Archive for November, 2017

Comments Off on Looking For A Good Property Manager? Ask The Right Questions

There often comes a time in a real estate investors career when managing his or her own properties isn’t possible. As a result, I am often asked if I can recommend a great property manager.

Of course, I can.

My criteria, however, may not be the same as either the property owner’s or, most certainly, that of the tenants.

To me, in addition to the usual jobs of a property manager, the most important qualities I look for is the understanding that their fiduciary duties are to the property owner (not the tenants) and knowledge of landlord/tenant law.

A fiduciary has a legal or ethical responsibility to act in the best interest and sole benefit of the property owner at all times.

Over the years, I have interviewed a number of property managers to see if they are good fits for my clients. Time and again I have been told by these individuals and companies that they have great relationships with their tenants. It is rare to hear they have good relationships with their owners. And those are the very people they have a fiduciary duty to!

Of course, when it comes to access to properties, evictions and even tenant screening, knowing the letter of the law can be the difference between success and failure, both as an investment property owner and as a seller.

That’s why I always ask prospective managers a trick question. It is, quite simply, if a property owner decides to sell, what kind of notice are we required to give residents for showings?

Of course, if the answer deviates from Minnesota state law and isn’t detailed specifically in the property’s leases, I can’t recommend them.

So what is Minnesota law?

I’ll give you a hint. There’s no such thing as a 24-hour notice rule.



Comments Off on Winter Minneapolis Duplex Sellers Stand Out From The Crowd

Selling your Minneapolis or St Paul duplex is a lot like trying out to be the starting quarterback on your high school football team.

If there aren’t a lot of duplexes currently for sale, it’s like being an athlete in a small school. It isn’t hard to make the team or start if there are only 300 kids in the entire school. Heck, in that case, you may not even have to work out.

However, if you transfer to a large school, where there are 1200 students, odds are you may have to actually lift weights, go to a football camp and train to even make the team at all.

Waiting to sell your duplex in the spring is exactly like that.

Most people think that the best time to sell is in the spring. But so does everybody else. That means there’s a lot more competition and as a result, you’re going to need to do a lot more to stand out and achieve a sale.

The irony is, there are a lot of buyers in the market for a duplex in the fall and winter too. They get frustrated because they have fewer properties to choose from. Many times, they are so happy to find something that just comes close to what they’re looking for, that they will purchase a property they wouldn’t have considered in the spring.

Did you know there are currently just 312 duplexes, triplexes and fourplexes for sale in the 7 county metro area? Last November, there were 400. But from December through April, there were fewer than 270 every month. That’s almost 30% fewer fellow duplex sellers to compete with!

If you’re thinking of selling your Minneapolis or St Paul duplex, give me a call at 612-290-5998. I’d be happy to tell you how to make the team.




Comments Off on Is There Rent Control In Minneapolis Duplex Owners Future?

Better cash flow and higher resale value are just two of the many important reasons to keep the rents in your Minneapolis or St Paul duplex at or near market value.

But there is one more casting its shadow among multifamily property owners in the Twin Cities: rent control.

Minneapolis and many of its surrounding communities are suffering from an acute lack of affordable housing.

The majority of residents in Minneapolis are renters, with more homes in the city being rented than owned.  The vacancy rate in the city is at just 3.4 percent; a historic low.

It’s the old law of supply and demand: when supply is low, the cost of rent skyrockets.

To combat this, the city has tried a number of strategies including passing an ordinance that prohibits landlords from renting to tenants using Section 8 vouchers, as well as trying to incentivize the construction of workforce housing by changing some zoning laws to spur the development of smaller apartment buildings.

They are considering other ideas as well, like:

  • requiring landlords to renew tenants leases unless they have legal grounds to evict them
  • requiring landlords to give the city and tenants advance notice when they intend to sell the property
  • giving tenants the right to buy a building before it goes on the market
  • rent control

As horrifying as those may sound to Minneapolis landlords, rent control is the one that would impact every aspect of investment property ownership.

And while it hasn’t been passed by the city council, it has been a topic of conversation.

Rent control prohibits landlords from increasing rent more than an amount or percentage determined annually by the city.

If your rent is below market value if rent control is implemented, the only way you will be able to raise it is if the tenant vacates the unit. If rent is artificially low, a resident may stay for a lifetime.

This low rent will not only have a negative effect on a duplex owner’s cash flow, but also dramatically decrease the value of the property when it comes time to sell.

It’s nice to have good tenants who stay. But is your tenant so great that they have the right to impact the value of your portfolio?

Most residents won’t move if their rent is below market value. And that’s just as true if it’s $100 below what they can rent any other unit for as it is for $400 less.

Keep your rent near market value. It will pay off in more ways than one.