adult.
• To save on postage, I send their monthly statement in the same envelope.

You can purchase software packages or services to do this work for you, but I have always found they are expensive. The easiest way I found to get these done is do a couple each night until you have them all finished. Turn the music on and just fill them out!

Scott Ficek is a Realtor with Keller Williams Integrity in Minneapolis and helps new and seasoned investors buy and own Minnesota investment property. He owns and manages almost 30 investment property units from single family to multi-family. Find his website at www.minnesotainvestmentrealestate.com or receive his blog via your RSS Feed or in your Email.

“Where can I get leases for tenants” is a question that I get from new investors often. There are many sources from which to get your landlord documents and forms. Many investors will create their own by just downloading the files from the web and modifying them to their needs. While this works in many situations, I prefer the efficiency of pre-printed forms and especially ones that are carbon-duplicates.

Although I am not a member, I buy all of my Minnesota investment property forms from Minnesota Multi Housing Association. I do spend about $20 each quarter, but I feel it is one less thing that I need to develop myself. Also, all of the forms are carbon-duplicates so I simply fill it out, have the tenant sign it, tear off the carbon and give it to the tenant and I am done. In the past, I would have to take the form or lease to my office, copy it and put it in the mail back to the tenant. The small cost of those documents is worth it for me to save time.

Additionally, a pre-printed form will often have been tested in court. The leases that I use are preferred by Section 8 and have been approved by the Minnesota Attorney General. This should reduce your exposure to questions about the validity of your leases.

Scott Ficek is a Realtor with Keller Williams Integrity in Minneapolis and helps new and seasoned investors buy and own Minnesota investment property. He owns and manages almost 30 investment property units from single family to multi-family. Find his website at www.minnesotainvestmentrealestate.com or receive his blog via your RSS Feed or in your Email.

In my post “I Know You Have Questions”, I asked the readers to send me questions or topics that they are confronted with often. John Gall asked two questions which I can answer together: “1. Are any suburbs in particular gold mines for rentals? 2. Are outer suburbs with inexpensive newer housing stock like Otsego and St Michael, Albertville still viable for rentals for single family homes?”

Investment property in the suburbs must be analyzed just like any other property in the metro Twin Cities, MN. There are several key points to consider before buying any property (especially ones in the suburbs):

1. Is the property financially a good purchase for price, cash flow, and potential capital appreciation?
2. Are there other rentals in the area? Competition can be helpful in attracting new tenants. If you are a rental island in the sea of single family houses, it may be difficult to get anyone to be interested in your apartments. Also, setting your rent may be more difficult without other rentals in the area.
3. When it is time to sell, it may be difficult to find comparable investment properties for the mortgage company to use when getting an appraisal. This in turn could deflate the price you can sell your property at.
4. Newer housing can appear on the surface to be a nice alternative to the worn-hard properties in Minneapolis or St. Paul. Often, though, these properties are priced higher than older buildings in the city, thereby reducing or eliminating any cash flow.
5. As I have wrote before, you should also consider where those suburban properties are relative to your own home. They may look appealing, but if they are 45 minutes from your house, you will not anxious to drive there often.
6. Lastly, the price of gas has doubled over the last couple of years and housing starts are at record lows. Most experts agree that the suburbs are the worst hit, as people contract back into the city, wanting to be closer to their jobs and not able to afford that bigger, new house in the suburbs. Consequently, the retail businesses in those suburban areas close, do not expand, or reduce their work force. Because renters generally live close to where they work and renters most often fill retail positions, those prospective tenants will not move into the area where the job market is tight or shrinking. Logically, this reduces the need for apartments in those areas, thereby making suburban investment property more vulnerable in a down market.

I encourage you to evaluate each one of these points before buying MN investment property. I believe that suburban investment properties need extra scrutiny to insure you make the right purchase decision.

Scott Ficek is a Realtor with Keller Williams Integrity in Minneapolis and helps new and seasoned investors buy and own Minnesota investment property. He owns and manages almost 30 investment property units from single family to multi-family. Find his website at www.minnesotainvestmentrealestate.com or receive his blog via your RSS Feed or in your Email.

This is a strategy that some tenants will use to forgo or delay paying rent. Although this is a legal maneuver in the state of Minnesota, the tenant must follow strict guidelines or be subject to eviction. As a landlord, it is good to understand what items the court will be looking for so you can decide whether to proceed with eviction or to meet the tenant’s demands.

If you go to court, here are some items the judge will be looking for:

• Did the tenants have a copy of a written notice they gave you that outlines what repairs they believe are needed?
• Have the tenants given you enough time to complete your repairs?
• Does the tenant actually have all the rent money? If so,the judge may require them to prove the funds availability.

What you should bring to eviction proceedings:

• Pictures of the areas/items that the tenants claim need to be repaired.
• If the work has been completed, receipts from the contractors or suppliers to repair items (and pictures).
• If the repairs are needed because of damage caused by tenants, pictures previously taken of area may help.
• If the repairs are scheduled, but not completed, bring a time line with you to court to show the judge you are working on the problem(s).

The judge can make several rulings:

1. S/He can order the landlord to make the repairs immediately and have the tenant hold the money until completed.
2. Order the tenant to pay the court or landlord until the facts are proven against the landlord.
3. Require the landlord to accept less for the apartment as a remedy to the tenant.
4. Pay the outstanding rent to the court for safekeeping until the landlord makes the needed repairs.
5. Rule that the tenants request(s) or reasoning for withholding the rent is baseless and order the tenants to pay immediately (including eviction filing fees), or be removed from the premises.

Exception: If the property has been condemned by a government agency or department, the tenant typically can not be required to pay rent and typically the damage deposit must be returned.

Written documentation is your best defense against a tenant that is trying to avoid paying rent.  If you are maintaining your properties and feel that your tenant is trying to take advantage of you, I recommend that you process an eviction against them and let the court decide who is right.

Scott Ficek is a Realtor with Keller Williams Integrity in Minneapolis and helps new and seasoned investors buy and own investment property in Minnesota. He owns and manages almost 30 investment property units from single family to multi-family. Find his website at www.minnesotainvestmentrealestate.com or receive his blog via your RSS Feed or in your Email.