All Forum Posts by: Bill S.

@Kenny Smith a more meaningful stat would be to compare with March of 2019 which was the last "normal" month before all the Covid-19 craziness. The info I have heard antidotally is that the actives are up from 2019 but I haven't heard about the other line items. I would say that price is for sure up from 2019. 

Median Days on Mark of 18 Days seems low as only the best priced properties move in less than 30 days. I can't believe that half the properties listed are going under contact in 3 weeks. If so, that is still really pretty good IMO. Are your sure you don't mean that the median days on market has increase 18 days from last year at this time?

This seems more "normal" than anytime in the last 5 years. Buyers can take their time and negotiate as well as get concessions and do proper inspections of the property. Sellers have to consider the market and their property condition and price their property accordingly.

No sad faces here.

@Christopher Castro my advise is to keep looking for a tenant. A two lease is not really that meaningful to me. Most tenants stay multiple years and with the cost of moving unless things really don't work out. I would expect 90% of tenants to stay at least two years. Loosing two months rent for a two year lease is not a win in my opinion. Even if you had to lower rent to find a tenant for May, you would likely be money ahead to just hold the line and look for someone sooner. 

The first thing to do is, decide what your deposit will be for any term. That should be in your advertising and rental policy. Know this, Colorado law limits you to collecting no more than the equivalent of 2 months rent for a security deposit. There is your limit. With the rental market being what it is today and all other things being equal, demanding more than 1 month rent equivalent for security deposit will drive away many applicants with good or even reasonable credit. Many of the larger newer complexes allow folks to move it with little to no security deposit if they have decent credit so know that is what your are up against.

The tone of your post leads me to believe you are looking to this security deposit to end up in your bank account and make you whole for the months of April and May if they fail to move in. That's not the way security deposits work. If they don't move in, you are required to make a reasonable effort to re-rent the property and then you can only withhold that portion of the security deposit that offsets the lost rent from the time they don't move in until the time you get someone else to move in. You would get to keep NOTHING for the two months you held the property off the market waiting for them to move in.

Non-refundable holding fees. I tried that, it didn't work either. You don't have a lease and as such there are no rules around how to handle the situation the courts then revert to the landlord/tenant law which is as I stated above. You can withhold for lost rent and expenses from the day they should have moved in until you get it re-rented. They (the courts) will not allow you to keep anything more than that. 

The process is simple. Set the date you want someone to start paying rent (right now I would say May 1 at the latest). The first qualified tenant get is. If someone wants to move in June, the answer is simple, "I don't care when you move-in, we want someone to start paying rent no later than May 1. Does that work for you?" If not then move on. If you want a two year lease term, advertise that and require it. 

Right now, if you are advertising your property correctly and it's properly priced, you should have at least a dozen showings in a week and at least one applicant that passed your prescreening process. Whether or not you want that applicant will be up to you to determine. At the end of week 2 of your advertising campaign you should have at least 25 showings and 2-5 applicants and one of those applicants should qualify. Generally speaking, if you are not hitting those numbers you have one or more of the following wrong. 

1) bad/insufficient advertising - not list on all the rental listing sites, poor quality pictures, and poor description.

2) unrealistic criteria - you want above market for credit, length of lease, or some other item that is out of sync with the current market.

3) Price - too high results in not enough inquires and too low swamps you. I have seen listings that have been posted for 3 weeks with 5 inquires. Clearly priced too high.

4) You are not responsive to inquires. We live in a microwave society. If you don't respond to inquiries during normal business hours no more that 5 minutes after they arrive (ideally 2 minutes) you can expect the applicants to move onto other properties. You need to respond to inquires outside of business hours within the hour (ideally within 2 minutes) if before midnight or after 6 am. Those between midnight and 6 by 7 am the next day.

5) If you have adequate showings but no takers, then there is something "wrong" with the property. It might be priced too high for the condition, the location might not be ideal, your showing process might be too cumbersome. 

My advise is to keep looking for your new tenants.

@Nathan Gesner my heart goes out to you and your wife. One of my breakfast buddies just lost his wife to the same thing. She lasted just over a year after the diagnosis. My prayers go up for you and your family.

@Ken M. all is negotiable in real estate with regards to the listing on both sides. Do what works for you and yes there are clauses binding for an additional time to prevent buyers and sellers from cutting out the agents near the end of listings. Still happens all the time though.

I followed the REventure youtube channel for a while. The guy is a one trick pony with no track record nor a data model to support his premise. He has been wrong for so long at some point he might be right but that is based on that same idea that a broken clock also being right twice a day. While his premise seems logical, it is in-fact not supported by data. When I followed the channel the idea was that affordability was constant and prices would return to the equilibrium of affordability. There is no data to support the idea that a lack of affordability will in fact result in a lower sales prices. The correlation is related to supply and demand. Demand closely follows job growth and job creation. So unless there is massive job loss in these markets, history says there will be no return to "affordability" that he bases his forecasts on. 

In fact home prices are down and inventory is up relative to 2021 highs but not anywhere near 10% which is what I would generally term to be a correction. In real value terms we have seen a small (maybe minus 2-3%) downturn in some areas of Denver but it's really hard to quantify since most homes are not exactly the same. Those that resell do not turn around and resell the next year or two without some distress in the sellers. The exception being if there is massive appreciation in the way of a remodel or the market in general.

You can do your own research to see if what this guy is peddling is of value. IMO it does not have value. Follow the "On the Market" Podcast here on BP and you will get 10x more value  and insight into the market.

@Ethan Hartter you might try James Keavney at KSA Architecture. He seems to know his way around that sort of thing. Not sure if he does the single family poptops but he has done a lot of townhouse/rowhouses/slot homes and knows his way around the Denver regulations.

@Ethan Hartter so I think you are referring to state of Colorado legislation regarding ADUs. My understanding is that Denver has their own overlay of the legislation which does not exactly match the state's approach. You need someone familiar with Denver if it's in Denver. Generally speaking, the difficulty with ADUs is financing the construction or getting the cash back after you pay for the improvements out of pocket. You definitely want to figure that out along with the zoning/setbacks etc. 

@Lau Cor so for areas with larger populations Pueblo would be lower cost as would Grand Junction then you drop down in population to areas like Alamosa, Lamar, Gunnison, Montrose, Rifle, Meeker and the four corners. Personally, I would not do Pueblo. I wrote about that several years ago here on the forums. I am not suggesting any of those areas would be good to invest in (each have a few pluses and a few minuses), just that they are lower costs area. You can also look in some of the smaller communities on the Western Slope once you move beyond the economic influence of the resorts. Keep in mind that once you drop down in population there are issues with finding quality property management and as well as securing quality tenants. 

@Brooks McCarvel - MBAs are a dime a dozen and IMO are not really that useful except to get promotions. It seems to me that the finance end of the business is what is missing for most business owners/starters . That said, you have to find what works for you. If the idea of doing accounting or finance is not appealing, don't do it. No reason to spend countless hours beating your head against a wall. 

Also it sounds like you are in the air force. If so, use your VA loan to buy a house hack there in Cheyenne. You don't need a down payment for the VA loan. This is the best way to start hands down.

@Mike Dumont so apart from some correspondence detailing how the funds would be handled, I would do the following.

Colorado law gives the landlord 30 days to return a security deposit. I would advertise and re-rent the unit and retain that part of the security deposit not used to offset the lost rent. You didn't mention if they had paid any part of the rent due. I assume not. So for example your rent is $1000 per month and they told you on Feb 21 they wouldn't be moving in that day. You then get the property rented Mar 1. They would owe you for 8 days rent in Feb (8/28) x $1,000 = $285.71 (assuming the funds collected was $500) so you would return the balance to them $214.29. The reality in this market is that you would likely not have any funds left to return to them since it is unlikely to get re-rented so soon. Just to be clear, I would only charge them for lost rent, from the date they were to move in until the date someone else started paying rent.

Now, would that hold up in court? I don't know. Maybe and maybe not. Especially since you don't have a signed document.

We don't do "holding fees" as tenants don't understand that and we had one threaten to sue. Our attorney told me just return the money as the brain damage of going to court and potentially losing (court is really just rolling the dice - small claims court is not about justice and the law but what the "judge" thinks is "fair") is not worth the possible gain.

We always sign a lease and any funds paid are first applied to rent and the SD is collected last. If the tenant backs out, the rent money is owed for lost rent while re-leasing the property. This is all spelled out in writing.

Lastly, the least brain damage approach is to return the funds and focus on re-renting and moving on. Caulk the lost rent up to your landlord education. Bottom line is that the place goes to the first qualified tenant with the money. No pay, no stay.

@Lau Cor you are probably not going to find many on market deals in Colorado Springs that you can get for 80K down (<$400,000 purchase price) that will break even with a DSCR loan. You might make it work if you can find a way to increase cash flow aside from the basic long term rental strategy.

Also as an FYI - Colorado Springs is it's own MSA and is not considered part of the "Denver Area". It is part of the Colorado front range. Boulder is in the Denver MSA but Colorado Springs, Pueblo and Fort Collins are considered separate from Denver

Hope this is helpful.