Archive for January, 2012

Isaac Newton’s Theory Of Minneapolis Duplex Sales

said on January 31st, 2012 categorized under: Twin Cities Real Est

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Duplex Master Isaac NewtonJust like Isaac Newton proved the existence of gravity, I can prove there is a shortage of Minneapolis duplexes for sale.

Take the week ending January 21, for example. There were 24 duplex, triplex and quadraplex property owners who received and accepted purchase agreements.

Of these, 4, or 16.7 percent didn’t need a bank’s permission to make the decision to sell.

Last year during the same week, there were 22 Minneapolis and St Paul duplex owners who accepted purchase agreements. Four of these duplex sellers had equity in their property.

So, year over year, while it’s only a difference of two sales, it’s fair to say Minneapolis duplex sales were up, right?

But here’s the catch. One year ago during that week there were 33 new listings.

This year, there were just 19 new listings.

 Higher sales + less inventory = duplex for sale shortage.

While conventional economic logic would suggest that less inventory coupled with higher demand would result in higher prices, this isn’t yet the case. Last year’s average sold price for the week was $112,074, compared to this year’s average off-market list price of $113,140.

In this market, generally speaking, average sale prices are less than the amount the property was last listed at. As a result, we can expect the average sale price to be below last year’s mark.

My theory can also be proven in the single family home market. There, the number of new listings for the week decreased 8.2 percent, while pending sales increased 29 percent.

The median sales price in the month of December, however, was down 6.5 percent to $145,000.

I haven’t been able to substantiate a rumoured March release of bank-owened inventory, but for the buyers currently in the market for a Minneapolis duplex, it would be welcome.

Minneapolis Duplex Owners Face Deadline

said on January 25th, 2012 categorized under: Legal Stuff

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minnesota duplex certificate for rent paidIf you owned residential income property in the state of Minnesota in 2011, consider this a friendly reminder that your CRP (Certificate of Rent Paid) must be issued no later than January 31, 2012.

A CRP is a form that helps tenants get a tax refund because they essentially helped pay your property tax for the year.

A CRP must be completed even if you sold a duplex, or purchased one during 2011. Each owner must issue a separate CRP to tenants for the time they owned the property.

Roommate CRPs are to be divided according to the the amount each individual paid.

Remember, if you forget to issue a CRP, you may be assessed a $100 penalty for each instance. In other words, if you have four tenants in your duplex, all of whom are unmarried, you could face $400 in fines.

I’ve made it easy for you. To get the forms, just click here.

Minneapolis Duplex Market Continues To Tighten

said on January 24th, 2012 categorized under: Twin Cities Real Est

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tightenIf it seems like there’s a shortage of Minneapolis duplexes for sale, it’s because there is.

Perhaps it’s because for many weeks we’ve seen statistics like this:

For the week ending January 14, 2012, there were 20 new duplex, triplex and quadraplex listings to the Minneapolis MLS.

During the same week in 2011, there were 40 new listings.

In other words, the amount of new inventory for the week had dropped by half.

In both cases, exactly half of that new inventory was brought to the market by traditional sellers– as in people who didn’t need permission from a bank to sell.

Ironically, there were just 14 Minneapolis and St Paul duplexes where sellers received and accepted purchase agreements the second week of January. Only one of these duplex owners decided to sell without bank interference.

On average, these properties pended at a list price of $78,299.

This number is down from that week in 2011, when 20 duplexes pended or sold on the MLS. Of these sellers, just less than one-third had equity in their property.

These sellers received an average sales price of $136,920.

Single family home listings followed duplexes, reporting a 5.2 percent decline in the number of new listings to hit the market. In all, there are 23.8 percent fewer homes for buyers to choose from than there were last year.

Pending sales, however, were up 29.4 percent.

The tightening market has yet to impact sales price in an upward direction.

Can’t wait to see what spring brings.

Comments Off on Two Basic Facts Known By Successful Duplex Investors

buy duplexes using leverageLast night, a group got together at my office and played Robert Kiyosaki’s game, Cash Flow.

Even though I work every day in the business of duplex and real estate investment, the game was an important reminder of some basic principles that are easy to forget.

For example, the players who fared the best were those who were the most tolerant of risk. They were the ones least afraid to plunge into an investment opportunity. There took risks the other players weren’t willing to.

Those players also understood the importance of leverage.

While the game allows bank loans to acquire stocks and businesses, in real life real estate is the only investment a bank will lend you money to buy.

Think about it. If you are looking to invest in a duplex, in exchange for coming up with 20-30 percent to buy it, the bank will pay for the remaining 70-80 percent.

And, finally, those players also clearly understood they would never get out of the “Rat Race” based on their salaries alone. They knew they needed other avenues to secure their financial futures.

Isn’t it time we all get started?

When Buyers Like The Same Duplex

said on January 19th, 2012 categorized under: Buying A Duplex

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Equals signWhen I work with a duplex buyer, one of the things I require is that they agree to give me the exclusive right to represent them.

After all, I work hard to find my clients great duplexes to buy; both on and off the Multiple Listing Service (MLS).

And if I’m willing to put all of that work in, I want to be sure that buyer isn’t going to bring some other Realtor in at the last moment who will get paid for my efforts.

When I discuss the terms of the exclusive representation contract is that the buyer understand I have other potential buyers I may be working with, and it’s possible that some or all of  those clients might be interested in the same properties.

In the decade I’ve been a licensed Realtor, I’ve shown many duplexes to multiple clients. Believe it or not, it is extremely rare that more than one buyer has been interested in the same property at the same time.

Every now and then, however, it happens. Especially if a duplex is a very good deal.

When it does, I am honest with both parties. I give both my opinion of market value on a property, and what terms I believe the seller might be willing to accept.

I never disclose the amount of one buyer’s offer to the other.

In fact, if one or both buyers are uncomfortable with the situation, I even offer the services of another Realtor in my office who has experience in investment property.

This agent helps the duplex buyer fill out the price and terms of their offer, and, if the client wishes, either sends the offer to the listing agent or presents it in person. This agent represents the buyer only for this period of time, and if the offer is either accepted or rejected, I step back in as their Realtor.

I do my very best to treat everyone fairly and equally.  I want everybody to get a great deal on a duplex, and change their financial future forever!

Minneapolis Duplex Market Stabilizes…For Now

said on January 17th, 2012 categorized under: Twin Cities Real Est

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minneapolis duplex market stabilizesFor the moment, the Minneapolis duplex market appears to be stable.

Before we all go singing “Ding, dong, the witch is dead”, let’s see what happened the week ending January 7.

There were 17 duplex owners who accepted purchase agreements on their properties. Of these, 41 percent did not need a bank’s permission to sell. Of these, the average price they left the market at was $95,350.

Last year, there were 12 Minneapolis and St Paul duplex owners who came to terms with buyers during the first week of the year. Similarly, 41.7 percent had equity in their properties. On average, these duplexes sold for $94,228.

There were 29 new listings that became available for purchase during the first week of 2012. More than half; 51.7 percent to be exact.

In 2011, there were 26 new listings during the same week. Of these, 53.8 percent were brought to the Minneapolis duplex market by traditional sellers.

And while this seeming “more of the same” could be cause for comfort, it’s important to remember that according to Lender Processing Services, more than 6 million loans nationally are more than 30 days behind in their payments. Nearly 2 million of these property owners are actually more than 90 days behind.

At some point, those properties will have to work their way onto the market.

Comments Off on Become A Savvy Duplex Investor – Without Spending A Dime!

use cashflow to get out of rat raceIf you are considering buying a Minneapolis duplex, or just exploring the possibility of real estate investment,  I have an absolutely free way for you to sharpen your skills.

On Thursday, January 19, we will be playing the game Cashflow from 7-9 PM at my office in Edina.

Created by Rich Dad Poor Dad author Robert Kiyosaki, the game is designed to help you quickly raise your financial I.Q., as well as teach you how you can become financially free even on a small salary.

There can be up to six players on each board, and we will have up to three boards going.

Whether you’re a first time investor, real estate professional, or just bored and looking for something to do, please call or email to let me know so we can be sure to save a seat for you!

Comments Off on Why Some Duplex Foreclosures Need Professional Help

repainting a duplexLast night, I was reminded why I think HGTV bears some of the responsibility for the current duplex market.

My clients and I went back for a second showing of a bank owned duplex where the previous home owner had clearly undertaken some do-it-yourself home renovations.

Trouble was, he didn’t know what he was doing.

Oh, the refinished hardwood floors and exposed brick chimney looked really cool.

Unfortunately, however, the homeowner also forgot to install a heat source on the third floor.

The kitchen cabinets looked good too. I just wish that duplex owner had also bought glass for the broken windows instead of using masking tape.

Fortunately, my clients were wise enough to invite a FHA 203k approved contractor along to the showing so that they could get an accurate and professional opinion of what repairs were going to cost them; before they put in an offer.

After all, if the cost of rehabbing the duplex, when added to the cost of purchasing it, was more than the finished property would be worth in today’s market, they would find themselves upside down once they were finished with the repairs. Just like the previous homeowner.

When you’re looking at buying a duplex that needs either a little or a lot of work, it’s  important to remember that big repairs and improvements aren’t as easy as they appear on HGTV.

If you’re considering using a FHA 203k loan to finance those repairs, it’s not a bad idea to get one of their approved contractors to give you a professional opinion before you even put ink on a page.

There are always unexpected surprises and expenses, that can leave you frustrated and broke. And if you’re ambitious enough to take that kind of work on, you also deserve to be compensated for your time and energy in the form of equity.

Remember to build all of those expenses into your thinking when you write an offer to buy a duplex.

Why Is That Duplex Still For Sale If It’s Already Sold?

said on January 11th, 2012 categorized under: Buying A Duplex

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duplex for saleIf you’re looking to buy a duplex, chances are you’ve looked at a few on the Internet.

Odds are also pretty good that you’ve stumbled into a duplex listing or two that were on the web so long and were such good deals that you simply had to call the listing agent to see when you could get in to see it.

At that point, you learned it already had an accepted offer on it.

So why, then, was it still on the Internet?

When someone writes an offer on a duplex, they usually do so with a couple of contingencies. In other words, they are offering to buy the duplex provided a couple of things happen.

They may make their offer contingent on conducting a home inspection, and determining that the property’s mechanical condition is satisfactory to them.

If it isn’t, then their purchase is also contingent on coming to terms with the seller about how to remedy any health and safety imperfections they find in the property.

Unless the buyer is paying cash, the purchase may also be contingent on the buyer’s ability to qualify for a loan, as well as the duplex’s ability to appraise for a value equal to or greater than the price the buyer and seller have agreed on.

However, in this market, the duplex seller may also have a contingency. For example, if the duplex is worth less than the amount they owe their lender, they must make the sale contingent upon their ability to come to a reasonable settlement with the bank.

Read the rest of this entry »

Minneapolis Duplex Sales Need A Publicist

said on January 10th, 2012 categorized under: Twin Cities Real Est

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anderson cooperI can’t believe there aren’t any headlines or special news bulletin interruptions. After all, what is a balanced real estate market?

One where there are an equal number of duplex buyers and sellers in the Minneapolis market.

The easiest way to measure this is with the Months Supply of Inventory statistic. Essentially, this number comes from the calculation of, if nobody put another house or duplex on the market, how many months would it take to sell all the ones already for sale?

A balanced market is one at which there’s a 5-6 month supply.

Anything bigger than that, and it’s considered a buyer’s market. Like what we’ve had the last few years.

Anything smaller than that, and we’re in a seller’s market.

In statistics released by the Minneapolis Area Association of Realtors today, in December, the Twin Cities had a 36.2 percent decline in inventory, resulting in a 4.6 month supply.

Which means, for the moment anyway, the market favors sellers.

And I certainly haven’t heard any word of this in our local media outlets.

For the week ending December 31, 2011, there were 20 Minneapolis and St Paul duplexes, triplexes and four unit apartment building sellers who received and signed purchase agreements for their properties.

Of these, 35 percent have equity in their property and do not have to get a bank’s permission to sell.

These 20 properties left the market at an average list price of $158,300. This is up from last year’s sold price for the same week of $117,310.

Of course, one year ago, there were just 11 Twin Cities duplexes that sold that week. Of these, only 18 percent did not involve a bank’s input on the sales price.

Last year during the week, there were 12 new duplex listings for buyers to choose from. There were the same number last year.

However, while traditional, equity sellers contributed 42 percent of the inventory during the final week of 2011, just 25 percent of those sold the same week in 2010 did.

Before we start looking for signs of CNN trucks and Anderson Cooper in our neighborhoods, it’s important to note happy days, are probably not here again.

After all, on a national basis, there are reportedly well over 6 million homes and duplexes at some stage of the foreclosure process.

But right now, we’ll take any bit of good news we can get.

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