Why You Can’t Get Your Mortgage News From a Newspaper

OK.  I admit it.  I like to get a chuckle at the expense of others.  Usually it is out of the stupidity of others.  Just look at my list of Stupid Property Repairs!  I am sure there is someone out there making fun of me, so I guess I reap what I sow.

I was reading this week’s Carnival of Real Estate and Dan Green’s post on The Mortgage Reports.  He has a short example of why you should only be getting advice from professionals in the discipline.  Dan found a news article in his local newspaper that had just glaring mistakes.  Unfortunately, the unknowing public that reads this mis-information doesn’t know any better.  Check out Dan’s post at The Mortgage Reports.

4 Tips for Winning the Offer on a Foreclosed Property

I updated a post I did a year or so ago about how to get an accepted offer on a foreclosed property. When you get a minute, check it out over at 4 Tricks to Being the Winning Bid for that Foreclosed Property.

Lowball Offers on Retail Homes

I wrote a post almost 2 years ago about making lowball offers on bank owned properties.  I use an offer that is more than 20% below list price as a lowball offer.  Both then and now, most banks will not even consider an offer that is too low.  Sometimes they won’t even respond, let alone accept a low ball offer.

As I have mentioned before, this market has also been very difficult in the last 6 months as the inventory of properties is much lower than 12 months ago and competition is much higher for both retail and investor properties.  In this foreclosure market, many of my customers have been purchasing foreclosed properties to rehab and flip them.  Their margins are much smaller than the huge numbers you see on those type flipping homes shows.  Most my customers are simply trying to make a modest profit and considering the risk they are taking, it is not that much.

I have been very surprised lately to see my investor customers receiving offers on their completely rehabbed properties at prices that I would consider lowball.  My customers price these homes competitively in their neighborhood and so I am disappointed to see offers that are 10-20% below list price.  When you are making only 10% on a flip, maybe $15,000 after all expense, you can’t discount the price by 10%!

While I don’t think we will change our model, it is interesting how aggressive the retail buyers are becoming out there right now.  Come to think of it…..I have been just as aggressive when making offers on retail properties.  Wait, maybe I should delete this post!

Investment Property 201 Seminar: Renting Homes for $1500+ Per Month

The volume of higher priced homes that are being sold in either short sales or foreclosures is creating an opportunity for investors.  The previous owners of these homes are now in need of a place to live.  Most have been homeowners for years and have no desire to move back into an apartment or multi-family setting.  These new tenants probably have good income and a strong desire to remain in the neighborhood.  They may have simply had a blip in their financial lives as a result of a job loss, medical problem, divorce or other temporary situation that led them to be unable to pay their mortgage payments.

This type of tenant can be fantastic to have as they understand how to maintain a property, they pay their rent on time as they have good jobs, and there are looking to put root down somewhere.  With this opportunity in the market, we want to teach you how to rent to these types of tenants.  How do you find someone that is willing to pay $2000 or even $3000 per month for rent?  What types of properties work best?  How can you command that rent?

Steve Rajavuori, from REI Property Management, will be sharing his experience with renting properties in this price range (over $1500 per month).  Come to this free seminar and learn from an expert.

Rentals Not Allowed

A customer of mine recently purchased a townhouse in Brooklyn Center.  It was a 1970s vintage with 3 bedrooms and they paid $29,900.  It is in terrible shape and needed everything (carpet, paint, kitchen, bath, furnace).  It was also filthy and looked like some of the college houses I had gone to parties in.  The carpet was sticky and there was ketchup on the ceiling of the kitchen!

After getting the offer accepted, we received the association docs.  Needless to say that I was dragging my feet on reading this 117 page document over the weekend.  My customer, being an attorney, dove right in.  Deep within the document were the “rental rules”, which went on to say  that a unit in that association may only be rented if the owner lived in the unit for at least 1 year prior to renting it.  [Insert gnashing of teeth by me,  here].

Why didn’t the listing disclose this?  Why didn’t the listing agent ask me if it was an investor buying this property?  We promptly canceled this PA and will be moving on.  Keep an eye out for this when purchasing a condo or townhouse.  It is more common than you may think.

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 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.

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There were no camera tricks used in the making of this article!