Buying a Minneapolis Condo–then rehabbing it…

  There are 2 types of buyers in the Minneapolis Condo market right now.  Buyers looking for a move in ready look where the future owner merely has to unpack their items without any updates to the space.  Then there are buyers looking for a bank owned condo that will likely need a fair amount of elbow grease.  As the inventory in Minneapolis shrinks for move in ready product it becomes increasingly interesting to see some how some of the bank owned units and those in sub par condition (i.e. estate sales or investor buys) become targets for buyers looking to start with a blank slate and work with an architect and builder to customize the space.

  Going this route in a condo purchase is not an easy one.  It takes the right team of individuals to source out a condo and create a plan for the rehab that fits within a budget.  Safe to say 95% of buyers out there come to the market looking to stick within a budget!

   Depending on the size and scope, working with an architect to design the layout and create a set of plans for the build could be advantageous and mitigate a fair amount of stress in the project.  Having a builder work closely with the architect to understand what is to be built along with putting together a scope of materials used to keep the budget on par is essential.  Finding an architect who was worked with a builder and had success is critical you having a good experience.

  Once a buyer finds a condo, successfully negotiates and closes they are left with signing a contract with the builder to demo and build out the space.   What we are finding in the Minneapolis condo market is that there are a fair amount of architects out there that will take on projects on an hourly basis so as not to absorb more than 3-5% of the total budget for the build out.

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Lending Guidelines for Condos

Having a good job, steady income and good credit will go a long way in helping borrowers secure a home mortgage, but they may not be enough when it comes to buying or refinancing in certain condominium buildings.  Stricter guidelines that govern which buildings are approved for conventional mortgages — rolled out by three government agencies in stages since December 2008 — are locking out thousands of buildings nationwide. States like Florida and Arizona are especially hard hit; mortgage brokers say that some buildings in the New York area have also been affected.  The guidelines and approvals come from Fannie Mae, the buyer of home mortgages; Freddie Mac, its smaller competitor; and the Federal Housing Administration, which insures loans. The rules were meant to help strengthen their balance sheets as they faced a surge of loan defaults in the condo market.

“If a condo project is not approved, it makes it very difficult to get financing for a first-time purchase or refinancing,” said David Adamo, the chief executive of the Luxury Mortgage Corporation in Stamford, Conn.

The National Association of Realtors estimates that 23,000 condominium projects nationwide are on the verge of losing their F.H.A. approval by spring. Some 2,200 buildings with older approvals lost their status in December. Last month, though, the F.H.A. granted extensions.

Lists of approved buildings are available online at Fannie Mae and the F.H.A.Fannie Mae’s guidelines typically preclude it from buying a new-purchase condo loan from a lender if more than 15 percent of the owners in the condo development are 30 days or more late on monthly maintenance fees. (The provision doesn’t apply to an owner seeking to refinance a Fannie Mae loan.)

Other hurdles: Condo associations are required to set aside 10 percent of their budgets for maintenance and “reserves”; and new developments are ineligible for Fannie-backed financing unless 70 percent of their units have sold or are under contract (the threshold used to be 51 percent). Freddie Mac adopted similar guidelines last year.

There are exceptions. “We do entertain waivers on our condo criteria, depending on the nature and circumstance,” said Janis Smith, a Fannie Mae spokeswoman, “when the lender makes a rational, fact-based request for the exception.” Last year, Fannie approved 93 percent of the 1,700 condo buildings in New York that applied for waivers.

The F.H.A., meanwhile, requires that at least 50 percent of a building’s units belong to owners who occupy their units, and that no more than 10 percent be owned by a single investor. The agency requires that a homeowners’ association set aside 10 percent of its budget for maintenance and capital expenditures. If the budget does not meet those requirements, the lender can request a reserves study to gauge the building’s financial stability.

New buildings are ineligible for F.H.A. financing unless 30 percent of their units have sold.

“The biggest problem we’re running into now is that a lot of condos are not meeting the minimum reserve requirements,” said John Manning, a mortgage broker in Brooklyn.

In addition, he said, homeowners unable to sell their condos have been subletting them, particularly in Battery Park City, a move that could lower the owner-occupied ratio below the agency minimum. “We have a lot of buildings that are teetering on the brink” of eligibility, he said.

Steven Campbell, a loan officer at the Mortgage Assistance Company in Plainville, Conn., says that condo owners thinking of refinancing should ask their homeowners’ association for copies of the budget and its financial questionnaire, a detailed form consumers submit to lenders for a loan or refinancing.

If a building is not yet approved, owners can hire a real estate lawyer or broker to submit the required paperwork, said Graham Lefloch, a broker at WC Financial in Stamford, Conn.

By LYNNLEY BROWNING from the New York Times

A New Roof That Works for a Living

There are green roofs, and then there are green roofs.

So when residents of Zeckendorf Towers, the condominium complex at One Irving Place on the east side of Union Square in New York City, voted to replace an aging conventional roof with an environmentally friendly one, they decided that a basic installation at $10 square foot — essentially sod and unlandscaped greenery — would not do. Instead, they chose elaborate landscaping with small hills, a wide variety of vegetation, pathways with paving stones and dramatic lighting.

The result is what the condo board believes is the city’s largest green roof, at 14,000 square feet. Installation of the seventh-floor rooftop, over a branch of Beth Israel Medical Center and bookended by four 29-story condo towers, began in April and was finished in October.

Although it is in winter mode, residents are already enjoying the visual benefits of the roof, which cost $330,000, or about $23.50 a square foot (minus a $60,000 one-time tax abatement from the city). The condominium paid for it from their reserve fund, said Hazel MacMurray, a board member at Zeckendorf Towers.

Residents, other than a handful who have private terraces, don’t have access to the roof, but for the rest, “The beauty is looking at it,” Ms. MacMurray said, adding, “You can see them just looking out. They’re experiencing the garden, and it just changes their lifestyle.”

Ms. MacMurray said she also anticipated that the green roof would benefit property values at Zeckendorf Towers. Currently, studio, one- and two-bedroom condos in the 670-unit full-block development, which was built in the 1980s, are listed at a median price of $1,315 a square foot, according to Streeteasy.com.

But any increase in values will last only as long as it takes for other buildings to catch on and retrofit their own rooftops, said Darren Sukenik, a managing director at Prudential Douglas Elliman and a top agent in Zeckendorf Towers. Many new residential developments are planning green roofs, he said, and they will eventually become the standard.

Zeckendorf Towers’ roof designer, New York Green Roofs, went to great lengths to make an all-season attraction for residents, said Amy Falder, a partner in the company. Witch hazel will burst into small yellow flowers in January, and striking plants like Japanese maple will have brilliant red foliage throughout summer and fall. Dogwood will display white blooms in spring, and anemones and balloon flowers will add to the profusion of color in summer and fall. Rhododendrons and upside-down ferns remain green year round. For the holidays, lights have been strung from tree branches.

Advocates say that green roofs, which have been common in Europe for years, offer a variety of benefits. First, the vegetation protects the roof’s membrane from cycles of freezing and thawing that can tear it, as well as from ultraviolet light that can wear it out, Ms. Falder said. This doubles the life of a green roof over a conventional one.

Also, a green roof provides insulation that makes the building envelope more energy efficient. Vegetation protects the roof from the wind in winter, and when covered in snow, the rooftop can be particularly effective at retaining the building’s heat, Mr. Brunner said. The rooftop’s cooling effects are even more pronounced in summer, when the vegetation can cut rooftop temperatures in half.

An analysis of green and black roofs published this year by Columbia University found that an unshaded green roof of 1,000 square meters (about 10,750 square feet) could save $330 to $350 a year in heating costs and $225 a year in cooling costs. In the case of Zeckendorf Towers, the energy benefits of its green rooftop will go to Beth Israel Medical Center, Ms. MacMurray said. The hospital space is a commercial condo, and Beth Israel is not paying for the roof.

Almost the entire rooftop at Zeckendorf Towers, even the tops of bulkheads, is covered in soil and mats of about a dozen species of sedum, which will transform into a carpet of green this spring, said Chris Brunner, another partner in New York Green Roofs, which has installed 35 green rooftops in the Northeast in the past five years, primarily in New York. Some species will take; others might not, he said, explaining that the roof will evolve over the years.

Ms. MacMurray said the whole city benefited when a green roof was built, because of their ability to retain storm water. According to a 2007 report by the environmental group Riverkeeper, a 40-square-foot green rooftop can absorb 810 gallons annually. So each year Zeckendorf Towers’ roof could prevent about 283,500 gallons of storm water from flowing into the city’s sewers and its flood-prone subway system, which has a major station below the towers.

“This green roof was really done to try to progress this building from the 20th century into the 21st,” Ms. MacMurray said, “and there are enormous environmental benefits to doing that.”

Authored by Alison Gregor of the New York Times

New building in the Mill District!

The American Academy of Neurology is the world’s largest professional association of neurologists. Founded by the chair of the neurology department at the University of Minnesota in 1948, the American Academy of Neurology has more than 22,500 neurologists and neuroscience professionals dedicated to promoting the highest quality patient-centered neurologic care. Mortenson Construction, along with ESG Architects Inc. and 20 Below Studio, will break ground on the new AAN headquarters in early 2011 with the building scheduled to be ready for occupancy in spring 2012. The five-story building features a sensory garden, roof-top terrace and state of the art meeting space capabilities. The Academy will also provide electricity to vendors of the Mill City Farmers Market through outlets strategically placed along the exterior of the LEED certified building.

Condo inventory shrinks at the sweet spot in the Minneapolis market

Minneapolis Condos & Lofts Foreclosures

  I have been working with plenty of Buyers these days that are asking about condo and loft foreclosures in downtown Minneapolis.  Many of them want to know how to go about seeing these units and more importantly if they are worth checking out.  Others are asking the big picture question everyone seems to want to know which is: where is this market going?  My response on this has been a few stats from 2008 and also some qualitive data that I see with the Buyers and Sellers that I come into contact with.  Looking at a few stats 2008, downtown Minneapolis started out with roughly 800 or so listings, as of 12/1/2008 70% of those listings have gone pending or sold which is roughly the same amount of activity that has occured in 2007–not amazing year over year numbers however not bad given the times.  The average (mean) price of a new-construction condo in 2008 is currently 10.8% higher than 2007; $389,094 in 2008 vs. $351,205 in 2007 for a never-lived-in 1-2 bedroom, 1,450-square-foot Downtown home.  Couple this with the fact that every weekend when I hold an open house I get the same consistent buyer demographic: everyone from all walks of life wants to make the move downtown.  Bear in mind these events are happening in trying economic times.  My point is despite this ecomonic period buyers are still making the decision to purchase downtown.

NYC couple making the move to Minneapolis!

This picture is a shot of the a unit on the ground level of the restored Whitney Building located in the Mill District.  Click the picture for an interesting story on another couple making the move downtown from another part of the country.

Another Green Project in the Mill District Coming Soon!

One of the last sites along the Mill District is soon to be home to apartment towers, townhomes and a green-roofed parking ramp.  The Marmont Apartments will be a 358-unit rental project at 2nd Street and 11th Avenue South.  The project is being developed by veteren Steve Frenz, the developer behind the Bookmen Lofts and Bookmen Stacks in the North Loop.   A green roof would top the two-story parking ramp. The roof would include a lap pool and green space for residents that overlooks the river and Gold Medal Park. Frenz said the ramp would be partially masked by two residential towers, 10 and 12 stories high. The towers would be connected by a glass bridge and wrapped in 10 townhomes, two stories each, fronting South 2nd Street and 11th Avenue.  

A bike and coffee shop would stand near Gold Medal Park on the corner of 11th Avenue and 2nd Street, Frenz said. 

This would be the second apartment project to develop within the Mill District as earlier this year Village Green Companies went to the city with plans of a 5 story apartment building on the site of the former “Portland” condo development west of the Park Ave Lofts.  Stay tuned for another update on the Mill District development!

Skyscape: Higher Standards in Urban Living

One of the most recently completed buildings to change the skyline of Minneapolis has been Skyscape Condominiums.  This 27 story building is located right next to Grant Park Tower and the Ivy Hotel+Residences in Elliot Park, an urban  neighborhood on the southeastern side of the city dotted with mostly historical brownstones.  Skyscape is mixed-use which means there is a great commercial component on the first floor of the building.  Currently there is a CVS Pharmacy that operates on the first floor of the building.

To the residents that live in Skyscape, the main attraction has always been access to the city skyways and light rail transit that connects the city with the Mall of America and the Minneapolis Airport.  Living only blocks away from jumping into the Skyway has made the urban commute enjoyable and now bearable for some during the Winter season!

Whole Foods + Apartments Coming to Minneapolis!

Milliken Development, owner of the former Washington Ave Jaguar Dealership announced January 14th they plan to go before the Minneapolis Planning Commission to finalize the details of a mixed-use project. The project currently is set to include a Whole Foods on the first floor with some other commercial components. Above the ground level would be six floors of high-end apartments totaling approximately 250 units. The developers noted the block would be developed in such a way as to allow future expansion of an additional two towers reaching somewhere between 12 and 20 stories respectively. Once approved through the city Milliken Development would begin demolition as early as spring of next year. The developer plans to achieve a base LEED certification (Leadership in Energy and Environmental Design), which is a designation for sustainable design.