Archive for November, 2010

Duplex Sales Are Tapioca

said on November 30th, 2010 categorized under: Twin Cities Real Est

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Tapioca PuddingReal estate transactions in the Twin Cities area were pretty bland the week ending November 20, 2010.

Pending single family home sales were down slightly; by 4.1 percent. There were 579 pended home sales over the 7 days; right at the approximately 600 transactions a week we’ve been averaging over the last six months.

The number of newly listed homes was down just 1.3 percent from the same week one year ago. And as we’ve seen in recent weeks, that leaves the number of active listings on the market at 9.6 percent less than were available last year.

In the duplex market, just 22 properties received purchase agreements. Of these, only 18.2 percent were offered by traditional sellers. Last year, the same week saw 30 duplexes receive purchase agreements, with 30 percent of those signatures belonging to traditional sellers.

The average off-market price for the week was $114,232. While this is down slightly from last year’s $115,002, it’s important to remember the 2009 figure is a sold price. This year’s mark is a pended price, which is equivalent to the last price the property was listed at before there was a purchase agreement accepted. Most likely, the sold price will be somewhat less than that.

Of the 26 new duplexes, triplexes and fourplexes on the MLS, 26.9 percent were being sold by traditional sellers. For the same week last year there were 47 new properties to choose from, with 46.8 percent that did not require the participation of a bank in the negotiations.

Not terribly exciting, not horribly disappointing.

We’ll take it.

Comments Off on It’s The Holiday Season – Reserve Your Duplex Chick Early!

run santaNow that it’s cyber Monday, I thought I’d take the opportunity to suggest to all of you who are thinking of looking at duplexes when you head home to Minnesota over the Christmas/New Year’s break to give me as much lead time as possible so I can accomodate you.

As funny as it sounds, I get really booked over the holiday break.

That isn’t like most Realtors, who take November and December off.

Largely because of this blog, I seem to be popular with Minnesotans who, like me, fled for warmer climates years ago and now are considering a move back.

Who can blame them? After all, it’s awfully difficult to get good lefse in Los Angeles.

Anyway, please call or email me as soon as you have your plane reservations in place. There are and will be a lot of good opportunities on the market, and I want to be sure I make time for you to see them all.

Minneapolis Duplex Sales Act Like The Weather

said on November 23rd, 2010 categorized under: Twin Cities Real Est

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winter windowSince the April 30 expiration of the first time home buyer’s tax credit, the Minneapolis duplex market has acted like it was winter.

Sales slowed. New listings slowed. And, well, now that it actually is winter, the market behavior almost appears “normal” in its behavior.

Whatever that is.

This doesn’t mean that we’re back on track; just that we’re now in a time of year where this slowing is typical.

In the week ending November 13, 2010, twenty-nine duplex owners accepted offers on their properties. Just 27.6 percent of these transactions did not involve a bank in the negotiations.

While this represents a 28 percent decline in pended sales from the same week last year, the good news is that just 18.75 percent of last year’s transactions involved traditional sellers.

The average off-market price this year was $133,336, while for the same week last year the sold price was just $117,259. As always, pended prices are different from sold prices, so this apparent jump in value isn’t necessarily something to cheer about just yet.

The number of new duplexes to the market was also up; leaping past last year’s mark by 15 percent. Of these new listings, 57.9 percent were offered by traditional sellers; 9.4 percent more than last year.

Over in the single family home market, pended sales for the week were down 4.3 percent from year ago levels. The number of new listings also dropped slightly, decreasing 5.3 percent from last year.

Fewer single family home sales should ultimately help shrink the bloated inventory of homes, which is up 10.4 percent from last year’s levels.

This sort of thing is typical in November, which, I suppose, is cause for celebration

What Happens With Every Missed Duplex Payment?

said on November 22nd, 2010 categorized under: Short Sales/Foreclosure

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Short Sale Real Estate Sign Isolated - LeftHow many duplex payments are you behind?

The answer tells me almost everything I need to know to short sale a Minneapolis duplex.

While each lender has its own rhythm and schedule, there is largely a predictable pattern of what happens as property owners miss more and more payments in the state of Minnesota.

(Please note foreclosure timelines and practices vary by state, so it’s important you check with someone in your specific area as to which guidelines apply to you.)

According to the Minnesota Home Ownership Center, the following is an average timeline for the foreclosure process in Minnesota:

1st Missed Payment – At this point, the lender generally calls the duplex owner and follows up with a letter reminding them about the overdue installment.

2nd Missed Payment – The calls and letters continue, with one of those correspondences being a thirty day default letter.

3rd Missed Payment – Attempts to collect continue, but at this juncture, things begin to change. The account is usually transfered to the foreclosure department, with a “Notice of Intent to Foreclose” sent to the duplex owner.

4th Missed Payment – Things start getting expensive with the fourth missed payment, as this is when the account is forwarded to a foreclosure attorney who, of course, starts charging legal fees; fees that are added to the property owner’s debt. The attorney starts earning his or her keep by sending a notice to the duplex owner.

5th Missed Payment – Matters become more serious with the fifth missed payment, because it’s at this point that the attorney schedules the Sheriff’s Sale. Once the sale is scheduled, notice of it is published for six consecutive weeks, usually in publications like Finance And Commerce or Capitol Report.

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Can You “Foreclose” On A Duplex Contract For Deed?

said on November 19th, 2010 categorized under: Financing

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close-up pen on the moneyWhat do you get when you have tightened lending practices, then add a slow duplex market for traditional sellers?

The re-emergence of the Contract For Deed.

A Contract For Deed, which is also known as land contract, is a transaction where the seller acts as the bank. In exchange, the buyer agrees to pay for the property in monthly installments, while the seller retains legal title to the property until the contract is paid in full.

(For the record, most sellers don’t want to carry a contract for deed for 30 years, so these transactions usually involve a “balloon payment” after a few years where the buyer obtains more traditional financing for the property, thereby letting the seller off the hook.)

Frustrated duplex sellers who simply want out of their property may discover offering this type of financing allows them to sell a property because it makes it a possibility for a broader pool of buyers.

Buyers who may or may not have credit problems.

While it’s always a good idea to ask to see a prospective buyer’s credit report before agreeing to seller finance the property, what about the buyers who develop financial difficulties after they’ve bought the duplex?

The good news is Contracts For Deed are not foreclosed on, meaning the wait to get delinquent duplex owners isn’t nearly as long as it is for banks.  When a buyer falls behind on payment by just 60 days, the seller can file what’s known as a Notice of Cancellation of Contract for Deed with the county and serve notice to the buyer.

From that date, the buyer has just 60 days to cure or reinstate the contract. This usually involves catching up on payments and reimbursing the seller for attorney fees. If the buyer fails to do so, ownership of the property returns to the seller.

The seller who repossesses the property does not have to return any funds to the buyer; even if default occurred after years of payments.

And there is nothing stopping the seller from marketing the property all over again.

Can You Rent Your Short Sale Duplex?

said on November 18th, 2010 categorized under: Short Sales/Foreclosure, Tenants

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for rentThe other night I stopped by a Minneapolis duplex to see if I could help the owner avoid the potential credit and tax consequences of foreclosure.

Guess what I saw in the front yard?

A “For Rent” sign.

Mind you, the sheriff’s sale has already happened on the property; meaning the owner has six months or less to either redeem the loan or lose it to the bank.

And the owner is within his rights to collect rent (unless the lender has told him otherwise).

But if you were a tenant and knew the duplex was in foreclosure, would you want to move in? If so, would you expect a discount on the rent?

Perhaps the owner simply planned not to tell them.

Trouble is, Minnesota state law requires him to.

A duplex owner in foreclosure must notify a prospective tenant, in writing, not only that the building is in foreclosure, but also the date the redemption period ends.

What’s more, the owner cannot lawfully sign a lease that extends beyond that redemption period.

So what’s the worst that can happen? After the bank reposses the duplex, the tenant can sue the landlord; not only for rent, but also for defending against an eviction case brought by the bank.

Seems to me like this guy’s got enough trouble already.

Minneapolis Duplex Sales Take Early Holiday

said on November 16th, 2010 categorized under: Twin Cities Real Est

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no santaDuring the week ending November 6, 2010, pending Minneapolis duplex sales apparently heard Christmas music in the stores and took an early holiday; plummeting 55.8 percent from their mark during the same week last year.

The percentage of pended listings offered by traditional sellers stayed roughly the same at 31.6 percent, the average off-market price of $121,952 hovered just above last year’s sold mark of $118,130, and the number of new listings for the week was down by just three units week over week.

In other words, while there was no significant uptick in traditional seller transactions, or in the amount of new listings, pending sales have dropped by half; which, if the trend continues, will ultimately increase the amount of inventory and put downward pressure on prices.

In the single family home market, the number of signed purchase agreements dropped 16 percent from their mark during the same week last year.

And while the number of single family homes available in the Twin Cities metro area remains 11.3 percent higher than it was one year ago, the rate of inventory increase appears to be slowing.

What does this mean? Right now, there are 11 homes on the market for every buyer who’s out there shopping. That’s the biggest selection available for home buyers since December 2008.

Comments Off on Duplex Chick Wishes For Duplex Do-Over

Duplex Chick logos 003I’ve been talking about endings with a lot of beginning duplex buyers lately.

The reason is I see many headed for the same mistake I made; making cash flow their number one goal.

In many respects, this is a good thing. I’ve always believed neither an investor nor owner occupant should ever buy a property that doesn’t make financial sense.

But once upon a time, I too had decided it was the most important criteria in my real estate purchases. So I bought a big building, without a lot of charm or character.

But it cash flowed like crazy.

When it was full.

But when vacancy rates went up, it took money out of my pocket. Seems there were 20 other buildings that looked just like it in my neighborhood; so tenants moved where the rent was low.

So I sold it. At a loss.

If I could have a real estate “do over”, that would be it.

Why? Because ultimately, it didn’t serve my long term goal.

My goal is to amass enough equity so that when I approach retirement, I can put a lot of money down on a big property, a cash flow machine, and have somebody else manage it.

Opting for cash flow right now was like not saving for retirement.

Big apartment buildings don’t appreciate the same way smaller multi-family properties do; simply because there aren’t as many buyers for them.

And I’m still working. So shouldn’t the income from my job should pay my bills?

If I could rewrite the past, I’d buy property in neighborhoods that had long histories of stability. I’d buy in places people want to live because of nearby natural and man-made amenities that enhance peoples lives. I’d buy charm, and I’d be thrilled if it simply broke even.

And that is entirely possible in this real estate market.

See, those neighborhoods will probably stay strong. Those neighborhoods will hold value. And maybe someday, they’ll even once again go up in value.

Someday. Like in 20 or 30 years. Just about the time I’m about to retire.

Maybe I’ll get my do-over after all.

What Does A Real Estate Investor Look Like?

said on November 11th, 2010 categorized under: Multi-Family Property Investing

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rich uncle pennybagsWhen you think of a real estate investor what picture comes to mind?

Donald Trump? Monopoly’s Rich Uncle Pennybags?

After all, it takes a lot of money to invest in real estate, right?

Wrong.

According to the Distressed Property Institute, the median annual income for a real estate investor in 2009 was $87,200. While  this is higher than the $72,900 median for those buying primary residences, it is nowhere near the Trump-osphere.

Actually, nearly half (43 percent) of investors made less than $75,000 per year. In fact, those who made less than six figures a year outpaced those who made more by a margin of two to one.

Apparently, Mrs. Trump and Mrs. Pennybags need some credit as well, as 78 percent of all real estate investors were married couples.

Not only are most real estate investors not rich, they’re also young. Only 22 percent of real estate investors are 45 to 55 years old. In fact, a whopping 50 percent of them are under the age of 45!

If you’ve been dreaming of becoming a real estate investor and didn’t think you fit the mold, know this: there’s never been a better or more affordable time to jump into the market.

You can start small. And there’s plenty of opportunity.

Minneapolis Duplex Market Tied

said on November 9th, 2010 categorized under: Twin Cities Real Est

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suit and tieIt’s a tie.

Most of the time, (in sports anyway), that isn’t necessarily a good thing. But when it comes to the Minneapolis duplex market, it’s an improvement; like wearing one.

For the week ending October 30, 2010, 22 duplexes, triplexes or fourplexes received puchase agreements. Exactly that many received accepted offers for the same week one year ago.

Of those that left the active inventory this year, 18 percent were offered by traditional sellers. Last year,  27 percent were.

While this year’s average off-market price of $155,961 was up significantly from last year’s sold mark of $131,655, it’s important to keep two things in mind. First, the pended price is the number at which the property was last listed. Second, this year’s average was largely influenced by a pending sale on Summit Ave of $750,000. Without that single transaction, the off market average falls to $121,870.

The number of new duplex listings for the week dropped 22 percent from those that hit the market during the week in 2009. Of  these, 2.8 percent were listed by traditional sellers; down slightly from last year’s 44 percent. While a drop in supply will ultimately help prices, reductions of 1-2 percent aren’t significant enough to help.

Meanwhile, in the single family home market, inventory continued to swell; up 12 percent from the same time one year ago. While the weekly total was just .4 percent higher than the week last fall, a 29.9 percent drop in week-over-week pending sales has not kept up with new supply.

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