All Forum Posts by: Bill S.

@Mark Hirleman I see you are new to the forums due to your number of posts. To "mention" someone, you type the "@" symbol followed by the first few characters of their name. A drop down menu appears and you select the person you want to "mention". When you do it right, their name appears highlighted in Bigger Pockets blue. BTW you can only "mention" those in the post or people you are colleagues with. So hopefully @Jen Tabernacki will check back and see your post. You can also set up notifications so that you get an email when someone "mentions" you in a post. Don't feel bad, it took me quite a while to figure out how the system works on Bigger Pockets and they also change it from time to time as well.

Yes. The "local nuance" is at play here. In Colorado, I was told legal abandonment is not a route to regain possession of a rental unit. I am not an expert but as I understand it, the state statute requires abandoned property to be turned over to the state to be reclaimed at a later date by the lawful owner. The process can be years. The short story is the lawyer I use for evictions and landlord/tenant issues (the firm does 90% of the evictions in Colorado) said the route is eviction and "don't use the word abandonment in your notices or you will regret it should the issue end up in court". I do know in some states that legal abandonment is faster/better/cheaper than eviction but as I understand it, Colorado is not one of them.

@Chris Brillante so each state is different and each contract can be modified as well so the details matter. It sounds like the selling is asking you to close if the property does not appraise at the value of your offer anyway. The bank will only lend up to the appraisal amount. So if you offer $105K and the appraisal comes in at $100k you have to bring an EXTRA $5k to closing. Can you do that? If not, you are rolling the dice with your offer and the appraisal. If you can do that, then you have to decide what you are willing to do to get the property. Perhaps a middle ground (provided you can afford it) would be to offer to pay the difference above the list price if the appraisal comes in short. If it appraises under list, then you could split the difference or something similar. That makes you take the risk for your higher offer but does not open you up to a very bad appraisal. I have seen buyers offering higher prices knowing the property won't appraise for their offer so they then negotiate to the appraisal amount and the seller eats the loss. They are just trying to pass some of that risk off to you the buyer who made the offer.

@Kaitlin Bagley so my idea of investing is to put all my eggs in one basket and guard it with my life. I stole that line but can't remember who said it first. My idea of diversity is to have multiple exit plans for a property. A flip should be able to be converted in to a rental or airbnb. An airbnb should be able to be sold as a flip or converted to a rental. Usually I want a minimum of three viable exit plans. In my opinion, diversification comes when you have acquired the wealth you want and then you start peeling some off into other areas if being "all in with one thing" keeps you up at night. The wealth comes from focus and concentrated effort. If you choose real estate then I have no problem with the approach of selecting one area, and one approach and hammering away at it. Again provided that you can exit a number of ways. 

Look at it this way, if all the stars do align against you and none of the exit plans work so you fail and have to start over. In reality, it wouldn't be the end of the world. You will have a lot of knowledge and can rebuild faster and better the 2nd time around.

Bottom line, don't worry about diversification in terms of asset classes when you are starting out.

@Austin Snow there are a number of suggestions above about "keeping" the security deposit. I would advise against that. I like to have the security deposit in play so that the tenant has incentive to clean the property and continue to pay rent. There are those that say keep the security deposit for the last month's rent or use it to offset the termination fee. No go. Again, you want to incentivize the tenant to end the relationship well and leave the property in good condition. If there is a couple grand at play they may not drag the piano across your wood floors but rather get a professional mover to do it right. All sorts of ways that not having a security deposit hurts you at the end of the lease. Finally you must (Colorado law) send the tenant an accounting for the security deposit even if all of it is used for repairs/expenses. If you fail to send the accounting for the security deposit and the tenant sues you, you would owe 3x the SD and you have no defense (you loose).

@April Mattin so a few thoughts here. Be very careful on the words you use. "abandonment" is covered by statute here in Colorado. Trust me, you don't want to go that route. Here are some random thoughts you might consider.

1) Has the tenant left and just left their unwanted stuff behind? Ideally get an email or text from them stating or confirming this condition. If they do that, then clean up and rerent. Be sure to send the security deposit accounting within the allotted time frame.

2). If the tenant won't confirm but you believe they have left, you have a decision to make. You can choose to go the full legal route and pursue eviction, etc via an attorney. The other option is to move all their stuff into a storage space and change the locks. Re-rent the property and hope they don't come back or if they do come back they don't make a stink. You could be in a huge legal battle if you have the wrong tenant. If they do come back and start throwing their weight around then you get out your check book and let them fill in the blank to get them to go away. If you end up in court you will loose and it will cost you more no matter how much you would have paid to make them go away.

3). One thing I have done is to post a notice in the window stating that you believe the tenants have "surrendered" the property back to you and to contact you within 3, 7, 10 or 30 days (you pick) if they have not moved on/surrendered the property. No attorney will advise you of this route as it is not a legal precedence. It's a practical thing you can do help your situation. If they get a hold of you, then you know they are still there. If not, you at least have a some assurance they are not at the property. 

Know this, right now, Colorado requires a 30 day notice for non-payment of rent. If you go the eviction route, you have to post notice and wait 30 days to file an eviction. Who knows where we will be legally at that time. Once your 30 day notice expires, you have to file suit and schedule a court date. This might take another 30 days or more depending on which county the property is in to get a court date. After you get a court date and assuming they don't show for court so you get a default judgement, you have at least another 30 days to get the sheriff to do the set out. The point of this is, do not delay. Take action NOW.

Post notice to quit at a minimum. Do it today or tomorrow at the latest.

Based on what you have said, you need to seize control of the situation as it won't go away or get better on it's own.
 

@Austin Snow so some good advise already. My approach is this. Work up an early termination agreement. The agreement would state that they owe something like 2x rent as a termination fee (for me, if the rent is $1,000 per month my termination fee is something like $1,950). Explain that this fee covers re-renting costs and potential lost revenue. Explain that it caps their exposure for lost rent or if you have to rent the property at a lower rate to get it rented at the holidays. After you have the signed termination agreement and the funds required by the agreement, start advertising. Hopefully you can get it rented for a Nov 1 move-in. You will have some work to pull it off but it could end up being a small windfall to you. 

As others have said, in the future, all adults over 18 must sign the lease. No exceptions. If you rented to lower end tenants you could have ended up with a house full of felons and sex offenders who coerced someone to apply on their behalf.   

@Thomas Wang where did you get the name for the original appraiser? On the refi side, what was the correspondence with the new appraiser? The best outcomes are where the appraiser gets information from you giving them backup for what you are hoping for. You should have recent comps. You should provide documentation as to where rents for the property and in the area have gone since you purchase. Do the work and make their job easy and you will likely see the value you want. Now that the appraisal is in. Review the two and compare see what changed. You can go back the appraiser and build your case but it's a lot easier to do it upfront before they let the number out of the bag. I have also heard there is a lot of push back to cash out refi's due to the past crash. I also think appraisers are being more conservative if there is cash-out of the refi.

@Thomas Wang you paid cash so the appraisal didn't go through the "normal" process of the appraiser being selected independently via the typical lenders appraiser pool process. I know my terms aren't right but the idea is correct. My guess is you purchased from a wholesaler, or a turnkey provider and they provided the appraisal for you as "proof" you were getting a good deal. Get someone knowledgeable to review the two appraisals and they can likely tell you which one holds water. I would be inclined to turn the bad one over to the state's appraisal licensing board to answer for their error. My bet is the first one was in the pocket of someone who had skin in the game for your original purchase.

@Scott Tousley so seems a bit like the cart before the horse. Start with what you want of a cash on cash return and then see if a particular property will meet it. Do this for 10 or 20 that are on the market now and see what the average is. That's what's "normal" for that market currently. If that works for you, great. If not, then perhaps you adjust your desired cash on cash return rate or find another investment.