Ramsey Town Center
I made my first visit to the Ramsey Town Center today. Its not a location that is typically on the way to anything. I was out there for a tax appeal. And anyone that has property in the Ramsey Town Center needs to consider appealing their property taxes, residential or commercial.
When you visit the struggling commercial area, I find it ironic that this shiny new building is the offices of the Midwest Medical Examiner. As the Ramsey Town Center is strewn with dead developments.
Its sad because there are some lovely homes built there, beautiful architecture on the the townhomes. But the projects have all been mothballed. Not one model home to be seen. And one sad “to be built”, a 2 bedroom, 1 bath single family home on a 55' wide lot advertised at $154,000 is the only active listing I could find on the MLS. As often the case, in addition to the builders, those that are suffering the most are the homeowners that bought into the dream. Unless they are very fond of quiet and don't like having neighbors.
As to solds in the last year--3 partially completed townhomes sold for $45,000 and a water damaged one for $52,000. And a new nice single family home, 2,500 square feet finished with 4 beds and 3 baths sold for $262,000. Lonely, though. It was really quiet out there on this flat open land.
It was a project that never made sense, even when it was conceived in the peak of the hot real estate market by the City of Ramsey, who sought out a developer. Though I doubt the City could have even considered the resulting bank fraud that landed people in jail and contributed to the main appraiser involved committing suicide. Back to the dead body thing again.
Expect for what appears to be a mostly empty commercial building with an event center, and a new Alina Clinic being built, all of the other “Town Center” commercial buildings are this amazing City Hall, the new VA Clinic being built, a large multistory empty parking garage, and the Medical Examiners Office.
Wednesday, February 16, 2011
Thursday, February 10, 2011
I'm a happy landlord
I'm a Happy Landlord!
As my closing approached for the beautiful townhome in Chanhassen, I placed a for rent ad on Craig's List. When I did my original projections it was based on a rent of $1,300 a month. And there were two other three bedroom townhomes advertised in the area at $1,300.
I knew my townhome was a superior location and floor plan. So I tossed it on Craig's list at $1,475 on a Friday evening. And got two calls right away--though they wanted an April 1st move in and I was looking for March 1st. But I was excited and told my friend who I copied the rental townhome strategy from.
“Laurie,” he told me. “It usually takes 15 showings to get a signed lease.”
Two days later I get a call from a wonderful woman, newly divorced, with three teenage girls who specifically wanted to live in the my Oak Hill townhome neighborhood in Chanhassen. Her marital home was close by and the girls' dad lived just down the road, with his new young honey and baby boy. Same schools for the girls, close to their friends and sports. This townhome is close to EVERYTHING, at the intersection on Highway 5 and Powers Blvd.
My closing was delayed three days due to the Texas storms, as the seller was Freddie Mac from San Antonio.
For some odd reason, Freddie Mac does not pay deed tax when they sell property.
Got the signed papers from Freddic Mac at 4:00. And the lease was signed at 8:00 that evening.
So the seven month search for the perfect townhome was not wasted. I wouldn't have immediately recognized how special this one is. I paid $4,100 over list price because there was another offer. If I hadn't seen all the others first I would have probably bid too low and lost it.
I'm getting about a 12.5% rate of return. Given both the real estate and financial markets, I'm pleased with that. So I'm a happy landlord!
As my closing approached for the beautiful townhome in Chanhassen, I placed a for rent ad on Craig's List. When I did my original projections it was based on a rent of $1,300 a month. And there were two other three bedroom townhomes advertised in the area at $1,300.
I knew my townhome was a superior location and floor plan. So I tossed it on Craig's list at $1,475 on a Friday evening. And got two calls right away--though they wanted an April 1st move in and I was looking for March 1st. But I was excited and told my friend who I copied the rental townhome strategy from.
“Laurie,” he told me. “It usually takes 15 showings to get a signed lease.”
Two days later I get a call from a wonderful woman, newly divorced, with three teenage girls who specifically wanted to live in the my Oak Hill townhome neighborhood in Chanhassen. Her marital home was close by and the girls' dad lived just down the road, with his new young honey and baby boy. Same schools for the girls, close to their friends and sports. This townhome is close to EVERYTHING, at the intersection on Highway 5 and Powers Blvd.
My closing was delayed three days due to the Texas storms, as the seller was Freddie Mac from San Antonio.
For some odd reason, Freddie Mac does not pay deed tax when they sell property.
Got the signed papers from Freddic Mac at 4:00. And the lease was signed at 8:00 that evening.
So the seven month search for the perfect townhome was not wasted. I wouldn't have immediately recognized how special this one is. I paid $4,100 over list price because there was another offer. If I hadn't seen all the others first I would have probably bid too low and lost it.
I'm getting about a 12.5% rate of return. Given both the real estate and financial markets, I'm pleased with that. So I'm a happy landlord!
Thursday, February 3, 2011
How To Speed Up Property Tax Appeals
How to Speed Up Property Tax Appeals
If you believe your property tax assessments are too high, there are three roads you can take: 1) “The Road to Nowhere”; 2) “The Toll Road to Tax Court”; 3) “The Express Route to the Board of Review”.
1) “The Road to Nowhere”. Call your assessor and whine that your TAXES are too high. Assessors don't set your taxes. I'm seeing many properties where the VALUES have declined and the TAXES have increased.
Understand that when it comes to property tax assessment, the ASSESSOR is presumed to be correct. Its the TAXPAYER'S Burden of Proof to demonstrate the assessed value should be lower. And this typically takes a well supported appraisal.
Whining doesn't work. And wastes everyone's time, including yours.
2) “The Toll Road to Tax Court”. If you believe your property tax assessment is too high for taxes due this year, TAX COURT is your ONLY option at this point in the game. Filing deadline is the end of APRIL 2011, and its approaching faster than we can imagine spring under the snow piles.
This road has fees that must be paid for each year. And you can be traveling on it for years and never get where you want to be--a reduced property tax assessment. In Hennepin County, for example, ½ the cases are dismissed with no change--but the taxpayer still pays the toll. Of the less than 1% of cases that actually go to court, its become more common for the judge to rule that the assessed value be raised HIGHER THAN THE ORIGINAL ASSESEMENT!
Its been my extensive experience, that when I treat the assessor with respect, don't play games, and provide a very well supported appraisal that omits the fluff that just wastes their time, I've gotten reductions as much as 66% on settlements without going to tax court.
These are some of the detours that can make the Toll Road to Tax Court take years:
a) Cases filed that have no merit. Remember ½ the cases in Hennepin County were dismissed? Those dismissals took a lot of the assessor's time that could have been spent settling the valid cases. If your property tax attorney/consultant files a case without doing even some basic valuation research, find another provider. For example, I may review eight subdivisions and recommend filing on only two or three. Without the up front valuation research, you're likely to pay years of tolls to tax court and land up in the dismissal pile.
b) Reluctance to Hire an Appraiser AND an Attorney. To successfully navigate the road to tax court takes two kinds of vehicles: an attorney and an appraiser. Only engaging one greatly increases the chances of your case being dismissed with no change, but you still paid the toll. Engaging neither will often lead to The Road to Nowhere.
c) Some Assessors are just really slow. I can provide them an appraisal and they sit on it over a year. And I don't think its because they sit around playing video games. They have many statutory responsibilities in addition to tax appeals. And they have to deal with cases that have no merit. Court dates can be extended for years. And they are dealing with older cases. Many tax appeals filed for 2010 still haven't been assigned initial court dates by the Tax Court.
3) “The Express Route to the Board of Review” In a few weeks you'll get your January 2nd, 2011 valuation notices for property taxes due in 2012. As this is the time of year when most of us are focused on completing our INCOME TAX for 2010, who wants to think about 2012 property taxes? So most people glance at this notice and toss it in the drawer.
Bad move. This notice states you can appeal the valuation by attending your local board of review, which is typically held around the first week of April 2011, when you're scrambling to get your income tax done. Note the pay 2012 board of Review is held before the Pay 2011 property tax court filing date.
The board of review is typically the City Council or Town Board, and they typically are not valuation experts and will defer to their assessor. You can appear in person, have a representative or send a letter. I went this route for Pay 09' for a group of clients. It was a total waste of time, got zero reductions, filed in tax court and got reductions as high as 65%.
Last year a client filed in tax court for Pay 2010. She got the notice for the Pay 2011 local Board of Review and asked me to go. After the last experience, I wasn't going to miss my Yoga class so she went by herself. Nominal reduction, but a letter explaining she could appeal to the Hennepin County Board of Review. I like new experiences, so I set the appointment, wrote a well supported appraisal, and presented to the County Board of Review in June of 2010. The County Board of Review in Hennepin County are appointed by each Commissioner. It was primarily Realtors and a developer. They were knowledgeable about the market, listened closely and asked questions. And the Pay 2011 assessment was reduced from $1,300,000 to $600,000.
No tax court. No lawyers and no filing fees. And most importantly, its the express route to tax appeals. But if you miss the entrance ramp, you can't go back.
How to Speed Up Property Tax Appeals
1) Send me the PIDs and basic property information for ALL of your real estate holdings THIS MONTH. I'll do a free evaluation, and for those cases that have merit, I'll work with an attorney to file your Pay 2011 property tax court appeal.
2) Send me those Pay 2012 notices AS SOON AS YOU GET THEM. Since I would have already been familiar with your property, I can do a quick evaluation if you have a case for Pay 2012 Board of Review. If you had a valid case for 2011, its likely you will still have one for 2012.
3) If you've provided me with what I need on a timely bases, I can prepare appraisals for Pay 2011, Pay 2012, and even older tax court cases that haven't settled yet for the same property.
4) As part of the Board of Review, the assessor must review your case. I'll ask them, while they need to get their head wrapped around understanding your property, to review the appraisals for the tax court cases for prior years and settle them altogether.
No guarantees, but I have used this strategy since 2009 with one particular County with really good and fast results. By pushing hard this spring, lets work toward getting your tax court cases settled by June. Then I'll have time to play golf with you all summer!
Don't delay and get stuck on the wrong road. The Board of Review is an express process and I need time to write a well supported appraisal. So get your free evaluation now. TODAY send me your PIDs, property locations, short explanation what the property is, with your contact information to heresthedirt@visi.com.
If you believe your property tax assessments are too high, there are three roads you can take: 1) “The Road to Nowhere”; 2) “The Toll Road to Tax Court”; 3) “The Express Route to the Board of Review”.
1) “The Road to Nowhere”. Call your assessor and whine that your TAXES are too high. Assessors don't set your taxes. I'm seeing many properties where the VALUES have declined and the TAXES have increased.
Understand that when it comes to property tax assessment, the ASSESSOR is presumed to be correct. Its the TAXPAYER'S Burden of Proof to demonstrate the assessed value should be lower. And this typically takes a well supported appraisal.
Whining doesn't work. And wastes everyone's time, including yours.
2) “The Toll Road to Tax Court”. If you believe your property tax assessment is too high for taxes due this year, TAX COURT is your ONLY option at this point in the game. Filing deadline is the end of APRIL 2011, and its approaching faster than we can imagine spring under the snow piles.
This road has fees that must be paid for each year. And you can be traveling on it for years and never get where you want to be--a reduced property tax assessment. In Hennepin County, for example, ½ the cases are dismissed with no change--but the taxpayer still pays the toll. Of the less than 1% of cases that actually go to court, its become more common for the judge to rule that the assessed value be raised HIGHER THAN THE ORIGINAL ASSESEMENT!
Its been my extensive experience, that when I treat the assessor with respect, don't play games, and provide a very well supported appraisal that omits the fluff that just wastes their time, I've gotten reductions as much as 66% on settlements without going to tax court.
These are some of the detours that can make the Toll Road to Tax Court take years:
a) Cases filed that have no merit. Remember ½ the cases in Hennepin County were dismissed? Those dismissals took a lot of the assessor's time that could have been spent settling the valid cases. If your property tax attorney/consultant files a case without doing even some basic valuation research, find another provider. For example, I may review eight subdivisions and recommend filing on only two or three. Without the up front valuation research, you're likely to pay years of tolls to tax court and land up in the dismissal pile.
b) Reluctance to Hire an Appraiser AND an Attorney. To successfully navigate the road to tax court takes two kinds of vehicles: an attorney and an appraiser. Only engaging one greatly increases the chances of your case being dismissed with no change, but you still paid the toll. Engaging neither will often lead to The Road to Nowhere.
c) Some Assessors are just really slow. I can provide them an appraisal and they sit on it over a year. And I don't think its because they sit around playing video games. They have many statutory responsibilities in addition to tax appeals. And they have to deal with cases that have no merit. Court dates can be extended for years. And they are dealing with older cases. Many tax appeals filed for 2010 still haven't been assigned initial court dates by the Tax Court.
3) “The Express Route to the Board of Review” In a few weeks you'll get your January 2nd, 2011 valuation notices for property taxes due in 2012. As this is the time of year when most of us are focused on completing our INCOME TAX for 2010, who wants to think about 2012 property taxes? So most people glance at this notice and toss it in the drawer.
Bad move. This notice states you can appeal the valuation by attending your local board of review, which is typically held around the first week of April 2011, when you're scrambling to get your income tax done. Note the pay 2012 board of Review is held before the Pay 2011 property tax court filing date.
The board of review is typically the City Council or Town Board, and they typically are not valuation experts and will defer to their assessor. You can appear in person, have a representative or send a letter. I went this route for Pay 09' for a group of clients. It was a total waste of time, got zero reductions, filed in tax court and got reductions as high as 65%.
Last year a client filed in tax court for Pay 2010. She got the notice for the Pay 2011 local Board of Review and asked me to go. After the last experience, I wasn't going to miss my Yoga class so she went by herself. Nominal reduction, but a letter explaining she could appeal to the Hennepin County Board of Review. I like new experiences, so I set the appointment, wrote a well supported appraisal, and presented to the County Board of Review in June of 2010. The County Board of Review in Hennepin County are appointed by each Commissioner. It was primarily Realtors and a developer. They were knowledgeable about the market, listened closely and asked questions. And the Pay 2011 assessment was reduced from $1,300,000 to $600,000.
No tax court. No lawyers and no filing fees. And most importantly, its the express route to tax appeals. But if you miss the entrance ramp, you can't go back.
How to Speed Up Property Tax Appeals
1) Send me the PIDs and basic property information for ALL of your real estate holdings THIS MONTH. I'll do a free evaluation, and for those cases that have merit, I'll work with an attorney to file your Pay 2011 property tax court appeal.
2) Send me those Pay 2012 notices AS SOON AS YOU GET THEM. Since I would have already been familiar with your property, I can do a quick evaluation if you have a case for Pay 2012 Board of Review. If you had a valid case for 2011, its likely you will still have one for 2012.
3) If you've provided me with what I need on a timely bases, I can prepare appraisals for Pay 2011, Pay 2012, and even older tax court cases that haven't settled yet for the same property.
4) As part of the Board of Review, the assessor must review your case. I'll ask them, while they need to get their head wrapped around understanding your property, to review the appraisals for the tax court cases for prior years and settle them altogether.
No guarantees, but I have used this strategy since 2009 with one particular County with really good and fast results. By pushing hard this spring, lets work toward getting your tax court cases settled by June. Then I'll have time to play golf with you all summer!
Don't delay and get stuck on the wrong road. The Board of Review is an express process and I need time to write a well supported appraisal. So get your free evaluation now. TODAY send me your PIDs, property locations, short explanation what the property is, with your contact information to heresthedirt@visi.com.
Tuesday, January 25, 2011
The Tenants says "baaaaaa"
The tenant says “baaaa”
I went to see “Babe the Sheep Pig” at the Childrens' Theatre. Babe the pig saves himself from being Christmas dinner by learning to act as a sheep dog. And saving the sheep from being eaten by wolves.
My first day of Real Estate School we were told the public are “sheep” and we, the real estate professionals, are “wolves”. Now that I'm going to be a landlord, I've learned that Minnesota Landlord Tenant law takes the sheep/wolf concept to a whole other level.
Try out this quiz I made up to get up to speed on Minnesota Landlord Tenant Law. Answers are at the end of the quiz.
1) If the landlord enters the premise without giving prior notice, the tenant may:
a) Terminate the lease
b) Recover up to $100 per violation in court
c) Both A & B
2) The tenant owes rent and the landlord brings an eviction action. To “stay and pay” the tenant must pay the past due rent, plus interest, plus landlord paid court and service fees. How much does the tenant need to pay to cover the landlord's attorney fees?
a) $5
b) $100
c) Landlord's actual attorney fees
3) Not only does your deadbeat tenant leave in the middle of the night with rent unpaid, but he leaves his junk. What do you do with the tenant's stuff?
a) Sell it and apply the proceeds to the unpaid rent.
b) Store it, and return it to the tenant if he shows up to pay the past due rent.
c) Store it, and return it to the tenant when they reimburse you for storing their stuff – they don't have to pay you the back rent to get their stuff back.
4) Your tenant is found to posses illegal drugs or contraband valued at more than $100, which is seized from your property. After given notice, you have 15 days to evict the tenant. You're tenant does well in the drug trade and pays his rent on time so you don't evict him. Tenant gets caught again and the value of the controlled substances exceed $1,000.
The government can take your rental property.
a) True
b) False
5) You don't want to rent to kids. Can you discriminate against renting to families with children?
a) No. You can never discriminate based on “familial status”
b) Yes, only if its a “55+” building
c) It an owner-occupied house, duplex, triplex or fourplex.
d) Both B and C.
6) The tenant skips out and doesn't pay the last month's rent. You can apply his security deposit for the rent payment.
a) True
b) False
Answers to quiz:
1) B
2) A
3) C
4) A
5) D
6) A
How did you do? Are you ready to be a landlord? Any advise for me?
I went to see “Babe the Sheep Pig” at the Childrens' Theatre. Babe the pig saves himself from being Christmas dinner by learning to act as a sheep dog. And saving the sheep from being eaten by wolves.
My first day of Real Estate School we were told the public are “sheep” and we, the real estate professionals, are “wolves”. Now that I'm going to be a landlord, I've learned that Minnesota Landlord Tenant law takes the sheep/wolf concept to a whole other level.
Try out this quiz I made up to get up to speed on Minnesota Landlord Tenant Law. Answers are at the end of the quiz.
1) If the landlord enters the premise without giving prior notice, the tenant may:
a) Terminate the lease
b) Recover up to $100 per violation in court
c) Both A & B
2) The tenant owes rent and the landlord brings an eviction action. To “stay and pay” the tenant must pay the past due rent, plus interest, plus landlord paid court and service fees. How much does the tenant need to pay to cover the landlord's attorney fees?
a) $5
b) $100
c) Landlord's actual attorney fees
3) Not only does your deadbeat tenant leave in the middle of the night with rent unpaid, but he leaves his junk. What do you do with the tenant's stuff?
a) Sell it and apply the proceeds to the unpaid rent.
b) Store it, and return it to the tenant if he shows up to pay the past due rent.
c) Store it, and return it to the tenant when they reimburse you for storing their stuff – they don't have to pay you the back rent to get their stuff back.
4) Your tenant is found to posses illegal drugs or contraband valued at more than $100, which is seized from your property. After given notice, you have 15 days to evict the tenant. You're tenant does well in the drug trade and pays his rent on time so you don't evict him. Tenant gets caught again and the value of the controlled substances exceed $1,000.
The government can take your rental property.
a) True
b) False
5) You don't want to rent to kids. Can you discriminate against renting to families with children?
a) No. You can never discriminate based on “familial status”
b) Yes, only if its a “55+” building
c) It an owner-occupied house, duplex, triplex or fourplex.
d) Both B and C.
6) The tenant skips out and doesn't pay the last month's rent. You can apply his security deposit for the rent payment.
a) True
b) False
Answers to quiz:
1) B
2) A
3) C
4) A
5) D
6) A
How did you do? Are you ready to be a landlord? Any advise for me?
Friday, January 21, 2011
Size Matters
Size Matters
Looked at a townhome in an awesome Plymouth location in Wayzata Schools. It backed a wetland. The neighborhood was primarily single family. It was well priced, a bank owned.
I emailed the listing agent “Can you please send me the contact info for the property manager for the H O A?”
And she responded “Can I get back to you in a week or so?”
“What's the problem?”
The problem was the H O A had been run by the woman whose unit had been foreclosed upon! No one knew who was in charge of this 18 unit HOA.
An agent's mom was in an H O A for one building of 6 units. A big storm damaged the roof. While mom wanted to fix the roof, her neighbor's wanted to pocket the insurance money.
When you buy into an H O A and the unit has unpaid dues, the H O A can't require the new owner to pay the old dues. They can go after the deadbeats, and the bank is responsible to pay the dues for the period they own the unit, but banks can be deadbeats too. But you are paying those dues in future dues increases to cover uncollected dues. Money has to come from somewhere.
Say there are 3 deadbeat owners in the H O A. If there are only 6 units, that's 50% of the budget! With the 18 unit one in Plymouth, that's 17%. In the 90 unit development I'm buying into in Chanhassen, that 3%.
After 6 months of aggresively looking for a townhome to purchase as a rental property, I finally found one that I'm not looking for reasons to walk away.
Chanhassen is an excellent market. The average sales price for all homes sold in 2010 was $371,972, up 3.7% from 2009. I looked at a couple older units in a Chanhassen neighborhood with a good location, but bad vibes. And a subdivision farther west I won't even look at because there are too many rentals and the rents are too low. But this one meets or exceeds my long list of criteria.
Location: Next to downtown Chanhassan, at the northeast corner of Highway 5 and Powers Blvd. Its walking distance to Target, Byerlys, Cub--all with better than typical architecture. Chanhassan elementary school is close by in the highly rated Chaska Schools. And its is across the street from the Temple of Eck campus, 174 acres with 2 miles of walking trails and Lake Ann, open to the public. Which is next to Lake Ann Park, with a swimming beach and boat rental.
The home has 3 bedrooms, 3 baths, a huge balcony and a walkout basement to a patio. Those who are familiar with the area tell me that Oak Ponds has a good reputation. And the property manager is really terrific.
My hope, with the 3 bedrooms and proximity to Chanhassan Elementary School, is to attract a familiy that will be a long term tenant. The property manager told me there are a lot of kid and dogs. The 3rd bath with shower is also unique, as a prior owner had added it in the finished walkout basement. With the exception of some brand new townhomes (which are typically too costly to cash flow as rentals) , if you can find a 3 bedroom townhome, there is typically only one bathtub. Having grown up in a house with 5 of us, 3 girls, and one bathroom (unless you count the ½ bath in the cold basement with the spiders and pillbugs that no one wanted to use), I'm reluctant to buy a three bedroom without a second shower.
Looked at a townhome in an awesome Plymouth location in Wayzata Schools. It backed a wetland. The neighborhood was primarily single family. It was well priced, a bank owned.
I emailed the listing agent “Can you please send me the contact info for the property manager for the H O A?”
And she responded “Can I get back to you in a week or so?”
“What's the problem?”
The problem was the H O A had been run by the woman whose unit had been foreclosed upon! No one knew who was in charge of this 18 unit HOA.
An agent's mom was in an H O A for one building of 6 units. A big storm damaged the roof. While mom wanted to fix the roof, her neighbor's wanted to pocket the insurance money.
When you buy into an H O A and the unit has unpaid dues, the H O A can't require the new owner to pay the old dues. They can go after the deadbeats, and the bank is responsible to pay the dues for the period they own the unit, but banks can be deadbeats too. But you are paying those dues in future dues increases to cover uncollected dues. Money has to come from somewhere.
Say there are 3 deadbeat owners in the H O A. If there are only 6 units, that's 50% of the budget! With the 18 unit one in Plymouth, that's 17%. In the 90 unit development I'm buying into in Chanhassen, that 3%.
After 6 months of aggresively looking for a townhome to purchase as a rental property, I finally found one that I'm not looking for reasons to walk away.
Chanhassen is an excellent market. The average sales price for all homes sold in 2010 was $371,972, up 3.7% from 2009. I looked at a couple older units in a Chanhassen neighborhood with a good location, but bad vibes. And a subdivision farther west I won't even look at because there are too many rentals and the rents are too low. But this one meets or exceeds my long list of criteria.
Location: Next to downtown Chanhassan, at the northeast corner of Highway 5 and Powers Blvd. Its walking distance to Target, Byerlys, Cub--all with better than typical architecture. Chanhassan elementary school is close by in the highly rated Chaska Schools. And its is across the street from the Temple of Eck campus, 174 acres with 2 miles of walking trails and Lake Ann, open to the public. Which is next to Lake Ann Park, with a swimming beach and boat rental.
The home has 3 bedrooms, 3 baths, a huge balcony and a walkout basement to a patio. Those who are familiar with the area tell me that Oak Ponds has a good reputation. And the property manager is really terrific.
My hope, with the 3 bedrooms and proximity to Chanhassan Elementary School, is to attract a familiy that will be a long term tenant. The property manager told me there are a lot of kid and dogs. The 3rd bath with shower is also unique, as a prior owner had added it in the finished walkout basement. With the exception of some brand new townhomes (which are typically too costly to cash flow as rentals) , if you can find a 3 bedroom townhome, there is typically only one bathtub. Having grown up in a house with 5 of us, 3 girls, and one bathroom (unless you count the ½ bath in the cold basement with the spiders and pillbugs that no one wanted to use), I'm reluctant to buy a three bedroom without a second shower.
Thursday, January 6, 2011
Broken Promises
Broken Promises
Ten years ago MnDOT, with the assistance of a City, was upgrading a 2 lane state highway. Developer Dan owns 4 commercial lots along the highway. A right of access plus a trail easement was needed for the road upgrade.
City Manager tells Developer Dan “the cost for acquiring the access rights and trail easement appraise so high on your lots that it would hurt the feasibility of the road project. I'll tell you what. The City owns this nice 5 acre lot near your land. Why don't we sell it to you for $50,000 and your right of access and the easement?”
Developer Dan agreed to the informal deal. He as busy with his development business and wasn't in any hurry to acquire more land. Finally, in 2006, a purchase agreement was signed between Developer Dan and the City for the 5 acre parcel.
Time goes by and the deal hasn't closed. And the road and trail were improved without the proper rights to Developer Dan's lots.
The City gets a call from George wanting to build a residential treatment center for substance abuse patients. George was told to call Developer Dan about the 5 acres he had under contract to buy from The City for $50,000. They strike a deal, netting Developer Dan a nice profit, and the City rezones the land to R3. Residential treatment centers are a permitted use in R3. Though George still had to go through the approval process to ensure his building and site plan fit the ordinance.
In August of 2010 the City Attorney sends Developer Dan a letter mandating a quick closing on the 5 acres.
Meanwhile, the City notices the neighbors about the planning commission hearing for the residential treatment center. The neighbor's, who objected to a day care facility in a commercial zoned area, were, well, unhappy would be an understatement.
One planning commissioner was out, the vote was 3-3, and it was sent to the City Council.
The City Council had an emergency work session and invited Developer Dan and George. A councilor was missing, but the vote was 4-2 in support of the project.
The formal City Council meeting was held. One hundred twenty five neighbors attended. Recall, its a permitted use, so the Council can't reject the treatment center on its use. But they could vote to NOT sell the land to Developer Dan. Which they did on a 7-0 vote.
Meanwhile, George as $30,000 into the approval process. Developer Dan didn't want to get sued by George. Nor did he have the energy, after all this time, to sue the City.
So he settled with the City and George, receiving maybe ½ of the money he would have gotten in 2000 to just sell the right of access and the trail easement for the highway.
Ten years ago MnDOT, with the assistance of a City, was upgrading a 2 lane state highway. Developer Dan owns 4 commercial lots along the highway. A right of access plus a trail easement was needed for the road upgrade.
City Manager tells Developer Dan “the cost for acquiring the access rights and trail easement appraise so high on your lots that it would hurt the feasibility of the road project. I'll tell you what. The City owns this nice 5 acre lot near your land. Why don't we sell it to you for $50,000 and your right of access and the easement?”
Developer Dan agreed to the informal deal. He as busy with his development business and wasn't in any hurry to acquire more land. Finally, in 2006, a purchase agreement was signed between Developer Dan and the City for the 5 acre parcel.
Time goes by and the deal hasn't closed. And the road and trail were improved without the proper rights to Developer Dan's lots.
The City gets a call from George wanting to build a residential treatment center for substance abuse patients. George was told to call Developer Dan about the 5 acres he had under contract to buy from The City for $50,000. They strike a deal, netting Developer Dan a nice profit, and the City rezones the land to R3. Residential treatment centers are a permitted use in R3. Though George still had to go through the approval process to ensure his building and site plan fit the ordinance.
In August of 2010 the City Attorney sends Developer Dan a letter mandating a quick closing on the 5 acres.
Meanwhile, the City notices the neighbors about the planning commission hearing for the residential treatment center. The neighbor's, who objected to a day care facility in a commercial zoned area, were, well, unhappy would be an understatement.
One planning commissioner was out, the vote was 3-3, and it was sent to the City Council.
The City Council had an emergency work session and invited Developer Dan and George. A councilor was missing, but the vote was 4-2 in support of the project.
The formal City Council meeting was held. One hundred twenty five neighbors attended. Recall, its a permitted use, so the Council can't reject the treatment center on its use. But they could vote to NOT sell the land to Developer Dan. Which they did on a 7-0 vote.
Meanwhile, George as $30,000 into the approval process. Developer Dan didn't want to get sued by George. Nor did he have the energy, after all this time, to sue the City.
So he settled with the City and George, receiving maybe ½ of the money he would have gotten in 2000 to just sell the right of access and the trail easement for the highway.
Monday, December 27, 2010
Foreclosure Rates and Year Built
Foreclosure Rates and Year Built
I'm working on a property tax appeal for town home lots near the neighborhood when I had made 3 unsuccessful offers on town homes. And my brain finally realized what my gut already understood: homes built from 2004-2006 have a higher rate of foreclosures and short sales.
I interviewed my client's salesman when I inspected the development for the tax appeal. “How are things going?”
“Great! We wrote contracts on 2 town homes last month.”
I then explained to the salesman that I was working for his employer to help reduce the property taxes. “Tell me what's really going on.”
“Well,” he launched into a long discussion. “I've been told to just sell the 10 remaining specs and models. That we are not building any more townhomes in this development. The competition from short sales and foreclosures is so intense that there is no profit in new construction.”
As I was doing research for the report, the light bulb went on. The attractive townhomes that are giving my client's new subdivision so much competition were built primarily from 2004-2006.
The years 2004-2006 were the height of “funny money mortgages.” Combine this with the fact that many buyers of 2 story town homes are first time home buyers. They wanted to get their foot in the door of home ownership. This is likely not their forever home. They are at an age where marriage, divorce, new babies and new jobs are more common than other demographic groups. They now need a different housing situation and are under water with their mortgage.
My initial thought about the attractive neighborhood I made the three offers in was that it would be one of the first to start to see home appreciation when the overall market improved. However, most of these town homes have mortgages originated during the peak of the problem years. Now I'm convinced the short sales and foreclosures will just keep coming-- and keep homes values down and put downward pressure on rents. And distressed properties don't pay their H O A dues, putting upward pressure on those, shrinking the landlord's profit margin. So I was right to listen to my gut when my enthusiasm waned the closer I got to closing.
In researching this property tax appeal for Pay 2011, I have uncovered some excellent data to support property tax appeals for most town home lots in the Twin Cities. If you are sitting on town home lots, please send me the development information for a free evaluation for property tax appeals. Just a sample P ID and your contact information to heresthedirt@visi.com.
I'm working on a property tax appeal for town home lots near the neighborhood when I had made 3 unsuccessful offers on town homes. And my brain finally realized what my gut already understood: homes built from 2004-2006 have a higher rate of foreclosures and short sales.
I interviewed my client's salesman when I inspected the development for the tax appeal. “How are things going?”
“Great! We wrote contracts on 2 town homes last month.”
I then explained to the salesman that I was working for his employer to help reduce the property taxes. “Tell me what's really going on.”
“Well,” he launched into a long discussion. “I've been told to just sell the 10 remaining specs and models. That we are not building any more townhomes in this development. The competition from short sales and foreclosures is so intense that there is no profit in new construction.”
As I was doing research for the report, the light bulb went on. The attractive townhomes that are giving my client's new subdivision so much competition were built primarily from 2004-2006.
The years 2004-2006 were the height of “funny money mortgages.” Combine this with the fact that many buyers of 2 story town homes are first time home buyers. They wanted to get their foot in the door of home ownership. This is likely not their forever home. They are at an age where marriage, divorce, new babies and new jobs are more common than other demographic groups. They now need a different housing situation and are under water with their mortgage.
My initial thought about the attractive neighborhood I made the three offers in was that it would be one of the first to start to see home appreciation when the overall market improved. However, most of these town homes have mortgages originated during the peak of the problem years. Now I'm convinced the short sales and foreclosures will just keep coming-- and keep homes values down and put downward pressure on rents. And distressed properties don't pay their H O A dues, putting upward pressure on those, shrinking the landlord's profit margin. So I was right to listen to my gut when my enthusiasm waned the closer I got to closing.
In researching this property tax appeal for Pay 2011, I have uncovered some excellent data to support property tax appeals for most town home lots in the Twin Cities. If you are sitting on town home lots, please send me the development information for a free evaluation for property tax appeals. Just a sample P ID and your contact information to heresthedirt@visi.com.
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