Archive for June, 2011
Comments Off on Why I Won’t Show You A Duplex When You Call
If you’re thinking of buying a Minneapolis duplex now or sometime in the future, please be prepared to come in to my office, or the office of any Realtor you choose, before you go look at property.
This accomplishes several things.
First, it gives you an opportunity to plan and strategize with the agent the best course of action that suits your short and long term goals as a duplex and investment property owner.
Second, it helps you save time running around, calling numbers on “For Sale” signs and looking at property that doesn’t fit your criteria.
Finally, it’s safer – for both the agent and you.
After all, you’ve just called a complete stranger and asked them to meet you at a potentially vacant house. Neither you nor the agent know the person on the other end of the call.
In the last year, a number of Realtors have been attacked and even killed when they simply answered a call from their sign and went to show the caller the duplex or home they had listed.
And this didn’t happen in New York. Or California.
Try Iowa and Ohio.
I recently lost a prospective client simply because I asked that our first meeting be at my office, rather than at a vacant property at 9:15 at night.
I would have loved to help him, but frankly, no paycheck is worth my life.
And no real estate deal should be worth yours.
It may seem inconvenient to meet a Realtor at his or her office before looking at a duplex you want to buy. But it will go a long way toward establishing a long term, successful and happy working relationship for both of you.
Comments Off on Apartment Sector Has Good News For Minneapolis Duplex Owners
The research firm Marquette Advisors reporting the vacancy rate for Minneapolis and St Paul duplexes and apartments dropped from 6.1 percent in the first quarter of 2010, to 3.1 percent in the first quarter of 2011, there suddenly seems to be something of a rapid recovery happening in the rental market.
According to a report in this morning’s Finance and Commerce, the apartment sector is the only area of commercial development showing signs of life this year.
To that end, there are an estimated 870 new apartments being built this year, with somewhere between 1100 and 1300 units on the books for next year.
This expansion is due, in part, to low vacancy rates allowing landlords to hike rents for the first time in five years.
Now, these aren’t huge rent increases. On average across the metro, rents are up just 1.7 percent from the first quarter last year. However, according to Marquette, increases have been much greater in hot urban neighborhoods like Uptown, downtown and near the universities; where rents were often up as much as 8 percent.
The suburbs and outer ring communities are likely to see rent improvements as well, but not at the same pace.
Clearly, tighter lending standards, a sluggish economy and swelling numbers of prospective tenants as a result of foreclosure have increased the demand for rental units.
And with an estimated 4 million plus more homeowners delinquent on mortgage payments nationwide, the trend is sure to continue.
Looks like it’s going to be a pretty good time to buy and own Minneapolis duplexes; for a long time to come.
Comments Off on Search For Duplex Sellers Continues
If last week’s traditional Minneapolis and St Paul duplex sellers were lost, for the week ending June 18, 2011, they were hanging out with Amelia Earhart.
The owners of nineteen duplexes and small multi-family income properties accepted purchase agreements for the week. Of these, 31.6 percent were owners (traditional sellers) who did not need permission from a bank to sell.
One year ago during the same week, 45.5 percent of the sellers who accepted offers fit that description. Duplex sales for the week were also slightly higher than this year’s tally, with 22 of them leaving the active market.
Here’s where things get interesting. There were 33 new duplex, triplex and four unit listings that went up for sale during that seven day stretch this year. Of these, 48.5 percent were traditional sellers.
Last year, there were 47 new listings during the same week. Just over half belonged to sellers with names rather than corporations. The 14 fewer listings this year represents a drop in new inventory of 29.7 percent. That’s nearly one-third fewer new duplex opportunities for duplex buyers to choose from.
Can a price increase be too far behind?
In the single family market, signed purchase agreements were up 49 percent over one year ago. That’s 961 properties; the biggest number in 57 weeks, and just four units shy of the high for 2008.
Newly listed homes were down 10.4 percent, the fourth consecutive week of decline. In other words, supply is down.
If you’ve been thinking of selling, are afraid of crashing, consider this little window of time Howland Island. It might be a terrific opportunity to sneak onto the market; before we attempt to fly over the rest of the foreclosure ocean.
Comments Off on Distressed Duplex Owners Can Share Secret
Not long ago I spoke with a Minneapolis duplex owner who was upset I’d spoken with his tenants in order to reach him.
The duplex owner was facing foreclosure, and feared I’d mentioned this to them.
While I knew his property was distressed, and I was, in fact, trying to reach him to see if I could help him find a solution, I would never tell a tenant anything one of my sellers or prospective sellers would not want shared. I always assume mortgage delinquency is confidential.
Here’s the irony. The tenants already knew.
In Minnesota, banks deliver a copy of the notice of default to the tenants. It includes the date of the sheriff’s sale, as well as other important information about the foreclosure process.
It does not, however, absolve the tenants from paying rent, abiding by the terms of their lease, nor reduce or eliminate their rights.
Until the end of the redemption period, (which is six months after the sheriff’s sale in Minnesota), duplex and other investment property owners also retain all of their rights as a landlord.
If you’re a duplex owner facing foreclosure, however, please remember that a second loan or Home Equity Line of Credit (HELOC), will survive the loss of the property, and the lender will have up to six years to pursue you for the deficiency.
And that’s the good news.
The not so good news is the IRS may want to hear from you too.
There are solutions, including short sales and loan modifications. Please contact me. I’d be happy to help find a solution.
said on June 23rd, 2011 categorized under: Tenants
Comments Off on What Is Market Rent On Your Duplex?
If it’s a great idea to keep your Minneapolis or St Paul duplex rented for as close to market rents as possible, how do you determine what that amount is anyway?
I wish there was a scientific formula. However, I happen to think non-scientific web sites like Craigslist, Oodle and Hotpads, are a great place to start.
Take a look on those web sites, local newspaper web sites, or take a look at the local newspaper. Try to find rental units like yours in your area and nearby neighborhoods and see what they’re renting for.
If you’re driving through your area and see an orange and black “For Rent” sign in a front yard, pull over and see if there’s a unit description on the sign. If not, you can always call to find out what’s offered with the property and how much it’s renting for.
Be sure to compare amenities. Locations. And if there are photos included in an online or print ad, do your best to compare condition. Try to determine whether or not the landlord in the ad pays for heat, if so, that unit will rent for more than one where the tenant is responsbile for his or her own utility bill.
If there are only 2 bedroom duplex vacancies in the area and your property has an empty 3 bedroom unit, take the amount of the rent advertised and divide it by the number of bedrooms. For example, a 2 bedroom unit that rents for $1000/month is renting, essentially, for $500/bedroom a month.
Then take the $500 and multiply it times your 3 bedrooms. This will put your rent at $1500/month. However, please note that more bedrooms sometimes results in an economies of scale; with less demand for big units, and a greater lack of privacy for those who occupy them.
Of course, the best way of all to maximize the rent you collect is to try to fill a vacancy. If you advertise one amount, and don’t get any response, odds are you’re charging too much.
On the other hand, if your phone never stops ringing, you may be under valuing your property!
Comments Off on Why Minneapolis Duplex Owners Love A Bad Real Estate Market
In recent months you may have heard that both the cities of Minneapolis and St Paul are experiencing historically low rental vacancy rates.
As in below 3%.
Thanks to the foreclosure crisis and tighter lending standards, more prospective home owners have been forced to rent until the both the economy and real estate market improves.
So what does this mean to an investment property owner, duplex buyer or seller?
As always, when supply exceeds demand, prices go up.
In recent months, a number of established Minneapolis duplex and investment property owners told me they’ve been able to increase rent for existing tenants and vacant units for the first time in years.
If you’re a duplex owner thinking of selling, this is good news. If you can keep your rent in line with the market, your property will have more annual gross revenue, which is one of the major components in determining value. The more income a duplex generates, the more it’s worth.
On the other hand, if you’re thinking of buying, this information should give you a sense of urgency. Regardless of whether or not a property is distressed (lender owned or subject to a short sale), values will go up because market rents have increased.
In other words, if you buy before prices increase, you’re more likely to get a bigger return on your investment dollar.
Comments Off on Minneapolis Duplex Sellers Missing
Where are the traditional Minneapolis and St Paul duplex sellers?
You remember them, right? They’re the ones who don’t have to get a bank’s permission to sell their duplex.
Because the Minneapolis duplex market for the week ending June 11, 2011, missed them.
While pended sales were up 14% over the same week the year before, just 14% of those transactions involved traditional sellers.
This was reflected in a lower average off-market list price of $101,188, compared with last year’s $157,670 for the same week when traditional sellers were responsible for 50% of the pended sales.
The number of new lisitngs was down as well, with just 40 new opportunities for buyers. Last year, there were 59 pieces of new inventory for buyers to choose from.
Of the week’s newly listed duplexes, 35% belonged to traditional sellers. This is down significantly from the 54% of the Minneapolis and St Paul duplex sellers one year ago who had equity in their property.
Meanwhile, pending single family home sales in the Twin Cities were up 33.7 percent from the week a year ago. This was the m
fifth week in a row that the market demonstrated double digit gains.
There were fewer single family homes that hit the market for the week as well, down 9.1 percent from 2010. In all, there are 11.6 percent less homes for sale than there were last year.
Sure hope someone finds those traditional duplex sellers soon…
Comments Off on Beware Of The Bad Duplex Landlord List
If you don’t take care of your Minneapolis duplex, not only are you losing maximum rental income and equity in the property, but you also run the risk of ending up on city’s bad landlord list.
What’s the bad landlord list? It’s a public record of landlords who failed to repair their properties and, as a result, had their rental licenses revoked.
In some cases, these landlords may even be prohibited from having a rental license for years.
What qualifies your property to put you on the bad landlord list?
Overgrown grass that’s more than 8 inches tall and overgrown vegetation that hangs over the edge of public sidewalks or alleys.
Trash and debris; either in the yard or due to an inadequate number of trash cans. Abandoned vehicles in the yard, or if your tenants are using the yard for overflow parking, it is a code violation.
Broken windows, graffiti, rotting wood, flaking and missing paint, broken stairs and missing bricks. If you’re missing an address on the property or it’s illegible, it’s also considered a violation.
Anything that is a health and safety risk could put you on the list; including no running water, improper electrical wiring, rat or cockroach infestations, or repairs performed without a permit.
For most of us, it’s difficult to imagine ever letting our duplexes get that far gone.
And yet, how many of us have especially long grass right now?
Comments Off on How To Help Your Duplex Sell: Even In A “Bad” Market
The other day, I saw a Minneapolis duplex where approximately 15 quarts of motor oil had been sprayed on the walls and floors.
For the record, that is not a great way to stage your duplex in order to attract a buyer.
So, if you’re thinking of selling, what physical improvements should you make to your investment property to make sure you get maximum market value in the shortest amount of time possible?
Getting a duplex ready isn’t really much different than getting a home ready to sell, except that we can’t control what a tenant’s unit looks like. However, we can make some of the same exterior and interior improvements a home owner would.
And the good news is none of them are terribly expensive.
Tell your tenants you are selling. As this is frightening for many, reassure them they are protected by their lease and that while you and your Realtor will do all you can to provide ample notice of showings, it will be within the terms of their lease or law. (In Minnesota, notice for business purposes is “reasonable attempt to notify”, not 24 hours. If your lease, state, city or county says something otherwise, those are the regulations you must follow.)
Now, let’s start on the outside of the duplex.
If it’s summer, make sure the lawn is mowed. Trim tree branches so the lowest one is above human height, and hedges so they’re below the window sills. Of course, if it’s winter, make sure you stay on top of snow and ice removal.
Read the rest of this entry »
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If we’re looking for signs the Minneapolis duplex and housing markets are getting better, today’s Realty Trac report gave us the definitive yes and no answer.
Realty Trac’s foreclosure statistics for the month of May appeared on the surface to contain good news, but may, in fact, simply represent the calm before the storm.
Nationally, 214,927 properrties received default, auction or repossession notices in May. That breaks down to one in 605 households. That’s the least since November, 2007.
In Minnesota, 2,813 properties received these notifications, with 1,073 of those coming in Hennepin county.
There is no way to determine, at this point, how many of those properties were duplexes or investment property.
The good news in all of this is in all, foreclosure filings dropped 33 percent from May in 2010, and were down 2 percent from April of this year.
But is it?
According to Realty Trac CEO James Saccacio, “Even at a significantly lower level than a year ago, the new supply of REOs exceeds the amount being sold each month.”
(REO, by the way, stands for “Real Estate Owned”, meaning it’s owned by the bank.)
Of course, the lack of buyer activity Saccacio cited was reflected in housing prices sliding 3.6 percent in the first quarter of the year, according to the S & P/Case-Shiller index.
According to Realty Trac’s communications manager Daren Blomquist, the inventory of distressed homes nationally stands at 1.8 million, which if no additional foreclosures came on the market, would take three years to sell.
That puts us into 2014.
That is, IF no additional properties come on the market and IF unemployment doesn’t get any worse and IF interest rates don’t go up (as everybody’s forecasting they’re about to).
Talk about hedging our bets…