(I wanted to find a sound byte of a choir singing “Alleluia”)

If you remember, in October 2008, Fannie Mae followed Freddie Mac and lowered the number of financed properties a person could hold to only 3 (4 if you include your personal residence). In an exciting and stunning change, Fannie Mae has reversed its decision effecting March 1. As you can imagine, these changes come with some extra hurdles, but that is OK. Read all the details at Rob Bonahoom’s Investment Mortgage Guy Blog.

I have been telling my customers that we would not see this reversed any time soon.  I am always a cynic and see the goverment of just getting in the way most of the time, by reducing free trade in place of government regulation.  I figured it was going to be a bank sometime in the future that would see a need for borrowing money to people like me that own more than 3 investment properties.  Today I am happily wrong!

Ryan O’Neill, from the Minnesota Real Estate Team, is our guest writer today.

Here in the Minneapolis real estate market, agents on our team have seen a number of real estate investors over the years who have purchased condos or lofts as investment properties. Though there is no “one size fits all” approach to buying investment property, I wanted to briefly touch on some of the benefits to you as the buyer with this type of property.

First of all, a loft or a condo generally speaking has a much lower level of maintenance. My wife and I have owned a number of single family homes in Bloomington since 2001. Though I am certainly not displeased with this type of investment property choice on our part, I have had to spend a sizable amount of capital on roofs, siding, and windows over the years. As an investor in today’s market, I certainly do not discourage investors from a single family home. However, if you do buy a single family home, it will definitely save you money long term by buying homes that do not require these sorts of updates.

Secondly, a loft or a condo does not require the normal sort of lawn and snow care maintenance that a single family home does require. Last week I received a call that one of my tenants was moving out of his rental home here in Bloomington. And course we received about a foot of snow since he has left. As the owner of the home, it is my responsibility now to remove the snow myself or hire a company to do so. Again, if this tenant was renting a loft or condo, there would be no such maintenance on my part as the owner.

Obviously, a condo will have a monthly association fee that will affect your monthly cash flow. However, with the current state of the market here in the Twin Cities, even condos and lofts cash flow after the association fees. And there are a ton of them for sale on the MLS.

Lastly, our team is excited to have put together a collection of the various Minneapolis condos for sale. We spent a lot of time putting together this loft and condo guide for all of our investors and owner occupied buyers alike. It is full of pictures of the myriad projects available here in our Minneapolis real estate market.

Incidentally, I wanted to congratulate Scott Ficek for being voted The 2008 Agent of The Year for The Minnesota Real Estate Team! Scott won award through the votes of his peers, our team of 40 real estate agents. Congratulations and thank you for providing such an awesome blog for Minnesota real estate investors!

Happy Real Estate Investing to all of you in 2009!

Typically the purchase of an investment property is smooth.  Sometimes title work complicates the process or the buyer’s financing falls through.  Occasionally, you see a property seller start to do strange things.

My customer purchased a multi-unit property that had one vacant unit.  As part of the purchase agreement, we require that we are able to show and lease the property prior to the closing.  This helps us get a jump start on finding a new tenant.

The customer was at the property showing a unit and ran into one of the other existing tenants.  She told him she was moving out at the end of the month because the existing owner was a crook [her words].  Seems she claims that he stopped by looking for not just this month’s rent, but next month’s rent also (when my customer would actually own the property).  Luckily she was smart enough to realize that she had no reason to pay him next month’s rent early regardless of who owned the building.  Needless to say, my customer was quite upset.  A quick call to the listing agent put that problem to bed.

I recommend that when you buy a building that is currently rented, you as the buyer should go over to the property as soon as possible to introduce yourself and assure the tenants that you want them to stay.  Talk to them about what they like and don’t like about their unit.  Confirm that in fact there have not been any side deals made with the current owner.

This short 30 minute visit can help alleviate many silent deal killers prior to closing!

Have you always wanted to buy investment property, but never knew where to start? Don’t Wait! Get Started now.

It is funny how this is really a small real estate world, especially in North Minneapolis.  Johnny Northside wrote a new post about the North Minneapolis T.J. Waconia houses where he actually made a mention of my post about one of my customers wanting to buy a T.J. Waconia House in North Minneapolis.

Here is where it get’s circular.  Jeannie Hoholik, from Keller Williams, comments on this blog.  In fact, she commented about my above post.  She is also the main character in Johnny Northside’s post.  Got all that?

I encourage you to check out those other posts.

Scott

As I have said before, I have sold many, many REO properties in the last 12 months. Every single one of these deals requires that my customers sign a bank addendum once the offer is accepted. It is the bank’s way to get all their legal language into the transaction to protect themselves. (If you think about it, a bank is selling foreclosed properties in probably all 50 states; it would be impossible for them to be fluent in each state’s real estate laws and customs)-this addendum helps them normalize all their REO transactions.

Last week, I was reviewing a bank addendum on a North Minneapolis property that my customer had just purchased.  While most of these addendum read like they were written by the same attorney (despite being from different banks), I came across the following clause (sorry for the poor quality):

The clause prohibits you from buying the property with Rehab Financing, selling it within 3 months, transferring it to another party within 3 months, or refinancing it within 3 months.  Wow.  Many of my customers are using rehab financing to buy the property, rehab it, and then refinance into a permanent loan at 75% LTV.  This clause prevents that.

Never seeing this type of clause before, I quickly called the listing agent.  She informed me that this is standard language on all Fannie Mae Foreclosure properties.  I was stunned.  I was amazed that after all the REO properties I had sold, I had never seen this before.  The listing agent also informed me that we can’t remove or change the clause.  If my customers didn’t like it, they would have to simply cancel the purchase agreement and find another property.

I guess the moral of the story is to read all the docs in an REO transaction, even if they look the same as the other 50 that you have seen!

Have you always wanted to buy investment property, but never knew where to start? Don’t Wait! Get Started now.

Buying Property is both at the top of the category list and the start of all our careers as real estate investors. As I look back over the last 12 months, here are some notable posts.

Buying Investment Property Category

• Best Type of Property for First Time Investors
• Don’t Get Emotional About Rehabs
• Buy the Short Sale or Wait for the Foreclosure
• 7 Questions to Ask Your Realtor About Investment Properties-My Response
• LowBall Offers on Bank Owned Foreclosure Properties
• Don’t Trust What You See or Read on the MLS
• 8 Tricks to Getting Your Offer Accepted on that Foreclosed Property

These are not necessarily the longest, the most popular or the most detailed, but I think they are a great resource for Buying Investment Real Estate.

Have you always wanted to buy investment property, but never knew where to start? Don’t Wait! Get Started now.