When it Shouldn’t Go as Planned

I'm not worried, I've got a plan - a phrase I often used when discussing my future life goals. After high school, I knew that I wanted to pursue a college degree, purchase a new-ish car, get married, travel, buy a house, and maybe even have some kids. Each step seemed mapped out for me. Parents, teachers, coaches, and guidance counselors always said that those were the steps that would set most people up for a successful life. However, there's a big catch. 

Our society puts a startling emphasis on the order you should pursue each step. We've all heard about the importance of "doing it the right way" and that if we do, our lives are set up for optimum happiness. 

The problem is, it doesn't always make sense to take each step in that order. Many people choose not to because they may want different things from life, or they want them in a different order. As a millennial, I am proud to know other millennials who independently own homes, are single parents, are pursuing a degree years after graduating high school, or even own businesses! The point I am trying to make is that each of those accomplishments is equally important, no matter the order in which they are achieved. 

My journey happened to follow the typically encouraged path. I graduated from college, got married, bought a house, traveled, bought a new car, and kids are most likely in our future. I recognize that massive parts of my accomplishments are due to a combination of privilege, help along the way, and a lot of hard work. But, I always wonder if doing it in that order was the best choice for me. 

Roughly three years before I purchased a home,  I was a highly qualified buyer (before I was married). But I didn't know it. I assumed it would be five or six years before I could buy a home. Looking back at the hundreds of hours I spent scouring brokerage websites, I feel a little bit of regret that so many dream homes slipped away from me, mostly because of ignorance. I feel a massive amount of regret when I calculated the $43,200 spent on rent those three years ($1,200 a month for three years). 

I had a very foggy understanding of the real estate industry, and an even deeper lack of knowledge when it came to the actual requirements a first-time buyer has to meet. My main misconceptions were: I needed to acquire a massive amount of savings (around $40,000) for a downpayment and closing costs,  I needed to pay my real estate agent as a buyer, that buying a house was risky and could leave me in financial ruin, and that a mortgage was a thirty-year commitment that was going to lock me down with hundreds of thousands of dollars of debt. 

After going through the process, I shake my head and realize I had it all wrong. 

In fact, I only paid $2,000 more for my mortgage downpayment than I did for the downpayment on my new car. I did not pay my buyer agent (other than with late-night calls,  a million questions, and some glowing referrals). 

I also realized I'd been paying someone else's mortgage when I paid rent - which made it an expense, not an investment. Lastly, I learned that most homeowners do not maintain the same mortgage for the life of the loan. Every concern that held me back for those three years wasn't valid. 

The crazy part? Most Millennials share those very concerns and questions. We grew up during the 2008 collapse, so our primary representation of the housing market was formed during a tumultuous time. I remember friends moving because their families could no longer afford their homes, and watching the people I loved struggle - without any way to help. As a teenager, it seemed overwhelming and scary. 

But, we have to remember that we live in a different time. I was lucky enough to share many conversations with a loan officer, Don Galvin, who explained the many steps that have been taken to avoid a future bubble of that magnitude. With his guidance and advice, I realized it's not 2008, and I don't need to let fear hold me back. 

So why don't all millennials (those born in or between 1987-1996) pursue homeownership with gusto? I can only speak for myself, but I was hesitant to begin the process only to find it was out of my reach, and I didn't know how to ask the right questions, or who I was supposed to ask. I did a ton of research in my defense, but for every question that was answered, I could find three different contradictional online articles to challenge the first. 

I only learned that I was indeed capable of buying a house when my good friend, whose a REALTOR, met me at a coffee shop and talked me through the process and what I could realistically expect during my homeownership journey. 

A few short months after a conversation over lattes, I bought my dream home in a fantastic location. And the best part, I am now investing in myself and my future. Even though I sometimes think about the dream homes I missed out on, my disappointment is quickly quashed by the fact that I have a home that I love. A piece of the world that's just mine. And that's pretty cool. 

K.A. Hayes

Are you looking to buy a home soon? Well, that's great! Our team is ready to help you! But before we can start with the formal process of finding you a home, there are some things that you can do RIGHT NOW if you want to buy a home in the future. 

Whether you're looking for a home for sale in St Louis Park MN, Minnetonka MN, or any of our team's other favorite cities in the area, we must first address what you can do to make sure that you and your family are ready to buy a home. 

Having Good Credit

Having good credit is extremely important when buying a home. Without good credit, banks and other lenders are less likely to give you a loan to buy your dream home. You see, banks tend to operate on a corporate level, and stay away from emotions. Many banks won't take "I promise to pay it back" as an acceptable assurance, so they look at your FICO score as well as your credit score to assess whether you qualify for a loan. 

Now you might be asking, "what credit score do I need to have to buy a home?". That depends on what kind of loan you are seeking to get. The Federal Housing Administration has the lowest credit requirements among all lenders, sometimes lending to individuals with credit scores as low as 500. On the flip side, traditional real estate mortgage companies require credit scores of much higher, around 620. If you're looking for a lower interest rate, you'll want your credit score to be above 700. 

To get your credit score above 700 so you can qualify for those prime rates, you must start building your credit history as soon as possible. The main factors that go into your credit calculation are credit card use, payment history, credit age, total accounts, and the number of times you've applied for credit. Below is an image that shows you how your credit score is broken down.

Pro-Tip: Get pre-approved for a mortgage. Before you even buy a home, talk with lenders to get an idea of how much house you will be able to afford. A letter from a lender will also improve your offer in the eyes of the seller. In short, this first point we made boils down to BUILD YOUR CREDIT!

Start Tracking Your Budget

Homes are typically the largest purchase you will make in your lifetime. They're not usually something you go out on a limb and buy because you had a little extra money lying around. Buying a home takes some serious budgeting skills, and to buy a home one year, six months, three months, or three weeks from now, you'll need to have a solid budget planned out. 

We're going to layout a simple five step process that you can follow to help you build a budget for buying a home. 

1. Add Up Your Income: It's nearly impossible to know how much you can spend if you don't know how much you make. Add up every source of income that you make each month to come up with a total.

2. List Your Household Expenses: Come up with a list of where each of your dollars goes each month. This includes groceries, cell phone bills, rent, personal spending, savings, etc.

3. Calculate Home Ownership Costs: Experts recommend that you spend no more than 25% of your annual take-home income on your house. So do the math! If you make $100,000 a year after taxes, no more than $25,000 should be going to pay for your home each year. 

4. Give Your Budget Room to Expand: Life happens. There are going to be unexpected costs that come up in your life, so be sure that you can play around with your budget if need be.

5. Make Adjustments: As time goes on you, may find that you're spending more in some areas of your life than you used to, and chances are you'll be making more money as time goes on. Re-visit your budget and make changes based on where you're at in life. 

Tracking your budget is a great way to know where your money is coming from and where it is spent. Once you have a good idea about this, you'll find the right price bracket for your home search!

Talk To a Lender

We talked about this briefly earlier in the blog post, but talking with lenders is a great way to learn what you might afford. Another plus of talking with lenders is the fact that you'll receive different offers. Some lenders might offer you lower rates than others, while some might want to tie you up in a mortgage for much longer. Don't take the first offer that you receive. Shop around and find the best option for you!

Talk To a Real Estate Agent

Now it's our turn! Real estate agents are experts when it comes to buying and selling houses for clients. Like talking to lenders, each real estate agent is going to offer something slightly different, and our job is to make the home search process as easy as possible. 

For example, say that you know you want a three bed, two bath house in St. Louis Park, but you're not sure how to start looking. Real estate agents have experience and know-how to find the perfect home for you, help you with the mortgage process, walk you through all the paperwork, and share as much knowledge as possible. Meeting with an agent and figuring out if they'll be a good fit for you is essential. Shop around! Find the agent going to go above and beyond to find you that house for sale in St Louis Park! 

Start Looking!

We never said you couldn't start looking for fun. Go to websites like Zillow.com and Realtor.com to find potential areas that you might want to live in. If you find a neighborhood that you like, see what other homes in the area sold for, or are currently listed at. If you find a place you like, save it and remember what features it had to offer. Some real estate professionals recommend searching the markets for 15-30 minutes a day before you're even ready to buy a house so that when the time comes, you'll be as ready as ever!

Just because you might not be ready to buy a house tomorrow, doesn't mean that there aren't things you can do TODAY. Remember to take all of this seriously, because as real estate professionals, we know these tips can help the home buying process. If you can follow these guidelines, you'll be an all-star when it comes time buying a house!

Our team is proud to have ten real estate agents who all excel in the real estate market. However, one of our agents, AJ Pettersen, goes above and beyond when buying and selling homes for clients. He was one of the agents in our brokerage that won the ICON award this year, which celebrates agents have exceptional sales volume and representation of the brokerage’s core values. 

About AJ

Before we get into the details of the award, why don’t we talk a little bit about AJ and how our team got to where it is? AJ grew up in Minnetonka, Minnesota, where he was a star baseball player at Minnetonka High School. After high school, he got a scholarship to continue playing baseball at the University of Minnesota and got a degree in economics when he graduated in 2011. Post-college, AJ continued his baseball career playing for the Minnesota Twins organization for almost four more years. After hanging up his cleats and racking his bat one last time, AJ was ready to move back to the Twin Cities. He and his wife, Emily, bought a home in St. Louis Park, and AJ began working in real estate full time. AJ’s first transaction happened in 2014, and since then, he’s been running with the wind! 

AJ was originally with the Engel & Völkers brokerage when he brought on our first team member in 2017, Taylor Kielty. Relatively new to the real estate world, AJ and Taylor began hunting down deals all over the Twin Cities. Before long, they brought on a few more agents and a transaction coordinator to assist with the buying and selling processes. Fast forward to 2019, AJ and his team joined eXp Realty, where the team has been steadily growing ever since. Now The Advisory Realty Group has ten agents, a transaction coordinator, a marketing manager, and two full-time interns. 

About The Brokerage

Exp Realty is the largest real estate brokerage by geography in North America. They currently have over 30,000 agents and are the fastest-growing brokerage in the country. In 2018 eXp agents did 74,678 transactions, and in 2019 they did 135,320 transactions; an 81% growth. Our team is excited to be apart of this rapidly growing brokerage and to take advantage of the many resources they provide their agents with.

About the Award

Each year eXp Realty selects agents from all over the country that achieve exceptional sales volume while demonstrating their core values as a business. This year, AJ was one of the winners for the state of Minnesota! So far in 2020, our team has done over $50,000,000 in volume, which exceeds our $49,000,000 for all of 2019, and $38,000,000 for 2018. One of the values that eXp Realty emphasizes is “community.” This means that their ICON agents must give back to the agent population with the philosophy that “rising tides lift all boats.” AJ has been a perfect example of helping the eXp agent population, teaching and leading others to success along the way. If you remember from above, our volume numbers have been steadily growing for the past three years, and AJ’s leadership and willingness to help everyone on our team is a big part of that.

Our team is incredibly proud of AJ for receiving this award. It came with a lot of hard work and determination, and it’s great to see one of our agents have so much success. Our team works very hard to be a well-known name within the real estate world of the Twin Cities, and AJ does an exceptional job of exemplifying what our team and eXp Realty stands for. Cheers!

First time home buying can be a confusing and complicated process. Lucky for you, our team has tons of experience with first time home buyers. We’re here to walk you through the entire process from beginning to end, as well as educate you as much as we can along the way. 

In this blog post and featured video, we will be covering the four popular first-time home buying options. Our team has completed transactions in each one of these categories, so our knowledge is as up to speed as ever. 

A good exercise to do while reading this blog and watching the video is to picture where you see yourself living. Do you picture yourself in a townhouse in Minnetonka? Perhaps you see yourself in a single-family home in Minneapolis, a condo in Blaine, or new construction in St. Louis Park… Any of these could be great options for you and your family, but it’s important to know what each of these is, and the pros and cons that each one has to offer.

Single Family Home | #1

The first home buying option we’ll start with is the single-family home. According to the U.S. Census Bureau, a single-family home is one that is fully detached, semi-detached, or a townhouse. If it is connected to another unit there must be a wall from ground to roof.

However, when most people think of a single-family home, they picture a standalone residential structure that is intended for a single dwelling. This means there is one kitchen, unshared walls, and unshared utilities. Since the second definition of a single-family home makes more sense to many homebuyers, picture that. 

Pros: There are some advantages to having a single-family home. The first, and probably the most obvious is the privacy that you will receive in this type of dwelling. They usually sit on private property and tend to be quieter since most of the time there are no shared walls between you and a neighbor. The second pro would be the ability to customize your property. If you want to change how the outside of your home looks, you can easily do some landscaping or change virtually any aspect of your home. If you live in a townhouse or a condo, these options are usually not readily available to you. The last pro that we’ll cover for single-family homes is the amount of space that you’ll receive. Even if you don’t own a large ranch down in Texas, you’ll often find yourself with more space in a single-family home compared to a townhouse or condo. This can usually be attributed to a bigger yard, more square footage, and extra storage space within the home. 

Cons: The biggest and most obvious drawback for some people is that there is the potential for more responsibility. Many single-family homes are not a part of a homeowners association, so lawn care, snow removal, exterior maintenance, utilities, cable, etc. are all the homeowner’s responsibility. However, if you’re someone who likes total control over your property, then this could be a major pro. The second drawback worthy of noting is that usually (not all the time) single-family homes cost more. Part of this comes from paying for the lot that the home is on. Usually, they come with more outdoor space and privacy, so that can be reflected in the price of the property. 

A single-family home can be a great option for you and your family, but it depends on where you want to live, and what your budget is. Talk to one of our team members if you think this option could be right for you. 

Condominium (condo) | #2

A condo is a privately-owned individual unit within a building of other units. Condos often share amenities such as pools, recreation rooms, tennis courts, lounging areas, etc. Many condos are a part of a homeowner’s association (HOA) which advises tenants on covenants, restrictions, rules, and for many homeowner’s associations, you will pay a monthly or annual fee that helps pay for exterior maintenance, some utilities, and maintaining shared spaces. 

Pros: The biggest pro for some people living in a condo is the low level of maintenance that they require. Typically, all of the exterior maintenance is covered by the HOA, as well as repairs that were not caused by the tenant such as a leaky roof or damage from a storm. Another pro to living in a condo is a sense of security. Many condo buildings have a security staff, and there is a secure entrance into the building so if living alone is not something you’re ready for, a condo can provide a good sense of security. Lastly, condos are often more affordable than single-family homes because they’re more compact, and often have lower property taxes. 

Cons: The most obvious con to living in a condo is the lack of privacy that you will receive. Because you’re living in a shared building, you have neighbors on the other side of a wall and many areas of the building such as the lobby, hallways, and social areas are shared amongst all the tenants in the building. Secondly, condos can sometimes have restricted outdoor space. Because condo buildings are trying to maximize real estate by building up, it doesn’t leave as much room outdoors for green space. However, this does depend on where the condo is located and the lot that it was built on. Another drawback to living in a condo that many tenants complain about is the HOA rules. These rules can range from noise levels, what you can have on your patio, to the size and number of pets that you’re able to have. 

Condos are great for people who might not be ready for a single-family home, but still want to exercise owning property and developing equity in the real estate market. They can also be good for people who would rather not have to deal with excess amounts of maintenance. 

Townhouse | #3

Townhouses are similar to condos in that they typically have an HOA and are more compact than a single-family home. The main difference between a townhouse and a condo is that condos are typically in a large building with many units per floor, while townhouses can have two levels much like a single-family home, are on the street level, but typically have a shared wall(s) with neighbors. 

Pros: Typically, townhouses cost less than a single-family home because you can get a lot of space in the same area as a single-family home. But because you’re sharing a wall(s) with a neighbor, you’re more paying for the inside of the home rather than the yard space you might pay for a single-family home. Since townhouses are typically smaller than single-family homes, they require less maintenance, and if there is an HOA they usually take care of the exterior of the house such as lawn and snow care. If your townhouse is a part of a development, they may have shared amenities such as a pool or clubhouse. Some townhouses even have access to their own yard, a patio, and a private garage. 

Cons: Since you’re usually near your neighbors, there may be some noise pollution that you’ll have to deal with, which you typically won’t find in a single-family home. Another drawback of living in a townhouse could be HOA rules. If you’re someone who doesn’t like restrictions or covenants on your living, then a townhouse might not be for you. The third drawback may only apply to some people, as many townhouses are multi-level living. If you’d rather have all your living spaces on one level, then a condo might be a better option.

New Construction | #4

The last section that we want to cover is new construction. This category will almost always fall into single-family homes and can be a great option if you’re looking for more space, and a new house to live in. Like AJ mentioned in the video, you can either go with a custom home designer which entails working with an architect and usually buying a piece of land, knocking down whatever structures are currently on the property, and moving forward with your design. However, some major homebuilders such as Lennar have lots ready to go, and homes that have already been designed. With major corporations like Lennar, you won’t have as many options right out of the gate, but the process is usually a little quicker.

Well now that we’ve covered the four major categories that first-time homebuyers typically exercise, it’s time to think about where you might want to live. Be mindful of your habits and what you like to do in your free time, as this is a major factor for many buyers when deciding what type of home they would like to live in. Until next time… 

The Advisory Realty Group

Only 5 facts we love about the Twin Cities?

The Twin Cities has a lot to offer and this is a much shorter list then we started off with, but we narrowed down to what we feel is the best. Beyond these 5 facts, you will find your Advisory realty team takes pride on being your experts on the best the Twin Cities has to offer you and your family.

Most of us have lived here for our whole lives or an extended period of time. So, whether you’re relatively new to the area, or been here for a while, look no further than The Advisory as your community resource for you and your family in the Minneapolis and St. Paul metro area.

Twin Cities Nightlife and Atmosphere is Unique | FACT ONE

The atmosphere here in the Twin Cities is first in the country bar none. With the Minnesota Twins and Minnesota Vikings on the up-and-up, sports in the Twin Cities are becoming a bigger part of our daily life. PRO-TIP: If you’re looking for a friend in Minnesota it could be as simple as walking into a sports bar and bad talking the Packers or the Bears. The second part of our culture that is worthy of note is the amazing available food options. With the Twin Cities having a large Hmong and Somali population, as well as making a habit of taking in refugees, the restaurants in the Twin Cities represent different cultures from all around the world. Some might argue that we have the best restaurants in the western hemisphere! The third and arguably the most important part of our atmosphere is the people. What better way to describe us than using the term Minnesota Nice? For newcomers of the Twin Cities, this can be an extremely confusing term as there is no real definition of it. Most would agree with the unofficial definition which refers to Minnesotan’s nice and polite demeanor but reserving of their emotions. Our way of dealing with conflict is to not deal with it at all, which means most of us are extremely passive-aggressive.

Twin Cities Lakes are Amazing | FACT TWO

There is rarely nothing to do in the Twin Cities. In the summer months, there are plenty of lakes (more than 10,000) for you to boat on, bask in the sun on the beaches, or enjoy the parks accompanied by many of them. If you live closer to the cities like St. Louis Park, for example, lakes such as Lake Harriet, and Lake Bde Maka Ska are perfect for walking, biking, and water recreational activities. If you live closer to the suburbs like Minnetonka, then Lake Minnetonka is the place to be. If you’re looking to get out of the cities for the weekend, a two-hour trip up north to Duluth is a great idea! Lake Superior and its beautiful shoreline extending to the edge of Canada. It's beautiful and unlike anything you’ll be able to see in the cities. However, if it’s the winter months, it’s a different story…

Twin Cities Winter Can Be Fun! | FACT THREE

Even if you’ve never been to Minnesota, you’re likely to have heard about the extremely brutal winter months we endure. Heck, sometimes those brutal winter months extend into May! For a newcomer, as soon as you step off the plane, you’ll be hit with a wave of the coldest air you’ve ever felt, followed by snow and ice for as far as the eye can see. While it might look like a tundra, plenty of stuff happens during the winter believe it or not. If you refuse to give up your hobby of fishing, ice fishing is perfect. You can sit inside a warmed house and sip a beer while you “fish”. If you’re looking for something a little bit more fast-paced, many of the ski hills around the area have tubing! Grab your friends and family, tie tubes together, and slide down massive hills as you wonder how something in such cold weather could be so much fun. If you’re looking to be exotic, some of the lakes farther up north have igloo bars!

Twin Cities has a Diverse Career Landscape | FACT FOUR

There is no shortage of good jobs in the Twin Cities, which is home to 16 fortune 500 companies such as 3M, UnitedHealth Group, Target, Xcel Energy, Best Buy, and more. Aside from large corporations, Minnesota has a lot of small businesses that do very well for themselves. From restaurants to microbreweries (over 200 in the Twin Cities), to computer repair shops, there aren’t many things you can’t find within a 30 miles radius of downtown.

Twin Cities is a Real Estate Hot Spot | FACT FIVE

Now onto real estate! The Twin Cities is a hotspot for real estate in the Midwest. Property wealth has grown exponentially since the great recession in 2008 and new developments are popping up all over the place. The values of homes are surging because people from near and far are realizing that the Twin Cities is a great place to live. For example, our team loves St. Louis Park. There are not many times where we don’t have a home for sale in St. Louis Park, or partaking in business in this area of some sort. One of our favorite neighborhoods is Bronx Park in St. Louis Park, which AJ briefly mentioned in the video above.

Want to Learn More about Twin Cities Real Estate?

If you want to know more about the neighborhoods that our team loves, feel free to check out the neighborhood page on our website. It’s a great place to get information about cities such as St Louis Park, Minnetonka / Excelsior, Robbinsdale, and more! Now you know the top five facts to know when moving to the Twin Cities!

If you currently live here and there is something that we missed, feel free to leave a comment below so we can be sure to check it out! On the flip side if you’re moving to the Twin Cities and you want to know something we haven’t already shared, please reach out, we would love to get in contact with you!

Contact The Advisory Team

 Discrimination in housing is a serious issue that's presented itself to the state of Minnesota. But first we must address the extreme and overwhelming events that have been happening in our country and around the world for years. Peaceful protests exist to demand equality for our Black community, who have suffered unimaginable hardships throughout history due to oppression and systematic racism. Our team has taken an in-depth look into housing discrimination within the Black community (specifically in the Twin Cities).

According to MinnPost, a nonprofit, nonpartisan journalism firm, the Home Owners' Loan Corporation was founded in 1933 and became a big reason why specific neighborhoods are prone to discrimination. The HOLC became famous for its maps, which color-coded residential areas within city limits based on their degree of "risk" for lenders. The maps took property value, property age, depreciation, and ethnic/racial makeup of the neighborhood into consideration. Essentially this gave lenders an easy to look at the map, where they could make a quick judgment of lending "risk."

Across the country, many predominantly Black neighborhoods were given a D rating and made it hard to get property loans in these areas. Even if a Black family could afford a home in these areas, they wouldn't have been granted one, based on the "risk" given by the HOLC. Many consumers thought of moving to a different neighborhood where the HOLC would have a better rating, but restrictive covenants prohibited this.

A restrictive covenant, specifically, in this case, racial covenants, put restrictive language on deeds and titles of houses that prohibited people of color from purchasing homes. Some racial covenants plainly stated, "Premises shall not be sold, mortgaged, or leased to or occupied by any person or persons other than members of the Caucasian race" (Minnpost). This is just one example of a racial covenant, but many more have been found throughout the Twin Cities area. While no longer legally enforceable, they still exist on many of the deeds throughout the region. 

The thought at the time was that for a neighborhood to be considered "stable and healthy," it had to be racially homogeneous. This, in turn, led to the segregation of predominantly black and white neighborhoods across the Twin Cities. Because of this segregation, many Black families didn't have the opportunity to accumulate the wealth that White families had been given in the housing boom of the mid 20th century, so they were put at a disadvantage of wealth accumulation (Minnpost).

An example of a neighborhood in St. Paul that was gravely affected by an attempt to drive out the black community was the Rondo neighborhood. From an article published by the Minnesota History Center, in the 1930s, Rondo was the heart and soul of St. Paul's Black community. Filled with vibrant people, thriving businesses, and a tight-knit community, this neighborhood was a wonderful place to raise a family. However, in the mid-1950s, the plan to construct the roadway for I-94 was set to go straight through the neighborhood, effectively tearing it apart. St. Paul city engineer George Harrold said that this construction in the neighborhood would cause great social impacts on the neighborhood and its residents. He was right. The construction split the Rondo neighborhood and forced the relocation of hundreds of families, causing detrimental effects to the Black community in St. Paul. 

There needs to be a change in how our system operates. George Floyd was an unarmed Black man that was murdered at the hands of Minneapolis police. This tragedy is undoubtedly not the first of its kind, and as a community, we need to stop allowing police to get away with this. Change is necessary. However, real change is not like a stoplight. It doesn't turn from red to green in a split second. It takes time, effort, and true dedication. If the goal is for everyone to live in harmony as one community, then we must hear each other. We must work for each other. We must listen to our Black citizens, and we must not let history continue to repeat itself.

One of the best things you can do is to educate yourself. In the description of this blog post, we've provided multiple sources for you, so that you can learn more about racial discrimination in the housing market in the Twin Cities over time. We've also provided sources of unrelated information to the housing market that you can use at your discretion. The Mapping Prejudice is a great tool for you to learn about the history and next steps. We encourage you to read it and learn as much as possible, for that is our biggest asset as a community.

Resources:

https://www.minnpost.com/metro/2019/02/with-covenants-racism-was-written-into-minneapolis

-housing-the-scars-are-still-visible/

https://libguides.mnhs.org/rondo

https://www.tptoriginals.org/redlining/ 

https://www.mappingprejudice.org/

Investing in Real Estate for Income in Minnesota can be a great investment.

Investing in real estate can be a very good source of income if you know what you’re doing and if you give yourself enough time to learn the ins and outs of the industry. In this blog, we’ll be covering the basics of investing in real estate, so stay tuned if this is something you’re interesting in learning more about!

First things first, we want to go over the two ways that you can make money from investing in real estate.

• The value of your property can appreciate over the long run. Which means you might purchase a house for $300,000, make some improvements, and sell it in a better market down the road for $350,000. That’s good money!
• The second way you can make money off of your investment property is by purchasing a home and then renting it out monthly tenants. This will provide a more steady stream of income for the owner of the house. Plus if the value of the property appreciates over time, its a win-win situation.

For this blog, we’ll mainly be focussing on the second point, which are called rental properties.

FINDING A GOOD RENTAL PROPERTY

The first step is finding a good rental property. Unfortunately, there is not one answer for what determines a good rental property, but rather what best suites the type of business you are trying to run. If you’re looking to buy a single family home, or a small apartment complex, you’ll want to find a property towards the suburbs, with good schools, open space, and lots to do. If you’re looking to rent to bachelors in their 20’s then you’re going to want to look at urban areas, with lots to do, and a good nightlife.

Once you’ve identified a couple of properties that suit what you’re looking for, you’ll move onto the next step, which is determining your expected cash flows. Obviously, the goal of investing is to generate positive cash flows, so let’s raise an example.

Say you find a single family home that you can purchase for $250,000. You figure out that you’ll have to take a mortgage of $1400 (which includes taxes paid by the mortgage company). We’ll say that landscaping and repairs will run you on average $200, and any other additional costs like insurance, utilities, etc. run you $400 a month. So your total costs are $2000 a month (1400+200+400= 2000). Now pretend that your rental property is in a high demand area, and you can rent it out to a nice family for $2500 a month. Your net positive cash flow is $400 a month (2400-2000=400). So you can assume that you’ll be netting around $4800 a year in extra income from owning this property.

A way to check if you might have a good rental property is compare it with the 1% rule, which simple states; take an estimate of your monthly income and divide it by the purchase price. The 1% says that if what you get is around 1%, you may indeed have a good rental property. In the example that we raised above 2500/250000=1%, so it’s possible that you have a good rental property on your hands.

Now of course this is a very simple example, but the principle stays pretty much the same. Make sure what you’re getting each month, is greater than what you spend each month. If you’re able to maintain that notion, you’ll be in the green, which is every investors goal.

LIST YOUR EXPENSES

As we briefly mentioned before, you’ll want to list out all the expenses you expect to incur while owning this property.

The failure to accommodate for even one expense can lead you to inaccurately judge how much you’ll be making each month off of your rental property. Some of the expenses you can expect to incur are agent commissions, mortgage fees, maintenance, repairs, property management, travel expense, taxes, legal fees, utilities, and more! Now we know its extremely difficult to accurately predict all of your expenses, but you should be able to come up with a pretty detailed list of expenses. When in doubt, it’s better to err on the side of caution when it comes to expenses.

FINANCING A RENTAL PROPERTY

Financing rental properties are a little bit different than if you were to finance a primary residence. For example, investors are typically required to make a 20% down payment on the home, whereas home buyers can sometimes only put a few percent down.

There are several different options you can explore when financing rental properties, and we’ll be going over those more in depth in our next video.

REAL ESTATE INVESTING SUMMARY

As you may now see, there are both benefits and costs to owning a rental property. It can be a good source of monthly income for you, if you’re willing to put in the work to make it happen. Watch the video in this blog to learn about the 5 things that AJ Pettersen wish he knew before investing into rental real estate. If you’ve come across any tips or tricks along the way, reach out to our team, we’d love to hear more about your experience.

Giving Back During the Holidays

We all know that the holiday seasons are a time to reflect on all the things that we are thankful for. It can also be a time to appreciate how lucky we are. Many of us have a roof over our heads, food in our pantries, warm clothes, etc. However, some people around you may not be as fortunate, which makes the holidays a great time to give back to the community and make a difference in someone’s life. 

In this short reading, you are going to get some great ideas about how you can give back during the holiday season.

Cookie parade

The first one is pretty light-hearted and can make someone’s day! If you love baking, make a few extra cookies and deliver them to your neighbors or coworkers. It’s a rumor that weight put on from cookies during the holidays doesn’t really count. 

Party with canned food

This holiday season, if you throw a party for friends and family, ask them to bring a couple of cans of food with so you can donate them to a local food shelter, church, or food bank.

Nursing home fun

Visit a local nursing home and spend time with the elderly that may not be able to spend time with their family. The baseball team at Gustavus Adolphus College does this every year and is getting quite good at Bunko. 

Empty the change jar

Most everyone has a change jar at their house, which collects coins throughout the year. Cash in that money to buy school supplies for the local elementary school. Many teachers have to buy their school supplies so you could help some educators out this way!

Another good idea for spare change is to buy some small toys from the dollar store and donate the toys to the children’s hospital. 

Help out workers

 Many people who work during the holidays, rather be spending time with their families. Putting together a small gift basket and handing them out to the workers at the local gas station or grocery store is another way to spread a little extra cheer!

Remember, there are more ways you can give back than the ones listed above. Even spreading joy and putting a smile on someone’s face can make a difference. Happy Holidays from The Advisory Realty Group!

Written by Jack Garrison

Holiday Season Home Preparation

(Realtor Edition)

The holiday seasons are approaching us ever so quickly! It can be a very stressful times of the year, especially if you’re trying to buy or sell a house. Don’t stress too much about it. Our team is overflowing with expertise when it comes to buying and selling during the holiday season. 

In this blog we’re going to address some facts about selling your house during the holiday season and some tips to help sell your house. 

Seeking out Serious Buyers

One of the pros to leaving your house on the market during the holiday season is the fact that you’ll be attracting (for the most part) serious buyers. Unlike the summer time when you could have open houses full of people “just looking”, people looking at your house during the holidays are more often than not serious buyers. 

Reduced Inventory

During the holiday season there are often less houses on the market which means you could be selling your house with far and few in-between. However, the lack of inventory also means that more often than not, there are not as many buyers available. 

Wallets are Open

According to financial statistics, the end of the year is when many people’s finances are at their strongest. This could mean those serious buyers that we talked about are more likely to make a down payment and buy your home if they like what you have to offer. 

Tips…

Decorations are Okay in Moderation

It’s okay to have some of your holiday decorations up when showing your house. Of course, you don’t want it to look overwhelming, but lots of buyers like to picture what their house will look like during the holidays. It also gives your house a bit of a personal touch.

P.S. It never hurts to have some of Grandma’s famous cookies sitting on a plate!

When in Doubt, Ask an Agent

If you’re having any doubts about selling your house, or what to do, don’t be afraid to ask your real estate agent about it. As mentioned above, they are professionals for a reason, they know what works and how to sell your house. 

Written by Jack Garrison

Help Keep the Flu Away

The flu season is approaching, and we want you and your family to avoid the flu as best as you can. Whether or not you get a flu shot, there are several things you can do around your house to help protect against the flu virus. 

1.    Disinfect your remote and phone

Your TV remote and cell phone often times hold more bacteria than seat of your toilet. I know, GROSS. It’s not a bad idea to take a disinfecting wipe and clean them off once every other day to ensure no extra bacteria is getting on your hands and face.

2.    Ditch the shoes

Germs love to hitch rides on your shoes. Take off your shoes as soon as you enter your home and grab a pair of fuzzy socks instead. 

3.    Utilize your washer

Kids toys along with dog toys can carry all types of bacteria on them. Don’t be afraid to throw them in the washer every now and then to disinfect them. 

4.    Wash those hands!

This one seems like a no-brainer but wash your hands! Touching stuff all day at work, school, or running errands can leave your hands covered in germs. 

5.    Get a new sponge

Your kitchen sponge can carry the most bacteria in your house. Go to the store and pick up a couple new sponges so you can keep those germs from spreading around the rest of the house. 

6.    Avoid the sick

We know it’s hard to avoid someone in your house if they’re sick. But try your best to be supportive from a distance. The only thing worse than one sick person, is two sick people 

 Although these aren’t guaranteed ways of keeping the flu out of your house, they can help the fight against those pesky germs. Also make sure to cover your cough, and try not to touch your eyes, mouth, or nose when out in public. 

Written by Jack Garrison