I am sure with that headline and what I am about to say will get me some hate e-mail, but I just tell like I see it (even if it is not 100% politically correct or polite). So I stopped by one of my units in Northeast Minneapolis this weekend to find that the tenant moved out in the middle of the night, owing me May rent.  Nice!  On top of that they left a couple pieces of furniture in the house, 2 beds in the yard, and no cleaning (surprise).  How did this happen to me again?

As I was having a little pity party in my unit, I had an epiphany.  This tenant had some telltale signs that I should have picked up on when I showed her the unit the first time.  While none of these are 100% reliable and I am sure there are many exceptions, and while I am sure I will get hate mail for saying some of these things, just chalk this up to my gut feeling and experience over the years.  Here are some correlations that I have noticed with bad tenants:

• One of my big pet peeves is seeing window screens pushed out or damaged on rental properties.  I don’t think I have ever wrecked a screen at my house.  I see tenants push them out all the time.  In fact I had a tenant last summer simply push the window air conditioner through the screen instead of removing it!  Bad tenants seem to treat the screens on the house like the treat the rest of the house.  They abuse it.  By stopping by and checking out their current living situation, you should be able to notice this.
• When you are running the tenant’s application, if there are any credit issues, collection items, or evictions, that is going to continue to be a problem.  Now I understand if you got laid off, went through a divorce, got sick and had a period in your life well that is explainable, but most bad tenants just seem to have no regard for payment of bills.  Just like any bad habit, once they get used to doing it often, it gets easy.

While I could go on and on, these are some quick thoughts that come to mind (and help me vent my frustrations).

Just when I thought I was out, they pull me back in.

-Michael Corleone

I have said it before:  I am done with Short Sales.  Unfortunately, I feel like Al Pacino in the Godfather III when he says:  “Just when I thought I was out, they pull me back in”.  I consistently say that I am not going to sell my customers short sales.  Unfortunately, the allure of the attractive pricing gets me every time.

Here are some pitfalls that I have seen amongst deals that have closed and many that have not:

• Listing agent calls 2 days before closing, says there is a $3400 Minneapolis water bill on the property and the seller is NOT going to pay it.  Listing agent asks if my buyer would take care of it!
• Buyer puts in full price, non-contingent offer on nice tri-plex in NE Minneapolis.  Listing agent does great job of communicating with us weekly.  Countrywide goes through 8 BPOs, 4 negotiators, and countless phone calls.  6 months later, my buyer finally decides to cancel when they ask for another BPO.
• A deal had previously fallen through (because of buyer’s financing) on a townhouse in Apple Valley.  Great agent does a good job of repricing the property at the previously accepted offer price.  My buyer pays full price, no contingencies.  Bank delays several times, sends someone out to do a BPO who promptly claims the property is worth 25% more than the list price (and 15% more than any recent sale in the neighborhood), bank cancels sale after 90 days in the process.
• Buyer is purchasing multi-family property.  Seller has stopped caring about property and not collecting rent.  Between the first showing and the offer being accepted, one unit becomes vacant.  As part of our due diligence, we get copies of the rent rolls and the leases.  None of the remaining tenants have paid any damage deposit and two are now more than two months behind in rent!
• Real Estate Agent markets property in Neighborhood with many foreclosures.  She never tells me this is in fact a short sale until well after we have an accepted offer.  At the closing, we find out the house was actually sold that morning to a land trust who in turn was actually the group selling it to us.  They make a $25,000 profit on a $115k sale!

Investment Property Short Sales can be great opportunities to buy investment properties at greatly discounted prices.  You just need to be prepared for anything as it seems like they are making it up as they go.

Wow.  Ten posts already!  This version is dedicated to a rash of stupid plumbing and bathroom repairs that I have recently come across.  Many of these are from North Minneapolis Real Estate, but all ends of the Twin Cities seems to be participating.

I am not sure why it is so hard to do good repairs in bathrooms.  Maybe it is because next to the kitchen, it is the most used room in the house.  I don’t know, but as you can see below, more than a few people couldn’t figure it out!  Enjoy.

Now I think I understand why the City of Minneapolis requires a special license to be a plumber in their city!

I was out with one of my rehab customers in South Minneapolis a couple weeks ago.  We were touring foreclosure properties for him to buy, rehab and rent out.  We were in a very nice area is Southwest Minneapolis (4xxx block, west of Chicago).

We pulled up to this cute story and half house on a quiet street.  It was getting dark and as always in foreclosures, there were no light bulbs in this property.  We enter the house and as my customer walks into the dining room, he falls.  It turns out the dining room is sunken about 6-8 inches like you would see in a 1980′s property (but this one is built in 1930).  Strange.

We walk around looking at everything.  I open a closet door and notice that the closet is also sunken.  Now we are really scratching our heads.  The rest of the trim and doors are original so we are unsure what is going on until we go into the basement.

According to my customer, it turns out this house (and the entire block) was built on an old garbage dump from the turn of the century.  Most of the houses in this area has similar problems.  The sunken dining room and closets are actually where the previous owner put in a new subfloor to level out the extremely out of level floor brought on by the sinking house.  In the basement, the floors are 6-12″ out of level in places, which has made the 1st floor out of level by 6-12″ in places.

Shame.  It was a nice house, but get the wrecking ball because this is not going to get any better!

The City of Minneapolis recently changed Title 12, Chapter 244 of the Minneapolis Code of Ordinances Related to Housing:  Maintenance Code.  That’s a mouthful, but here is the summary.

The community crime prevention/SAFE unit and the inspections division will be responsible for enforcement and administration of this new ordinance.  If a there is a police call (and probable cause) to a rental property in Minneapolis for any of the following violations (a conviction or arrest is not necessary):

1. Gambling
2. Prostitution
3. Sale or possession of controlled substances
4. Unlawful sale of alcoholic beverages
5. Noisy assembly
6. Unlawful possession, transportation, sale or use of a weapon
7. Disturbance of the peace

After the first offense for any of the above violations, the city will send the landlord a violation letter.  Within 10 days, the landlord will be required to submit a written management plan to the community crime prevention/SAFE unit.  Failure to submit a plan can result in the revocation, suspension, or refusal of renewal of the Minneapolis rental license.  These departments will work with the landlord and approve the plan.

If there is another violation at the same residence within 18 months of the initial violation, the landlord must again submit a “satisfactory” written management plan to the SAFE team within 10 days.  The management plan must detail all actions taken in the last 12 months by the landlord to abate the original problem and to prevent further violations.  Failing to submit a plan can result in the rental license being in jeopardy.  Additionally, the landlord or his designee must attend a property owner’s workshop prepared by the SAFE team.

A third violation within 18 months after the 2nd violation will put the license in jeopardy.

If the landlord has a pending eviction action against the tenant or his/her guest involved in the violation or has issued a writ to vacate within 30 days, the landlord may submit the eviction documents to the SAFE team within 10 days of the reciept of the violation notice.  If the eviction is being pursued “diligently”, there may be no adverse license action.  Further, any adverse license action to revoke, deny, suspend or not renew may be postponed or discontinued if it appears the landlord has taken appropriate action to prevent further violations.

This new ordinance could have far reaching effects depending upon its use.