All Forum Posts by: Joe Schaak

@Rashad Kennedy, I did get an answer! According to a city legal statute, the Seller is required by law to complete the Code Compliance Report prior to their sale of the property. This is a local law that most banks are unaware exists and it usually takes them a while to wrap their process around it. In past transactions, I've been able to use it as an inspection contingency of sorts. First, I alert them of the law upon winning the auction and I remind them of it when I sign the PA and a couple more times during the process. By the time that the bank gets around to actually scheduling the inspection, they have had to ask for an extension of the closing date in order to allow time for the inspection to be completed (it usually take 3-4 weeks just for the inspectors to get there once requested). If I haven't seen the interior of the property, I'll make a point of stopping by during the inspection. If I like what I see at the property and on the Code Compliance report, then I'll go ahead with the purchase. If I don't, then I won't grant their requested extension and the deals dies. You'll have to file a Cancelation and deal with the hassle of getting your earnest money back but its better than losing a lot of money on a bad property. To be clear, Cat 2 homes are purchased without the Code Compliance report being completed. However, I choose to use this local law as a safeguard in my business. Hope this helps! Good luck with your projects ~

When you rehab entry level single family homes, are you providing cable television outlets? What about Cat-6 ethernet connections? With everything shifting towards wireless technology, I'm curious what technological amenities investors are including in the homes targeting first-time homeowners. Thanks!

I used Mike @ Boulevard Cabinetry on my last property and was happy with both the price and the quality. The kitchen cabinets plus a bathroom vanity ran about $3800. They are all wood and soft close drawers and doors.

https://www.redfin.com/MN/Saint-Paul/977-N-Jameson-St-55103/home/51147322

Welcome, Travis! Real estate is such a broad opportunity. Its tough to give nuggets of advice across the whole spectrum. Painting with a broad stroke, I would say identify your farm area and the parameters of the type of deal that is attractive to you. The focus that results from that exercise will help stave off the shiney nickel syndrome and should lead to more productive use of your time. Also, persistence wins out. Stick with it. The first deal will most likely take a while but it will come.

I'm only familiar with St Paul rentals, Lindsey, but maybe it will help. In St Paul, rentals are inspected by the Fire Department for safety and any flagrant code violations. If the unit passes, the owner receives a "rental license" which is displayed in a front window or door. Personally, I like the program. I keep my units in good shape so its not really a burden. It gives the tenants further piece of mind. For Duluth, you may want to make a quick call to the city desk to find out more.

I have a lending opportunity and I'm looking for a MN-based private lender or a lending company willing to take a 2nd Lien position. Thank you!

@Sam Sharma Thanks, Sam. Yes, I know Reid. He's great. I was hoping to hear from an investor that may have experience from our side since Reidis limited in what he can or can't recommend being a city employee. Category 2 allows the property to be sold once the Code Compliance report is completed and the Buyer demonstrates a plan and financial resources. Category 3 doesn't allow the sale until the property is brought up to code which means theoretically that the banks will need to spend the money and fix things. There's just no way a bank is going to invest money in to a property to sell it. 

@Account Closed Not sure if this helps or not : https://www.stpaul.gov/departments/safety-inspecti...

From what I've read, Category 3 vacant buildings are to be avoided. That said, my nature is to try to solve problems and turn a negative in to a positive. As a Category 3 property, the owner of the property must bring the property completely up to code. What happens if that "owner" is a bank? Is there a way to work this so that a sale can go through? Does anyone out there have experience with these Cat 3 properties?

@Jason Hirko@Ben Stoodley Great information, gentlemen. Thank you!