We sold our North Minneapolis flip house this past Thursday December 23 2009 and it was a picture perfect end to a great story.
We got an offer on our house less than two weeks after it went onto the MLS. After some very typical negotiations we came to an agreement. Due to federal regulations, any “flip” house that receives an offer with FHA financing needs to have at least 90 days (seasoning period) between one owner to the next. This is a rule that went into effect to protect potential buyers from investors who were simply trying to make very quick cash and typically were not doing any significant work to improve the home for the prices they were asking. So, even though we remodeled this house inside and out, top to bottom, and have receipts to prove it, we still have to abide by this rule if we were to consider an offer with FHA backed financing. This meant that we had to “hold” the house about a month longer than we would if we had worked with a conventional loan or a cash buyer which meant additional out of pocket money for us and with our early Minnesota snow falls, a lot of shoveling!
Of course, our buyer’s were smart and hired a professional home inspector to take a look at the home. The inspector was very impressed with the work and there were a few very minor things that we put the finishing touches on for our buyers. We did end up meeting our buyers in advance of the sale which is pretty unusual. We were thrilled to meet them and thought they were the perfect fit for our home! We were also really happy when the first time home buyer federal tax credit got extended so that our buyers could take advantage of that as well!

This transaction showed us that not only is a home flip a good investment opportunity for us but also seeing the glow on our buyer’s faces at the closing table confirmed our joy in knowing that our “flip” is now providing a great home so this couple can get started on the right foot.

Overall, flipping a home in North Minneapolis was a great experience for us and after the holiday and a nice well deserved vacation, we will be on to our next one!

Keep in mind….house flipping is not a “get rich quick” plan. There is a lot of risk involved – please refer back to my first post about our North Minneapolis house flip for more information.

Jen McKinnon
Realtor / Investor
Agent Referral Network
MN Real Estate Team

612.384.1073
jen[at]mnrealestateteam[dot]com

Our house at 3326 Morgan Ave N is on the market as of yesterday and we have our first showing this morning!  With the quality of construction and the price point we are the best house in the North Minneapolis area right now. What really sets us apart is the huge master suite with walk in closet and master bath.  North Minneapolis boasts some great 1.5 story houses but most of them just have the bedroom part in the half story.

It was hard to determine the price point because right now within a 5 block radius of 3326 Morgan Ave N there are “comparable” houses ranging in price from $109,000 to $174,000.  Some “sold” comparables range from $98,000 to $143,000 with a median price of $125,500.  With a flip / rehab, yes, you want to make money but you also need to determine how quickly you want to sell it.  Many flippers get greedy and try to make as much money as possible but end up pricing too high.   As with any smart business decision, you need to take your time / money ratio into consideration.  The longer the house sits on the market, the less money you make in the long run and most likely you will need to lower your price point which never looks good.  I’m confident that we’ve priced our house correctly and fairly for the market.  If we were willing to wait it out we could maybe go a little higher but there is also a strategy of pricing lower and hoping for multiple offers which could push the price up.

Ultimately, it’s a fine dance between buyers and sellers.  If you provide a good, quality product that you can be proud of at a fair price, everyone wins in the end.

Jen McKinnon

Realtor/Investor

AGENT REFERRAL NETWORK

MN Real Estate Team

612.384.1073

jen[at]mnrealestateteam[dot]com

So we are now 40 days into our North Minneapolis house flip and our tentative finish date is October 19th.  I stopped by our flip house on Friday to take a look at the progress.
I’ve included pictures but here is what has been accomplished so far:
1. All wood floors have been refinished in a beautiful dark wood stain.
2. Carpet has been installed upstairs in the master suite and on the basement stairs.
3. All tile in kitchen, dining and bathroom has been completed.
4. New kitchen cabinets and counter tops installed.
5. All new windows and interior and exterior doors and hardware.
6. New bathroom vanity, mirror and towel bars installed – still waiting on the toilet for the main floor bath and the new countertop and shower door for the master suite bath.
7. New garage roof and door – there were 4 layers of old shingles on the garage!
8. Old shrubs removed, trees trimmed and yard cleaned up along with some concrete work on the stairs and front walk.
9. New light fixtures installed throughout the house.
10. Interior paint is just about complete and exterior scrapping has started.
11. The deck on the back of the house has been repaired.
12. All fascia and eaves have been replaced.
13. Shelving installed in closets.

Here is what we are still waiting on to be completed at our North Minneapolis Flip house before I can list the property for sale:
1. Appliances installed in kitchen and washer / dryer in basement.
2. Finishing of interior paint and all exterior paint on house and garage.
3. Master suite vanity counter top and shower door.
4. Final yard work / clean up.
5. Major Cleaning Throughout The Entire House.

Everything is coming out beautifully and I’m really pleased with the craftsmanship and the appearance of everything so far – this is going to be a great house for whoever buys it. Most likely a first time home buyer.
I’m really hoping that the first time buyer credit gets extended because typically first time buyers utilize FHA financing and with a flip house there is a mandatory 90 day waiting period between the owners closing and a new purchase agreement being written. Technically, you can agree to an offer with an FHA buyer but the title company can not get the agreement (and it needs to be dated) on the 91st day after the owners closing. Then, realistically, it takes about 30 days for the financing, appraisal and title work to be completed. This would put us closing sometime in December.
Anyone with Conventional financing is fine to write an offer and close as normal. I actually just heard about a Conventional program that offers about 3% down payment (with certain restrictions). I have a friend, Alec Grebis at Bell Mortgage who knows all about this.

Contact me with questions or if you know someone who would like a fully remodeled house in a nice neighborhood!

Jen McKinnon
Realtor / Investor
Agent Referral Network
MN Real Estate Team

612.384.1073
jen[at]mnrealestateteam[dot]com

So, it’s been 22 days since we closed on our property and so far we have had demolition, most of the interior paint is done – some rooms still need a final coat of paint and the tile is complete.
We had the door way between the kitchen and dining room opened as far as we could go – probably around 6 inches to give the space a more open, modern feel and make the kitchen appear bigger. This made a HUGE difference.
Glass block windows have also been installed into the basement – this is a good safety feature and old windows are usually leaky.   It’s always a good idea to replace basement windows with glass block and it’s actually not expensive but makes a big difference in cleaning up the basement.

The paint colors are neutral yet not the typical boring tan, white or off white. You want the house to feel up to date but no offensive with paint colors. Ie – don’t paint anything red. I like red and the dining room at my personal residence is red but not a good color to chose for an investment property.

The tile is gorgeous and extends from the kitchen into the dining area because the wood floors had been ripped out and it would be very difficult (on a budget) to get new wood floors to match. Tile also adds a texture and color element to the house. The main floor bathroom also has the same tile on the floor as well as the entire bathtub / shower surround.

I am a little disappointed that the kitchen cabinets have not been installed yet as I was told they would be installed early this week – but I’ve been assured that we are still on track to finish on time. Right now that is approximately Oct 19th.

Stay tuned for more updates.

Jen McKinnon
Realtor / Investor
AGENT REFERRAL NETWORK
jen[at]mnrealestateteam[dot]com

Demolition began this week and currently all the old flooring and carpet has been ripped out, the kitchen has been completely gutted and the main level bathroom is partially torn apart.
We have also found that the neighbors are very interested in what is going on. They want their block cleaned up and question us from time to time to make sure we are on the up and up. I guess that’s all part of the deal – they are sort of our watch dogs and let us know what has been happening at the house!
Alot of work still to be done but we’ve made a start!

Jen McKinnon
Realtor / Investor
AGENT REFERRAL NETWORK
jen[at]mnrealestateteam[dot]com
612.384.1073

We are still waiting for the final approval to get started on construction and getting very anxious. I’m a little frustrated because it’s been almost a week now and of course the holiday did not speed things up. Tomorrow, my mission is to make sure we can start the demo by Wednesday.
I’ve attached a number of pictures that were taken this weekend so you can see what we’re starting with. It’s actually in decent shape but I’m so excited to watch the transformation.

We are looking forward to getting started this week and I will try to get more pictures posted as progress happens.

Jen McKinnon
Realtor / Investor
AGENT REFERRAL NETWORK
jen[at]mnrealestateteam.com

Ok, so my husband and I just bought our first house to flip and I figured that there are others out there that may want to do the same. So, I will post as we go through the process so you can get a good feel for what it is like.

To start with we went the easy route and bought a property that was not listed on the MLS that I found through some industry connections. Most houses that will work for flipping have multiple offers and can be tough to get. None the less, we found our in a better area of North Mpls.
Step 1 – Get pre approved with a reputable lender and one who deals with these types of rehab loans on a daily basis – they are not your typical loan.
Step 2 – Find the house and make sure that you will be able to buy, rehab and cover all costs and still be able to sell at a profit. You want to know the comparables near your house so that you know what a REALISTIC sale price point is.
Step 3 – Have your contractor review the house to let you know how much it will cost to rehab and if there are any issues with the house.
Step 4 – Get your escrow set up. Please note that you will need to put at least 20% cash into an escrow account based on the total loan amount (cost of house + rehab costs).
Step 4 – Get a good title company (I recommend Trademark Title) to get you clear title. We ran into an issue on our house where there was a cloud on title from 3 transactions ago. Trademark Title is the only company that caught it! You want clear title and a smooth closing with no suprise assessments down the road. Which I have seen happen many times with other title companies.
Step 5 – Close on the house – we closed on Sept 1 and then we wait a couple of days for the contractor to get approval from the lender to get started.

So, this is where we are at in the process.
Our contractor is staging the supplies and we’ve already got people walking by on the street asking when it will be done! Hoping to be done within 6 weeks so looking to list it mid October!

Jen McKinnon
Realtor / Investor
AGENT REFERRAL NETWORK
jen[at]mnrealestateteam.com

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Jen McKinnon
Realtor / Investor
MN Real Estate Team
612.384.1073
jen[at]mnrealestateteam[dot]com

Do you love watching those TV shows in which people are buying houses, fixing them up and reselling them for huge profits? Most of the time it looks like controlled chaos. Furthermore, these people don’t look or sound any smarter than you, but they claim they made as much money on this one house as you did all of last year.

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For more information or to register today call

Jen McKinnon
Realtor / Investor
MN Real Estate Team
612.384.1073
jen[at]mnrealestateteam[dot]com

This no-frills/no fluff information packed seminar is offered regularly as a follow-up to our introductory Investment Real Estate 101 seminar. Using a case study format, you’ll review how to calculate cash flow. We’ll learn about and discuss the important financial analysis tools an investor needs to have; cap rates, before and after tax “cash on cash” return, and 1st year return on investment. You’ll also be introduced to the Internal Rate of Return, a powerful tool which measures not only current cash flows, but also future cash flows, as well as tax benefits, appreciation, mortgage reduction, and selling costs over the entire projected life of the investment.

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For more information or to register call

Jen McKinnon
Realtor / Investor
MN Real Estate Team
612.384.1073
jen[at]mnrealestateteam[dot]com