Overcoming Obstacles, A "Benevolent Flipper" Buys A T.J. Waconia House And Works To Revitalize North Minneapolis

Photo By Jeanie Hoholik

I have developed a new source, Jeanie Hoholik of Keller Williams Classic Realty, (click for her website) and then click here for her blog. She is telling me the ins and outs of helping one of her clients to buy a T.J. Waconia house.

Why? To flip it, of course! But in a good way! Just look at the photo above to see the kind of work this flipper has done, with all her sales to homeowners, not slumlords. If you like the photo above, that house is 3346 Girard Ave. N. and it's for sale right now, listed at $150,000.

Yes, these are the kind of "flippers" we need in North Minneapolis. I've invented the term "benevolent flipper" to describe a kind of flipper who considers impact on the neighborhood, and not just the financial bottom line.

A Messy Back Story

As most regular readers know, T.J. Waconia was a high-profile mortgage fraud controversy involving Thomas Balko and Jon Helgason, who ultimately pleaded out to mere "mail fraud" charges, but...

...sentencing has not yet taken place. Latest word from the T.J. Waconia Victims Blog is that sentencing "might take place some time in December" but that is "not definite." (Note to readers: wear an asbestos suit if you want to participate in that blog, things get incredibly hot, there!) My position on the matter continues to be "let the punishment fit the crime." Balko and Helgason should serve their sentence under "house arrest" in one of their own properties in North Minneapolis.

Meanwhile, there has been a lot of speculation and worry about what is going to happen with the 140 approx. houses which bear the black mark of T.J. Waconia. (For a convenient but possibly not complete list of those houses, click here)

Life After T.J. Waconia

The question is: can people buy these houses? Is it possible to get a good deal? Is buying one of the T.J. Waconia houses really complicated? How can they be purchased at all? What is the process? The most up-to-date information (until this blog post) could be found in a September 9 blog post about investment property, click here, about how T.J. Waconia's "legacy" still haunts North Minneapolis

Attentive readers will note Jeanie Hoholik posted a comment on that blog post, saying she was regretfully steering clients away from the T.J. Waconia houses because of the complications. But Hoholik's position on the matter has now changed. She has figured out it is indeed possible to buy these houses and jump through the necessary hoops, which aren't even that bad. There is some minor bureaucracy involved, but Hoholik tells me the authorities at the Greater Metropolitan Housing Corporation are "approachable" and "easy to work with." She would even go so far as to say "nice."

In conversing with Hoholik the other day at the Loring Pasta Bar (where they have an excellent "salad au savage") I pointed out a contradiction to her: if she had developed some specialized expertise in getting these houses sold, she might be better off keeping such knowledge to herself and, that way, capture a bigger piece of the real estate market. Hoholik said she understood that, but like her client--the "benevolent flipper"--Hoholik weighs "the greater good" into her calculations, and not just pure financial self-interest.

The sale of a T.J. Waconia house at 3306 James Ave. N. to Jeanie Hoholik's client is the first such sale I've heard about since these houses came under at least PARTIAL city control due to their former association with T.J. Waconia prior to foreclosure. This is unconfirmed, but it might be the first such sale, PERIOD, and thus a lot can be gleaned from revelations about the process. That knowledge can be applied to the remaining 140 or 139 or however many houses remain on the infamous "T.J. Waconia list."

Sucked Into The T.J. Waconia Controversy

It was my own crazy and merely momentary idea--back in about January of this year--that I might be able to get a really good "fire sale" price and buy one of those T.J. Waconia houses. Though life turned out to be a lot more complicated than my naive initial notion, in doing my research and making queries I was pulled ever deeper into the fascinating story of T.J. Waconia, and I haven't left it--NOR BEEN FREAKING ABLE TO LEAVE IT--ever since.

Now along comes Hoholik, furthering my entanglement in the T.J. Waconia saga. Here is Hoholik's story, which arrived in an email today.

My client and I were able to get around the TJ Waconia holding-houses-hostage debacle. We put in an offer to the listing agent on the property at 3306 James Ave. N. that was listed on the MLS on August 8. The house was bank owned, so we knew that it would take some time to get a response. When we did get a response, we were told there was another offer on the table so make it our best offer.

We held fast and were told a few days later the bank wanted to negotiate with us. We didn't budge in our asking price so the bank eventually turned us down on August 13. We kept watching the house activity on the MLS and decided to put in another offer on September 2. The bank came back and said, "What can I say? Persistence pays!" We got the house. We even got the bank to pay for the $6,000 code compliance fee assessed by the City of Minneapolis. I called my client right away and told her the good news. We were high-fiving it over the phone.

It wasn't five minutes later that the listing agent called back to say we couldn't buy the house because it was in the hands of the Greater Metropolitan Housing Corporation. They are overseeing all of the TJ Waconia owned properties. I called them (GMHC) to see if I could get my hands on a clean list.

(Comment by Johnny Northside: A "dirty" list might be easier and a lot shorter. Start with this one, click here)

Before we ever got that far, we had a very nice conversation about the houses which my client has purchased and rehabbed over the last two years. I sent the nice lady at GMHC, Stephanie Gruver, "before" and "after" pictures of the homes that my client has refurbished. Gruver was very impressed. She said she would take the information and go over it with the powers-that-be and let me know if maybe they could let us buy the house even though it's on "the list."

She called me back in a couple of days and told us that, yes, we could. We signed an agreement with them to promise to put the home back into good condition. I had the pleasure of calling the listing agent to let them know that we could indeed buy the house. They were surprised and delighted. We signed the purchase agreement with the bannk and we closed on September 25.

A great story, Jeanie, and a very socially useful one to share.

My next blog post will show the house at 3306 James Ave. N., and what kind of condition it was left in. Hoholik's client will be turning that house around, baby. Hey, after all, she signed a promise...and that still means something to SOME people.

My blog post after that will have pictures showing some of the spectacular renovation work which Jeanie's client has performed, and tell the story of how she left a high-paying job as a business executive to live the uncertain, but highly-rewarding life of a flipper. (I would like to think the life of a "benevolent flipper" is even MORE rewarding)