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In years past, when an investor was looking to buy a new rental property, they typically would look at multi-family properties.  With the large inventory of single family homes that are currently in foreclosure or going through short sales, many of these properties are now becoming rental homes.  This increase in single family rentals is changing the landscape of Saint Paul real estate in many ways:

• Townhouses, side by side duplexes, and condos were previously the top of the food chain (in a matter of speaking) for tenants.  These were often seen as the last stop before buying a property of their own.  Most of these were larger, gave you less neighbors, and more amenities than an apartment.  As more single family houses have become available to the average renter, these other properties have been affected.  The non-single family rental is experiencing lower rent amounts, higher vacancy, and less rental demand.  Where once you would have tenants fighting over a nice 2 bedroom side by side duplex unit with hardwood floors for $1000, now you are struggling to find a tenant that will pay $875.  Tenants are realizing that they can spend the same amount of money (as just a couple years ago) and now rent an entire house.
• Unfortunately, landlords that have owned single family houses several years are also feeling the squeeze from the foreclosure market.  They may have paid 25-50% more for the same property in the same area than the investor today.  This makes the old owners operating costs (ie:  mortgage) much higher and their operating income much lower.  A new investor can undercut the old investor’s rent amount on a like property, while maintaining a good cash flow/profit margin.
• There is also an increasing type of tenant that we have not seen in large quantities previously.  These are previous homeowners that have lost their house to foreclosure or short sale.  They may have had a job loss or illness that affected their financial situation, resulting in the loss of their home.  Many of these new tenants have good jobs with solid and steady income.  They simply hit a pothole in their financial road.  This type of tenant is not going to move into an apartment building and may not even be interested in a connected (condo, townhouse, side by side) living situation.  They previously owned a home and want to stay in that type of property.
• Lastly, we are seeing many Saint Paul houses coming into the rental pool that previously have never been rented.  Many are middle to upper end homes.  These are the result of the current owners being unable to sell the property, but unfortunately still needing to move out for one reason or another.  They are actually being quickly rented up by the above tenants that were used to a larger mortgage payment and want a larger home.  Rent amounts of $2000-$4000 are common.

Whether you are a new investor or have owned some property in Saint Paul for many years, this changing rental landscape is important to understand.

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The following income limits apply to all MMP loans purchase approved on the HDS SF Web Application on or after Monday, March 1, 2010:

* The 11 county Twin Cities Area is defined as: Anoka, Carver, Chisago, Dakota, Hennepin, Isanti, Ramsey, Scott, Sherburne, Washington and Wright Counties.  This includes Saint Paul and Minneapolis.

**Includes Dodge and Olmsted counties

The income limit increase does not apply to the following programs: Community Activity Set Aside (CASA) and HOME HELP.

MMP provides access to a maximum of $3,000 in entry cost assistance for the following Targeted Borrowers:

• Single Headed Households
• Households of Color or Hispanic Ethnicity
• Households Containing an Individual with a Disability
• Households Purchasing a Home in a Low Income Census Tract
• Households earning 60% or Less of Area Median Income

Link to MMP Entry Cost Assistance Income Limits

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The report sites the 4.5 million mortgages that are either currently in foreclosure or have missed at least one payment (and are most likely headed into foreclosure). As the banks work through that large number of properties, most will not qualify for mortgage modifications, which have less than a 10% success rate. When these additional properties hit the already flooded foreclosure market, it will surely put downward pressures on REO and retail properties alike.

Additionally, the Federal Reserve has committed to stop buying up mortgage backed securities in March, which will push interest rates higher. That coupled with the end of the $8,000 buyer’s credit in June, will push demand for homes lower and prices lower with it.

Fortunately, according to CNNMoney.com, the Saint Paul Real Estate market (in fact, the entire Twin Cites market) will experience a smaller decline of 0.9% from September 2010 to September 2011. This is lower than the expected national average.  If the employment market improves, this may counter act the drop in housing prices.

We will wait and see!

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The City is trying to enhance the rivers appeal and access.  Currently it is not possible to see the river or gain access to the river along much of where it winds through Saint Paul.  Proposals include extending the network of parkways to the river to create more green space and places for walk, bike, run, and simply view the river.  With the resurgence in living in the city, especially Saint Paul Condos and Lofts, this work is really past due to highlight the natural beauty that St. Paul and the river have to offer.

If the green ways are extended and access to the river is enhanced, we should see a positive affect on Saint Paul real estate prices.  With the population expected to grow by 40,000 people by 2030, adding these enhancements will allow Saint Paul more space to infill with new housing developments that rival other cities.  This will be especially important in the West Seventh Street area, which is by the river, but unfortunately has some of the oldest and most neglected housing stock in Saint Paul.  With the city tearing down many of these older properties, the new river access should help encourage developers to build new housing stock on those lots.

The master plan will be completed in 2011 with several opportunities for Saint Paul residents to voice their concerns or opinions at public meetings.  Once completed, it will be used as a road map for all future real estate development in St. Paul for the years to come.

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The St. Paul Union Depot Lofts were born. Consisting of 33 units, many of them are two level units with exposed brick and open ceilings.  Most units are approximately 900 square feet, one bedroom units.  The prices average around $160k.

Some of the amenities include:

• Community roof top party room with Kitchen Area, Pool Table and Rooftop Deck with BBQ Grill.  Featuring great views of the Saint Paul skyline.
• Skyway connected building to make commuting to work or play easy in the winter.
• Light rail connects this building to Minneapolis and the airport and will continue to grow as Saint Paul’s light rail hub.
• The building features Christos Greek Restaurant and Boiler Room Coffee Shop.
• Underground parking
• Fitness Center
• and much more

Search the MN MLS for Union Depot Lofts for Sale

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Link: http://www.stpaul.gov/index.aspx?NID=75
Contact number: (651) 266-6350

Vacant and Foreclosed Properties
In the case of a foreclosure, the owner or its assignee is expected to contact the SPRWS customer service line to provide them with updated contact information and a mailing address. After this information is provided, only the contact person can request the shut off, meter removal, or turn on.

The owner or assignee of a foreclosure may call SPRWS to verify that the bill is up to date and if the meter is not at the property, verify whether SPRWS removed the meter or if the meter was stolen.

Winterizing a property
When winterizing Saint Paul Houses serviced by Saint Paul Regional Water Services, do not remove the meter. Under City Charter Section 94.06, the meter is owned by SPRWS and may be removed only by an employee of SPRWS except in case of an emergency or when a plumber changes the meter location to drain the system. When winterizing a property, SPRWS recommends a “Shut Off and Remove” at which time a SPRWS employee will shut off the water in the street and remove the meter.

Matters regarding billing
-A meter reset charge is assessed to the property when the meter is removed. This bill must be paid prior to the water turn on.
-If the meter is shut off but not removed, property owners will still receive a minimum charge and the bill must be paid prior to water turn on.
-If the meter is shut off and removed by SPRWS, the meter will be inspected upon removal, and if nothing is wrong with the meter, the final bill is produced and the property owner will receive no further minimal charges.
-If a meter is missing, call SPRWS to verify whether the meter was shut off and removed by SPRWS, or if the meter was stolen.

Water Bills:
Water bills are a lien on the property. The seller of the property is responsible for the entire water bill up until the day SPRWS is notified and conducts a final reading. The final meter reading should be taken on the day of closing. An appointment for the final reading should be made in advance. SPRWS prefers that the owner or the assignee make an appointment at least two weeks
in advance to the date of closing. If the appointment needs to be canceled, it may be cancelled the same day.

Turning the Water On:
If the water is turned off and needs to be turned back on, SPRWS will not turn the water back on unless someone is at the property. Appointments to turn the water back on should be made at least two weeks in advance to when the new property owner will need the water on.

As is Properties:
If the property is being sold “as is” and the meter is broken, damaged or frozen, the new property owner will be responsible for the cost of repair unless an alternative agreement is made before closing. A visual inspection cannot always indicate whether a meter is broken, damaged or frozen. If Saint Paul Regional Water Services performs a “shut off and remove”, the meter is inspected after removal, and a fully functioning meter will replace it upon turning the water back on.

Closing Checklist
- Set up an appointment for a final meter reading/water turn on around two weeks in advance of the closing date, scheduled for the day of closing.
-Provide SPRWS with an updated address to receive the final bill from the final meter reading.
-Provide SPRWS with the new property owner’s name and contact information.

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1. Category 1-A homeowner must register a unoccupied home within 30 days or face a fine.  To remove it from the list requires only a $50 fee and any outstanding orders for legal occupancy (which may be as simple as shoveling the snow).
2. Category 2-Homes can be moved to Category 2 within 30 days of hitting the Saint Paul vacant building list.  This is a typical state for most Saint Paul Foreclosures.  These properties are condemned or have multiple housing violations.  They are legally considered uninhabitable.  They will require a licensed contractor to submit a schedule and sworn construction statement to complete the work.  The buy may need to escrow money to complete some repairs.  If you jump through all the hoops, you can buy these properties and rehab them.
3. Category 3-These properties are slated for demolishing.  Almost nothing can save them from the wrecking ball.

Previously, when you submitted a plan to renovate a Category 2 property, you would simply submit the proper paperwork to the city.  Maybe you would need to meet an inspector on-site to discuss certain issues.  Not a big deal.

Starting January 1, 2010, Saint Paul is adding a new fee called a “Sales Requirement Fee”.  This $275 fee is required at the time you submit your rehab plan for the Category 2 home.  It must be paid for the city to review how you are going to the repair the home you are buying.  This review process can take up to 4 weeks and the property can NOT be sold until the city approves the buyer’s plan.

Just one more way to get money out of Saint Paul Home buyers and slow down the process.  Keep this in mind!

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A free continental breakfast will be provided and discussion will focus on the potential value of a local business association, and how businesses in other parts of St. Paul have organized their local business support and promotion efforts. If there is enough support at the meeting, people are available to help get a local business association started. Please RSVP to ed [at] daytonsbluff [dot] org or 651-772-2075. Your support is needed!

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The Minnesota Home Ownership Center is pleased to announce a new pilot program that may assist families AFTER the foreclosure of their home with up to $2,500 to relocate and secure alternative housing.  Funding for this pilot program has been provided by the Saint Paul Foundation Community Economic Relief Fund.

For now, homeowners being displaced must have owned in Dakota, Ramsey or Washington Counties during this pilot program.  Depending on need, and availability of future funding, the program may be expanded.

Funds may be used for:

• Moving expenses
• Security deposits
• Up to half of monthly rent for first three months
• Utilities (gas, electric, water)

A fact sheet with additional program details and information, is available here.

Homeowners should contact the foreclosure counselors at the following organizations:

Dakota County: Dakota County CDA
Ramsey County: City of Saint Paul PED
Washington County: Washington County HRA
Spanish-Speaking homeowners (In the three counties): Neighborhood Development Alliance

Due to limited funding… these grants are available on a first-come, first-served basis.  Thank you to Saint Paul Foundation Community Economic Relief Fund for helping former owners of Saint Paul Homes to overcome this difficult life change.

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