Remember the former Ethan Allen building in Eagan off Yankee Doodle and Promenade? Neither do I seeing that I lived there for most of my life and never set foot in it.
I still can’t believe that it made it that long, which was around for 10 plus years. I rarely saw any cars in the parking lot. Prime retail spot in where 27,500 cars cars drive by on a daily basis.
The building has now been remodeled to fit six tenants in which there is 14,500 square feet of retail space available. For being a bad market for vacant space in the commercial real estate arena, this building is 100% leased before it even is delivered.
The tenant that I’m looking forward to the most is Smashburger. I’ve been waiting for this franchise to open an a spot south of the river ever since coming into the Twin Cities market about a year ago, they have been mainly on the north end of the metro.
If you haven’t tried them before, compare them to a Five Guys or In-N-Out. Don’t place them high on the “healthy things to eat” list.
The New Tenants
Smashburger
Sports Haircuts
Solo’s Pizza
Verizon Wireless
Pearle Vision
Panda’s Express
Anyone could be called a good anchor tenant except for maybe Sports Haircuts and I’m a little surprised by the Panda Express, I thought those where relative to mainly malls but it landed the end-cap space in the building.
That’s one happy landlord/developer to land such quality tenants in such a short period of time.
Nice, Fannie Mae just upped the ante in getting a mortgage. They announced a few days ago (late to the party but I’m busy) that they will include an incentive of up to 3.5% if a buyer uses the HomePath mortgage program. The monies can be used for closing costs and appliances.
If you’re unfamiliar with the HomePath mortgage program, here are the deets.
WASHINGTON, DC — Fannie Mae (FNM/NYSE) announced today that people purchasing a Fannie Mae-owned HomePath® property will receive up to 3.5 percent of the final sales price to be used toward closing cost assistance or their choice of appliances. The offer is available to any owner-occupant who closes on the purchase of a property listed on HomePath.com before May 1, 2010.
You can search for Fannie Mae HomePath specific properties on their website.
The flipper’s paradise has returned and is in full effect around the Twin Cities metro area. It appears that it is 2002-2006 all over again when it comes to “turn and burn” real estate for property flippers. Not only are the lower-end properties hard to grab, most buyers area finding themselves competing with wannabe seasoned real estate investors on cash deals looking for quick profits.
Quick basics of a flip is to buy low and sell high to maximize profit without putting in a lot of capital in out of pocket. Let’s all admit that all of us have at least glanced at one of the episodes on television about people making six figures in one deal.
A lot of distressed properties that are rehabbed don’t actually make the final grade in what a buyer is looking for. Most seem fake.
Most Flips Miss
All flips follow the same flow. Cut corners on the less noticeable (roof repairs, trim work, etc) and dump money into the eye catching features (kitchen appliance, granites, et al). Almost all flipper’s hate spending money on practical items.
Here’s a quick list of some characteristics to watch out for:
Kitchen Appliances: Most flippers have connections with local vendors offering ’scratch and dent’ appliances, watch out for noticeable damage. Even if
Vanilla in colors. All those training videos tell real estate investors to use neutral colors to appeal to the broader audience. The color of choice seems to always be light tan.
Consistency throughout the property is a problem. Mix-matching finishes like flooring, carpet, tile, cabinets (kitchen/bath). I think the reason is they ran out products to choose from on the discontinued rack. Cutting corners once again.
Cheap windows, these are used because either they where retro fit in the current opening or because someone broke in. Check how they slide, some might have been installed wrong and therefore brute strength is needed to open. Also, faulty installation can cause a mess with water intrusion.
The carpet is cheap. Sure it is brand new, but the quality is at the bottom of the scale. They use a upgraded pad to make it feel better than what it usually is. End result is the carpet wears a lot quicker.
Travertine and Brazilian cherry floors don’t solve everything.
Ever walked into a rehabbed house with staging? It doesn’t happen that often, but this usually means that they have done this thing before. Why? The real estate investor knows that a well staged house usually sells faster and draws eyes away from the real problems. Remember first time flippers are really trying to cut corners and typically don’t want to pay for home staging.
Fundamentals Need To Be Addressed
There is no joy in updating a roof, siding or simply upgrading the furnace along with the HVAC systems. This everybody knows, but fixes like these are often over missed and are small aesthetics for buyer’s.
Be on the lookout for the small things: caulking around bathroom fixtures, repaired cabinetry, trim (mitered corners, chips in the wood, dated), stain carpet cleaned but not replaced and other eye sores.
Moving walls or adding spaces can be much more functional as an end result. A lot of homes are older and not not kept up with today’s trends.
I’m no professional flipper, but I would like to think that I know what buyer’s want. Perhaps most flippers lose focus and only worry about the potential cash made from the property. A little time spent on the smaller things might create a quicker sale.
Be Cautious
Ask for disclosures. Property flippers don’t want to give these out. They will probably only issue a limited warranty for title meaning that they *only* know what they know from the time the property was first purchased.
True story and not uncommon, I was able to dig into one property for a client and found out there was mold prior to when the property was bought by the investor. It turns out they admitted to it being a small amount, but only to find out it was part of major cover-up. You see, all they have to say is there was mold, it has been taken care. The question is, how much mold damage?
Before pictures would be nice. If they just bought the property, odds are the buyer’s agent will have access to the prior listing photos giving you an idea of what the property looked like when the investor purchased it.
Just make sure to explore all due diligence, get an inspection.
Get Over The Shiny Objects
Seeing past the bright shiny objects is the key to spotting if flip has flopped. Make sure the property fits what you, the buyer is looking for. Just because the property has all the latest and greatest fixtures doesn’t mean that it is the best.
Find something that has value.
It’s hard to find a flip done right, most are simply half-assed.
Over the next few weeks, I’m going to be swinging by some big commercial real estate properties throughout the Twin Cities that are in distress.
The Shops on Galaxie are located in the defunct future heart of a bustling downtown Apple Valley. This area hopes to see it’s better days as a master plan gone belly up, big thanks to recession.
In what was suppose to be an area where businesses wanted to work, lured in on what seemed to be big promises. Many small start ups have come and gone. Future streets carve out the landscape where residential units and commercial space is suppose to sit.
If you know of anymore, drop them in the comments below and I will look into them.
The TC Daily Planet has an article about a new mortgage scam/fraud making it’s way around the Twin Cities metro area.
With the foreclosure rate in the metro area still soaring, struggling homeowners face a new and more sinister threat – unscrupulous scam artists. With ads claiming they can help you keep your home while eliminating your mortgage and property tax, a group calling themselves “Slavery to Sovereignty” is the latest in a long line to take advantage of residents who are desperate for help.
Good news for local Twin Cities house flipper’s (those that buy cheap houses and put $10,000 life’s work into it and sell for massive profit or attempt) the FHA 90 day seasoning rule has been temporarily lifted starting in February 1st and running for a year.
If you are unfamiliar with the seasoning rule, it is meant for an arms-length transaction for all parties.
The overall goal for a property investor that is flipping houses is to buy low, throw some money at house and sell high, along with having the property for the least amount of time. Here lies a small problem, when the seasoning rule was first introduced FHA wouldn’t insure a home loan if it had changed hands of title unless the previous owner had ownership of 90 days or more.
Being that a large buyer pool are using FHA loans, no-go on getting in on freshly renovated properties that are agressiveley priced and are actually selling.
The overall goal is to move FHA-REO properties a lot quicker and stabilize market conditions.
Looks like some metro areas that are riddled with foreclosures will get some help with the funds from Recovery Act phase 2 out of ?. Roughly $2 billion is being set aside to help revitalize neighborhoods across the country.
“Vacant homes have a debilitating effect on neighborhoods and often lead to reduced property values, blight, and neighborhood decay,” said Donovan. “This additional $2 billion in Recovery Act funding will help stabilize hard hit communities by turning vacant homes into affordable housing opportunities. The Neighborhood Stabilization program is a key part of the Obama Administration’s comprehensive approach to address the national housing and economic crisis.”
There is a document on the website that lists where all the funds are being allocated, for your convenience I did it for you. Minneapolis is getting about $19 million and St. Paul will get about $18 million. Funds will be used to buy and rehab homes, purchasing vacant bank owned homes and provide assistance for financing home buyers.
Remember the former Ethan Allen building in Eagan off Yankee Doodle and Promenade? Neither do I seeing that I lived there for most of my life and never set foot in it.
