All Forum Posts by: Marc Jolicoeur

I believe leases in MN are legally binding even if the property changes hands. So that means if the tenants do not leave as expected you will be required to stand by the lease.  Even the month-to-month requires proper legal notice to be made before the lease would terminate.  Depending on when and how notice was given to the tenants, it could require you to wait an extra month or so.

Good Luck

@Amy Ranae from your description of the property it sounds a lot like the BRRRRs I have done.    I basically specialize on townhomes and have done two BRRRRs and a flip.  Congratulations on finding a good deal in this tight market. Let me know if you want to share notes.   

@Deanna McCormick provided a great response!  

I advertise on craigslist and on zillow. From zillow, the ads get pushed to Trulia and Hotpads.  It's free and I get a lot of response from these methods.  I get tons of showing requests.

One thing I do is I always email the lead with an email laying out my rental criteria.  50% of the time the lead will reply back with some issue and determine for themselves that they do not qualify.   This is great as it saves me the time from having to do many showings.   Everyone who actually comes to a showing is pretty much going to qualify, or they are going to give me a sob story.

Since you are a newbie, if you want some coaching on navigating this process, go ahead and message me.   I would be willing to show you what forms I use.

If you want the best low maintenance tenants, offer great rentals in safe neighborhoods, with great schools. 

Personally I prefer many suburbs rather than Minneapolis or St Paul due to the schools ratings. Some parts of both large cities are great and some parts are a bit risky.

@Amber Gonion when you browse all forums, scroll down to the Local Forums section and then click the link to see the 51 sub-forums.   Under the Minnesota Forum, there are subforums for Minneapolis, St Paul, and Rochester.

Direct link to the MN forum is here

https://www.biggerpockets.com/forums/566-minnesota...

It depends on the severity of the criminal background.   Heck - I got a speeding ticket recently so I have a criminal background.

In my written rental policies document I say:

Management reserves the right to refuse to rent to an applicant for any one of the following reasons:  1. Criminal History, 2. Insufficient Income, etc...

For me it totally depends on the severity of the issues and how long ago they occurred.  If a guy can explain to me, how he is back on the straight and narrow road, I would probably give him a second chance.   Just don't lie on the written application where I ask about the criminal history.   Instead provide an explanation of the facts I will see when I run the background check.

I great resource you should get is the Landlord's Guide to Minnesota Law published by HOME Line. Its a great book that spells out all MN rules.

According to page 37 under MN statute (363A.03, subd. 43) You may reject applicants with children if you - the owner of the rental property - are living in the building and it has four of fewer units. I guess this is an allowable exclusion from legally protected class discrimination.

I was not able to find an answer in the book to whether StPaul limits the number of occupants per bedroom or per sq ft. of living space.    Minneapolis does limit the number to 5 total people per unit and limits the number of unrelated individuals.

I think its best to publish some criteria for potentially denying an application to filter out many who would not be great tenants.   Give these criteria to all applicants and those coming to a showing.  For example:

- income > 3x rents

- credit score > 660

- credit history has no missed payments

- must have verifiable income (tax returns, pay stubs, employer verification) 

- no lies or omissions found in the application

- no evictions

- no criminal background

Note: Per federal law if you have an older place, you need to disclose it if it has lead paint.

Please share if you find other answers.

I would assume the seller will not want to deal with it or come clean with the city.  Therefore you should make the your offer accordingly.   Assume you will need to deal with the city to get it approved.  Review building codes and regulations and get a home inspector to give you his full report.  Check out the requirements for egress windows, number of exits, ceiling heights, ventilation, etc..  Assume you may have to spend money or make design changes to make it right.  

Then make your offer accordingly and explain your reasons for a low offer to the seller. If he balks, then ask if he would be willing to open permits and get the assessment from the building inspector.

@Account Closed I don't think the specific answer is in the Minnesota landlord/tenant handbook but please look there first in case I am wrong.   I also picked up The Landlord's Guide to Minnesota Law which is the reference bible.   I highly recommend this publication for all MN investors.

https://homelinemn.org/publications/landlordsguide...

The reason the answer is elusive is because in MN it depends on how your lease is written.  If you lease requires a notice in order to terminate, then you do not have to do anything to renew the lease as it will renew automatically, unless you or the tenant give proper notice to terminate.

According to the book (p141), "If you have a pure, fixed-term tenancy, no notice is required to end the lease. It simply ends.  A one-year lease that starts on January 1 end runs through December 31 ends on December 31 without notice required by either side."

Continuing on p. 144, "While giving notice is not required in a fixed-term lease that does not specifically require a notice to vacate, it is often a good idea. Notice reminds your tenant that their lease end date is approaching.  It is a tenant's job to know when their lease ends and how much notice is required."

@Josh Hagen I cannot speak to the multifamily apartment market here but for single family, inventory of properties for sale is very low.  I believe its 30 year record low inventory for houses priced under $200K.

I have been offering on one or two REOs per week since April 1 in the suburbs and have not been able to get any deals. Even if I make mine a cash offer, I am finding that it goes to multiple offer situations and it settles $20K higher than I was willing to pay (80% of ARV minus repairs). I seriously don't know how these other investors are able to pay that much for properties and make a profit on the flip. Possibly they are planning to rent and hold a few years betting on appreciation.

The thing is, there is a good chance now that there will be a couple more years of appreciation like we have seen the last 3 yrs.    The twin cities are attracting new residents from elsewhere in the country and many of them have good jobs.   I have two tenants in my rentals and both are out of towners, and I work at a mid-sized company that seems to attract new employees from other areas just as much as hiring locals.

What will cause the housing market here to correct?   Well, a severe recession could do it (like the last one) but that is really not the most likely path for Minnesota.    We can't lose 20,000 construction and mortgage company jobs next time.....as we never hired those guys back since the last recession.   Our job market is pretty tight right now and has room to adjust before it would cause thousands of people to lose their homes.

Foreclosures are now 10% of the meagre inventory and foreclosure trends have been dropping for years.    Hedge funds bought up tons of inventory 3-4 years ago....  if they try to liquidate all, then that could do something to inventory that would be good news.

So, what is a newbie to do?   I say look at 1% deals, or properties that have been on the market for a while that are mispriced or need a renovation.  You need to get in at some sort of a discount from current value.   I try to get 15% equity going in.   Often you need to force appreciation somehow.  Finish the basement, add a master suite, fix up the yard, update the interiors, etc..   Do your numbers and be conservative.     Plan for maintenance, management and capex.  As long as you cashflow $300 for a house, or $125 per door on a multi, I would say pull the trigger.  If its in a good school district or an improving area, then it should appreciate - but don't count on it - just buy right.