All Forum Posts by: Bill S.

@Alex Clopton you need to keep calling. Not sure that an 80% LTV is available but it doesn't hurt to ask. Have you tried Canvas CU?

@Tim Fode yes rents are softening. We are down about 5% for new lease amounts. Where we can we are increasing amenities to hold rent prices (adding washer and dryer hook ups and then renting out the washer and dryer). Adding dishwashers, adding fenced private yard space. Obviously these are property specific. Some cases we are doing light renovations such as adding new kitchen cabinets and granite countertops. Renewals we are doing small rent bumps of 3% or so. Haven't had anyone move over that amount. Lots of turn-over with folks leaving the state or buying homes though. The single family homes are seeing rent increases of 5% as folks that see buying as out of reach are wanting to rent houses which is still significantly less than buying.

@Calvin Graves So I disagree with the concept that the lease covers all bad/undesirable behavior that would cause a "normal" landlord to non-renew. I have had case of tenants, subtly harassing other tenants at multi-unit properties. Also dealing drugs and other criminal behavior. Unless the cops come and arrest them, you really can't write a lease to address these characters. It also makes it challenging when purchasing a property from an estate or other party that hasn't really managed the property well (didn't spend a lot of time screening the current tenants). Bad actors make it into the units. Occasionally I have made a mistake and let some folks in that weren't the best neighbors to the other folks at the property. In our current litigious society it is difficult to get previous landlords (especially big box LL) to give an honest response about the quality of people applying to my units. Based on what I have observed, I do a thorough screening, and still I have had one or two slip through the cracks over the years. Not being able to send them packing at the end of the term is going to make things more challenging not to mention making life miserable to the quality tenants living next to these less than desirable characters.

The law was billed as reducing unnecessary evictions (those without cause). In reality, only a very small portion of evictions (<1%) were without cause (98% were for not paying rent and 2% for violating the lease). It is my humble opinion that the legislator who wrote the law (he represents tenants exclusively), was building a business for himself and trying to create an industry for attorney's to represent tenants. In order to do this, the law has to become complicated and convoluted. 

@Dee D. You really need to understand the law. As I understand it, HB24-1098 changes the procedures for evictions and creates many more procedural hurdles but I would not say it "restricts a landlords ability to evict non-paying tenants". What the law does do is create tenants in perpetuity which means I can't decide I don't want to continue to rent to a tenant who has lived in the property for over 12 months and tell them to move at the end of their lease. Now I must have a cause to end the lease and that cause must be an evictable violation of the lease or one of the few exceptions stated above. This completely changes the nature of the property rights. I no longer am intitled to the return of my own real property at the end of a residential lease. The tenant can stay as long as they want. This is most restrictive when purchasing a property with legacy tenants from slum lords. In many cases, the old tenant base doesn't fit with the new plan for the property (ie upkeep, cleanliness, and respecting the rights of others). In the past, it was simple to say, "time to move on" to these legacy tenants. Now, they have to violate the lease and we then have to evict them. Lots more brain damage and more evictions which is what the stated purpose of the bill was to avoid.

I would say that SB24-094 has far more impact to the operations of many landlords in Colorado. Most of the details will have to be ironed out in the courts. Again in direct opposition to the stated purpose of "helping" tenants. The attorney's I follow stated that this bill impacts landlords in Colorado in that they are no longer required to uphold a standard of "warranty of habitability" but are now required to "guarantee housing" to those folks renting from them.

Long answer. I am still investing in long term rentals in Colorado. I am of the scale that I can probably deal with these issues by throwing money at the various problems that will arise. I am not sure I would have survived or even started investing being a small time landlord if these laws had been in place when I started investing.

@Elizabeth Naranjo There is no easy way out. Most areas require a permit to do as little work as installing 1/2 a sheet of drywall. Certainly replacing a furnace and/or a water heater would require a permit as well as running a new or replacing a duct run. Adding a new outlet, circuit and pretty much doing anything electrical aside from replacing a fixture or replacing the receptacles or switches requires an electrical permit. For plumbing, any new piping (even replacing existing pipe with new) would require a permit. Moving a gas appliance (range, or furnace) would require a permit. Some areas require permits for windows and some do not. Replacing a roof would require permits and sometimes replacing or installing new siding requires permits. 

Usually plan on permits unless it's a paint and carpet rehab. 

I think you may be over estimating the time required to obtain permits. Most permits for single family residential rehab type work is done over the counter. The exception being if you are changing the floor plan which may mean you need architect drawings. If you are changing the location of fixtures they may require a plumbing plan as well. It really depends on the scope of work and the person inspecting the work as well as the one issuing the permit.

Find someone who knows the permitting system in the municipality where your project is located and have them review the scope, and the work done and see what they think it would take to pull permits after the fact. What I'm saying is you might be over estimating the time and difficulty of getting the project completed with permits. If the work was done properly, it may not be too much of a problem. Fall on your sword with the municipality and tell them you were taken advantage of and want to move forward correctly now. Most are somewhat understanding and most will try to do what they can to get your project finished. As long as you don't argue with them or make them mad, you should not experience more than the usual brain damage of getting permits. Sure it will cost more and take longer but consider it the price of your education.

Other than that your option as others have point out is to find the money to finish it off the books of the hard money lender, sell it or refi it and pay off the lender and move on. I would say that about 98% of all residential rehabs in the Denver market are done without permits. Occasionally you will see listings in the MLS that state "all work done with permits" or something similar but in most cases, it's a don't ask, don't tell approach. That said, that now that the market has softened a bit, folks wanting the work permitted is probably going to be more common so it may not be a bad thing.

My final thoughts are about your hard money lender. My assumption is that this is not their first rodeo and as such, their loan documents should have covered the need for permits for partial payments on the improvement amounts. 

I think you realize now that you hired a GC that lied to you. I would have serious reservations moving forward with this person to complete your project. They should have clearly communicated to you what work required permits and that they could get those or not but the choice would be yours and that you would bear the cost implications either way. Since they did not do that, what else are they hiding from you? Sub-par work, cost over-runs, undisclosed delays and work beyond their expertise? You need to slow down and get your team on the same page with you or it will cost you more money and time in the long run.

@Eric Einstein so without knowing specifics it is a bit hard to comment on. I will answer in general terms. It is rare that you can tear down a 3/3 for the land and have enough value with the land for building that it make sense. The exceptions are when density can go up 5x or more. That is you can build at least 5 units on the property at near the value of the existing home. You mention, "...convert to Rowhome zoning..." The current flavor in the Denver metro area for up-zoning on individual properties is is "NO!" I rarely see an individual property that has been up-zoned. I doubt this plan would be successful.

Assemblage can create value but unless the zoning is favorable is does not create value. Based on what you have shared, it is unlikely be a benefit. 

Probably the thing that makes the most sense is a adding a unit in the back of your current house. 

@Colleen F. yes we have a bunch of real winners in office now. One party controls the house, senate, and governor. They have super majority so cannot even filibuster to prevent legislation. The author of most of the bills was evicted when he was in high school and the president of the senate was also evicted when she was a child. They hate landlords and the legislation reflects it.

They wonder why evictions are increasing and low income housing is scarce. 

@Alec Bildstein my advise in addition to attending meetups is to read the forums and see who contributes and adds value and find the folks that you resonate with. You can also research those you meet at the events by reading their posts here as well. That said, the good one come via word of mouth from other investors. Talk to investors that have done deals and ask who they used and when you get the same name a few times, you have someone to add to your list.

@George Zev My heart goes out to you with regards to dealing with a HOA. I have no legal advise to you. What I have seen is that you would owe the $6k charge one way or another but you should have an attorney weigh in to be sure.

@Trace Adams so IMO you have the cart before the horse. You should KNOW the rental laws before you even look for a property to purchase with the intent of renting it out. 

Typically the local municipality supersedes the county regs. That is if the property is with the City of Littleton then Littleton rental laws apply. If it is in unincorporated Jeffco then Jeffco rules apply. It's a really big difference too. 

In all likelihood you cannot "turn it into a duplex". Zoning laws typically want to keep single family neighborhoods as single family neighborhoods. Some areas allow ADUs if you live in the property so what works now may not be legal if you move out. 

All electrical work requires a permit. If you add a 220 outlet for stove/range then it requires a permit. The permit for 2nd range (220 outlet) at a property may be turned down if the property is not zoned for two units.