As we all know, in certain areas, vandalism of vacant houses is almost expected.  When I am touring some neighborhoods, I am almost surprised when the copper water lines have NOT been stolen.  I saw a house in North Minneapolis a couple years ago that had something that looked like steel plates over the windows.  I should have taken a picture, but I was amazed at the security of it.

This is not an advertisement for this company, but I recently received an email for a company that will secure your property using these lightweight metal panels over the doors and windows.  Their website says that there is no nails or screws used to secure the panels.  I am guessing they must open the window/door and then use a bar across the inside to basically clamp the panel to the opening?

I have no idea what this costs (it appears you lease the panels and pay for install), but what a cool idea.  In fact, I was thinking that the homeowners down in hurricane and tornado country should own a set of these they could install in an house or so.  No more plywood (or better, no unsecured houses).

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!

Back in June, I wrote that REO banks will typically only consider offers that are 90% of the list price on foreclosed properties.  They often never even reply to low ball offers on foreclosures.  In the last couple weeks, I have seen a dramatic change in many of the bank’s responses to lower than average offers.  They seem to be having Christmas sales or something because offers that my customers submitted, but I never figured would be even considered, are getting accepted.

Here is an example:

47XX Bryant Ave N, Minneapolis

• Listing  price=$43,159
• 3 bedrooms, 2 bath, on market 260 days, rehab costs around $50k
• My customer’s offer=$22,600, cash, close before December 31
• Bank’s counter offer=$35,000

My customer refused to budge from their initial offer price.  I expected the say “thank you for the offer, but we are not going to accept an offer at less than 50% of list”.  Surprisingly, 2 days later they came back and accepted the offer.  No counter or changes.  Just accepted this very low offer on this North Minneapolis foreclosure.

This is just one example, but I have seen this scenario playing out on other deals also.  I believe the banks are motivated to get properties off their books or at least marked as pending before January 1.

So if you have been sitting on the fence, now is the time!

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.

I have written several times about Minneapolis Rental Licensing challenges:

• Minneapolis Rental Licensing Searching for Unlicensed Rentals
• New Minneapolis Rental Conversion Fee

I do understand the need for some regulation, even if I don’t agree with the above items. The newest tale in the Minneapolis Licensing saga came up at the end of last week. Our rehab contractor was at the City of Minneapolis checking on which customers would be required to pay the Rental Conversion Fee on the North Minneapolis houses that they just purchased.

When the city person checked the computer for a very nice 3 bedroom, 1.5 story house at 34xx Russell Ave N that a customer had recently purchased, she told our contractor that this property had lost its rental license. At first, this made no sense as I always understood that the property held the license, but just the owner/manager could lose the license on a house. I assumed (I guess now incorrectly), that if the house was sold, the new owner could apply and receive a Minneapolis rental license.

I was wrong. This house had its license stripped and even going through foreclosure, having a new owner, and paying the rental conversion fee, would not allow this property to be a rental. I have come to understand that the status of a rental license is like the “grandfather” status that we refer to in regards to code compliance. Definition of grandfather status: As building codes have changed over the years, houses previously built to the then current codes are said to be grandfather’ed in and they are not required to be updated to the current code standards. This is why you still see knob and tube wiring in houses built 100 years ago, even though that code changed 50 years ago.

Luckily this buyer was still in their inspection period and we quickly cancelled the contract. If we had not found this issue, this investor could have been left with a house thats only use was for an owner occupant. The only option would have been to flip the property, which could have been a difficult situation to resell even a rehab property in North Minneapolis.

The city said that restoring the license is very similar to obtaining a variance on any other city regulation. There is a large packet of information you need to complete. Then you will need to speak in front of the licensing board. I have been told that in these situations, you are almost always fighting an uphill battle as it is much easier for them to deny your request.

Despite buying and rehabbing almost 100 houses in Minneapolis, this is the first time that anyone in our group had seen this issue. I recommend that you confirm license availability prior to closing on your next Minneapolis Investment Property.