November 21st, 2008 categories: Legal Stuff
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October 6th, 2008 categories: Legal Stuff
Last week, we talked about the reasons a landlord can file an eviction action; nonpayment of rent, lease violations, illegal activities or a holdover tenant.| Discussion: No Comments »
September 25th, 2008 categories: Legal Stuff
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August 21st, 2008 categories: Legal Stuff
With the change in the current housing market, many would-be sellers are turning to renting their homes in lieu of a sale. And, they often forget one thing that many first-time landlords do: the government.
No, I don’t mean the IRS. Rather, the city government; places like Minneapolis and St Paul. Both require landlords to have either a valid rental license or a certificate of occupancy before a property can be leased.
In Minneapolis, whenever a property is converted to rental usage, it must be inspected for compliance with the city’s minimum housing standards. Of course, this is not free. The city charges property owners $1000 for the initial inspection. This is in addition to the annual license fee, which is $61 for the first unit and $19 for each unit under the same ownership in the same building.
St Paul does things differently. They require a certificate of occupancy, which is issued after an inspection by the fire marshall. Every rental property, from single family homes to large apartment complexes that are not owner occupied are required to comply. The fee for this is $50 per unit.
So, who’s going to notice? Well, if you get caught, Minneapolis is going to charge you an additional $250 for the first unit, and $20 more for each additional unit. Failing an inspection in St Paul, on the other hand, results in bigger fees for each additional time the inspector has to visit until non-compliant problems are solved.
Still think you can get away with it? Tenants often know this rule. Experience says, the minute you have to enforce a noise rule, or ask for delinquent rent, they’ll call city. So much for that idea…
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June 26th, 2008 categories: Legal Stuff
It’s easy to forget about carbon monoxide (CO) After all, who thinks about turning on the furnace in the heat of summer?
Well, the state of Minnesota does. With good reason.
Between 2002 -2006, 89 people died from carbon monoxide poisoning. That translates to an average of 18 a year.
Carbon monoxide is produced when fuels such as gas, oil, kerosene, wood or charcoal are burned. Dangerous amounts of the gas can build up when fuel is not burned properly, or when heaters aren’t vented correctly.
Carbon monoxide has no odor or color. As a result, by the time people realize they’re suffering from carbon monoxide poisoning, they’re no longer able to move.
So why worry about it now? Read the rest of this entry »
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June 23rd, 2008 categories: Legal Stuff
I showed a three story duplex in southwest Minneapolis featuring a deck on every floor. There were stairs leading from the second story deck to the ground, but none from the third to the second or the ground for that matter.
And the question came up: would the owner be required to add stairs to comply with the fire code?
According the the Minneapolis Fire Marshall, no.
No matter what story a unit is on, there must be one window in each sleeping room that is easily openable from the inside. It is required to have a net glazed area of 5.7 square feet. The minimum openable height of the window is 24 inches, while the minimum openable width is 20 inches.
Of course, the window can’t be more than 48 inches above the floor either. And area wells must meet minimum size requirements.
The same criteria holds true for St Paul. However, the city may require the property owner to install another escape on the third story. According to the Fire Marshall, while a secondary stairway isn’t required on the second story, the third floor is judged on a case by case basis. The fire marshall determines whether or not it is necessary by considering the square footage of the third floor as well as the layout of the property.
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June 13th, 2008 categories: Buying A Duplex, Financing, Legal Stuff, Twin Cities Real Est
We’ve all read the headlines about real estate scams in the recent boom years resulting in many of the foreclosures in the marketplace today.
And, we’ve all heard about mortgage fraud.
The extent of the problem has become so vast that, according to Bloomberg News, the FBI has ordered many field offices to stop investigating other financial crimes so agents can spend their energies on the sub prime mortgage crisis.
The FBI considers 12 markets rife with fraud: Arizona, California, Florida, Georgia, Illinois, Indiana, Michigan, Minnesota, Nevada, New York, and Ohio.
We’ve all heard the big stories about this; how the woman who earned $24,000 got a stated income loan where she qualified for a house she could never afford. How buyers and appraisers artificially inflated prices to receive kickbacks at closing, then never made a payment…
But I have to say, sometimes even something that seems like an innocent and logical solution to a problem is considered mortgage fraud.
What do I mean?
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June 8th, 2008 categories: Buying A Duplex, Legal Stuff, Multi-Family Property Investing
One of the concerns multi-family property investors often have is how to protect themselves in the event a tenant suffers an injury on one of their properties. Namely, how can he or she protect their real estate portfolio?
A relatively easy way to do this is to form a Limited Liability Company or LLC, and either take title or, via a quit claim deed, change the ownership of the property to the LLC.
An LLC is often suitable for single owner or smaller companies. It is a hybrid between a partnership and a corporation, except that it is often more flexible. One of the advantages of an LLC, is the owners have limited liability for the actions and debts of the company.
The process of establishing an LLC is relatively easy and inexpensive. It is created by filing the Articles of Organization with the Secretary of State, for which the state charges a filing fee. This is something you can do yourself, or if you’d rather, you can enlist the help of a real estate attorney.
If you create a unique LLC for each property in your portfolio, then each is owned by a separate company. Each should have its own checking account and bookkeeping. This helps establish a record of it truly being a separate entity.
That way, in the event someone is injured on one property, and they are successful in litigation, the only property in play is the one owned by that LLC.
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June 4th, 2008 categories: Buying A Duplex, Legal Stuff
People always ask me to call if I find a good deal on a property.
During the peak of the market (which was the valley for investors who stopped to a the numbers), they’d hear from me once every 4-6 months. And, that property was usually gone within a day.
Now it seems I get to contact people once every couple of weeks. And the property I call about is usually gone in a day or, every now and then, a week.
I found one this morning, with a huge positive cash flow. And I sent it to the people working with me.
Contrary to popular belief, Realtors don’t always save the “best deals” for themselves. Especially now. I do, however, save them for the people who have commited to working only with me by signing a buyer’s exclusive representation agreement.
What’s that? Well, in the simplest terms, an exclusive representation agreement states that you’ll work only with me in the process of locating and purchasing a property. It runs a specific length of time and can be cancelled, in writing.
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June 1st, 2008 categories: Buying A Duplex, Legal Stuff, Multi-Family Property Investing, Selling A Duplex
You may have heard of a 1031 Exchange. Sometimes it’s called a Starker or a Like Kind Exchange. And, you may also have heard a lot of things about it that aren’t true.
Let me explain what it is as simply as I can. Pretend you purchased an income property in 2000 for $100,000. Even in today’s market, it’s now worth $175,000, and you have a full price offer. After the expenses of selling it and the cost of improving it over the last eight years, you are set to realize a profit of $50,000. If you choose to pocket this money at closing, you will pay capital gains taxes on it.
But wait, there’s more. Remember all of that wonderful depreciation that helped so much on your taxes? If you’re going to cash out, the government would like it back (called depreciation recapture). Unless…instead of pocketing the money, you choose to reinvest. This can help you avoid not only the capital gains tax, but the depreciation recapture as well.
A 1031 Exchange allows you, at closing, to assign the proceeds of the sale to someone called a qualified intermediary. For a small fee, this company or entity holds the money until you pick out a replacement property. When you close on that property, you tell the intermediary to send your $50,000 to the closing as your down payment.
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