Minnesota Investment Real Estate

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Back in November, I came across an article that talked about how this writer saw an ad on Craig’s list for a property that was 50% below the market price for the neighborhood. It had him intrigued. He proceeded to check out the upcoming open house only to find out that it appeared to be some sort of bait and switch program going on with an unlicensed agent to sell this house.

I originally called this How to Sell Your House in 5 Days a Scam. Recently, I was doing some geek work on this blog and noticed that I get many searches from Google about How to Sell Your Home in 5 Days. It got me wondering why this post off all my posts would be popular, especially 8 months later.

It turns out there is actually a book written on how to sell your home in five days! It outlines how you advertise your house for 50% of the desired price, have an open house, and then start an auction and bidding war to get the sale price up to where you want it. All in five days. The writer claims he has sold 150,000 houses this way (yeah, right). Amazing.

Upon further review, I would not necessarily call this program a scam, but it is definitely on the strange side of real estate sales. I imagine it could work in the right neighborhood, with the right owner pushing the process, in the right market, with the right house, at the right price point, but I can’t imagine it working more than 10% of the time. I suppose it ranks up there with hiring a clown to entertain the children during an open house, so the parent can tour the house in peace.

Have you read every book on investment properties? Have you spent hundreds of dollars on investment real estate seminars, but still you have no started? Give Scott a call.

Scott Ficek is a Minnesota Real Estate Agent with RE/MAX Advantage Plus in Minneapolis and helps new and seasoned investors buy and own Investment Real Estate. He owns and manages almost 30 investment property units from single family to multi-family. Find his website at www.minnesotainvestmentrealestate.com.

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!

Scott Ficek 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. He is also a Minnesota Real Estate Agent with RE/MAX Advantage Plus in Minneapolis and helps new and seasoned investors buy and own Minnesota Investment Property.

This is our last post in our series about “The Garrison Cycle”.  A theory created in 1985 by Marc Garrison who also started the National Association of Real Estate Investors.

As we enter the Expansion Phase, demand for all property (investment, single family, new construction, and even rental) begins to increase.  Eventually, demand will overtake supply and prices of properties and rent amounts will increase dramatically.  The supply of vacant apartment will decline dramatically and landlords will be receiving dozens of calls for each vacancy ad in the newspaper.  Inflation will start to enter into discussions and on-market time will decrease dramatically with the best homes being sold even before the sign goes in the yard.

Because it is impossible to know how long this feeding frenzy for property will last, sellers should sell early to avoid the downturn into the Equilibrium Phase.  If they bought during the Decline or Absorption phases, the sellers should experience high returns on their investments.  Buyers should stay away from paying the over-inflated prices and look for solid performing properties that can weather the upcoming storm of the next phase.

The previous Expansion Phase started in 2001 and lasted until about 2005.  It was market by double-digit growth of prices in many markets.  In Minnesota, we saw multiple offers at over list price on the 1st day a property went on the market.  Unfortunately, the future is difficult to predict.  If the Absorption Phase actually starts in late 2008, history shows us that we may not see the Expansion Phase until 2018.

Scott Ficek is a Realtor with Keller Williams Integrity in Minneapolis and helps new and seasoned investors buy and own investment real estate. He owns and manages almost 30 investment property units from single to multi-family. Find his blog at www.minnesotainvestmentrealestate.com. His website can be found at www.mnirea.com

We are exploring a concept called, “The Garrison Cycle”, in our continuing series.  This theory was created in 1985 by Marc Garrison who started NAREI.

In the Absorption Phase, all factors including prices, inventory, sellers & buyers motivation, economic climate, mortgage products, and even government regulation have changed from the previous two phases to make investment property attractive again.  The economy has recovered by adding jobs which will increase occupancy levels and driving rent higher. 

At the beginning of this phase, property prices will be at a rock bottom.  The number of properties for sale slowly decreases.  The government and lenders offer incentives to stimulate buying.  This phase is where the incredible profits are made as prices, rents, and occupancy all increase. 

Sellers that survived the Decline Phase are now able to find buyers for their properties, albeit at lower prices.  Most have realized that they can not command the unexplainable prices that they saw at the top of the market (in the Expansion Phase).

Previously the Absorption Phase started in 1991 and continued for 10 years until 2001.  Predicting the start and end of the current Absorption Phase is more difficult, but I believe we have not seen the bottom of the Decline Phase yet.  I hope we may see recovery and the start of the Absorption Phase as early as late 2008.  Unfortunately, you typically can only have 20/20 Hindsight and we may not know if my prediction is correct 3-5 years from now!

Scott Ficek is a Realtor with Keller Williams Integrity in Minneapolis and helps new and seasoned investors buy and own investment real estate. He owns and manages almost 30 investment property units from single to multi-family. Find his blog at www.minnesotainvestmentrealestate.com. His website can be found at www.mnirea.com

In our continuing series, we are exploring a concept called, “The Garrison Cycle”, which was created in 1985 by Marc Garrison who started the National Association of Real Estate Investors, NAREI.

The Decline Phase is characterized by what Garrison calls a “psychological hysteria” where the down market feeds on itself.  Sellers now are unable to sell their properties, because they are unable or unwilling to take losses to get out.  Most buyers have retreated to the sidelines waiting until the market recovers, while some buyers prey on desperate sellers.

Occupancy levels and rents decline while foreclosures and defaults rise.  In response, the mortgage market tightens and the government tries to step in; both will ultimately make the situation worse.      

Looking back, we experienced the Decline Phase starting in 1985, accelerating in 1986 with the Tax Reform Act, and falling into full decline with the stock market crash in 1987.  We did not end the Decline phase until around 1991. 

In my last article, I stated that the Equilibrium Phase occurred recently in 2005-2006.  With the increasing foreclosure rates, the shake out in the mortgage industry, and the government trying to step in, I believe that we are fully now, in 2007, in the Decline Phase.  I hope that history does not repeat itself and we need to wait 4 years (until 2011) to see the end of this phase. 

Scott Ficek is a Realtor with Keller Williams Integrity in Minneapolis and helps new and seasoned investors buy and own investment real estate. He owns and manages almost 30 investment property units from single to multi-family. Find his blog at www.minnesotainvestmentrealestate.com. His website can be found at www.mnirea.com

In a continuing series from last week, I am discussing a concept called, “The Garrison Cycle”, which was created by Marc Garrison who started the National Association of Real Estate Investors, NAREI, in 1985.

In the Equilibrium Phase, the market has topped out and is beginning to cool off.  Job Growth and residential income property appreciation in that specific market have slowed to the national averages.  As the phase continues, the hangover and wild ride of appreciate of the Expansion phase are beginning to catch up with investment property owners. 

Sellers are too late to command the premium prices of just a short time ago.  Buyers begin to look for deep discounts on investment property to offset the lower appreciation the market is currently experiencing (which is low by saving account standards).  Investors leave the market (or refuse to get in) as the appreciation on property flattens out and they instead invest their money in the stock market and other investment vehicles.

I believe we saw this phase in 1980 when we saw interest rates in the double digits.  I also believe that we saw this phase more recently in 2005-2006 as we saw the market cool after the frenzied 2000-2004 run of multiple full-priced offers per house.  Although short, this phase precedes the Decline phase which we will discuss next.

Scott Ficek is a Realtor with Keller Williams Integrity in Minneapolis and helps new and seasoned investors buy and own investment real estate. He owns and manages almost 30 investment property units from single to multi-family. Find his blog at www.minnesotainvestmentrealestate.com. His website can be found at www.mnirea.com