All Forum Posts by: Chris Mullenberg

Excellent insights Mike! All makes a ton of sense. Wouldn't have thought of all of this. Much thanks!

My partner and I are under contract to buy a contaminated meth house. Have 2 quotes for remediation. Believe we are getting in at a nice price for a strong upside on ARV. Planning to keep it as a rental after fix up. Anyone ever bought a meth house? Any tips or pitfalls to share? Thanks everyone!

I'm in the boat of "it depends", on the deal, your goals, and your market. If I'm looking at a long term hold property that will cashflow well even at current sellers market prices, then I'm not as concerned to wait for a huge discount. Grab the low interest rates and start cash flowing. (I still only buy discounts, but just saying I'm not holding out for a 30% + discount )

Here in Northern Colorado, we've seen almost no swing towards a buyers market through the crisis. Inventory remains low, demand remains high, and as we start Re-Opening the market next week we are anticipating a flood of even more demand and another hot summer sellers market. In our market it appears that waiting could mean higher prices and higher interest rates. Also we are in a well-employed established area that likely wont see many foreclosures and fire sales. There's no need to go to foreclosure or fire sale it because the open market demand is so strong, you'd just sell your property for a good price if you were in trouble.

I'd say if a large number of residents in your area are not making rent and/or mortgage payments, waiting for the seller wave could be a good play.

@Caleb Heimsoth and @Joe Villeneuve  yeah probably too much of a wildcard property to risk it. Being so close to the university, bedrooms are going at $600-$700/month each but this house is too small. If it were a 4/2 in similar location I'd be all over it. 

@Joe Villeneuve for sure! Seller wants $335k price, $25k down, 6% interest-only, 5year balloon. That interest only payment would be $1,550/mo. Adding in taxes/insurance puts total monthly payment about $1,761. Those same loan terms on a PITI would put monthly payment around $2,100. Only catch now is that I'm not sure I can lease the home for more than the $1,761/mo. That would be seriously pushing it for a 2/1 in this area, even with it being super close to the university. One wildcard is that it's zoned to allow in-home business and has detached garage too, so maybe a unique tenant who needs that would like it. Artisan or contractor who would want to run a little business there. Thanks for the input!

@Patrick Liska good point, I would plan to make my purchase contingent on having a tenant-buyer signed to a lease before closing. If I can't find one, I'll let the deal go. One of the terms of course is to give the seller his desired price, so I would be banking a bit on being able to sell it for a higher price when I sell down the road. Thanks for the help!

I found a seller willing to sell to me on owner-finance terms, and he only wants to talk about interest-only payments. My initial strategy was to find a tenant-buyer for a lease-option, as this property doesn't need enough rehab to be a good flip. I'm a newbie, and was figuring my monthly payments to seller would reduce the principal a bit until balloon payment. Any advice on doing interest-only with the seller on a 5-year balloon? Good idea or bad idea? 

Hey Logan! Thanks for the comment. This house is in Rossborough (Dunbar and Horsetooth) . Cash flow is almost double that of our long-term rental in FtCo. Not quite the 1% rule but some busy months we get close! The house came with a grandfathered short-term rental license, which was the only reason we jumped at it. You're right, if a property doesn't have a grandfathered license, the allowed short term "zones" are very few and far between. There are actually quite a few properties in FtCo that the city allows "primary' short-term rentals, meaning it's your primary residence and you can rent it for up to 90 days per year, but who actually wants to Airbnb their own house that much? I'd be on the lookout (we certainly are) for properties that have a grandfathered license. Also fyi the city has a short-term rental zone look up site that you can punch in any address and it will tell you if it qualifies for new license. I have not found a database of current grandfathered properties, but that would be awesome. The city told me they won't give it out. No other major hurdles other than some weeks it's definitely a side job, getting new guests in, providing great customer service, cleaning/fixing the property. For now we do most of this ourselves, hiring out cleaning most of the time. Let me know how I can help! :) 

Investment Info:

Single-family residence buy & hold investment in Fort Collins.

Purchase price: $400,000
Cash invested: $80,000

Vacation rental. 4 bed, 2.5 bath, 2 car. Well-located Fort Collins neighborhood.

What made you interested in investing in this type of deal?

2+ year history of very strong vacation rental bookings. Good location. Seller including all furnishings. Most importantly, came with the grandfathered short-term rental license required by the City. Hard to come by!

How did you find this deal and how did you negotiate it?

For Sale By Owner, direct contact with the seller.

How did you finance this deal?

Portfolio loan local bank, 20% down

How did you add value to the deal?

Minor cosmetic improvements. Majorly improved the online VRBO and AirBnb listings to attract more renters.

What was the outcome?

Cash flow every month since purchase! And becoming a "Premier" listing on VRBO with 5-star reviews etc.

Lessons learned? Challenges?

Probably overpaid for the home furnishings, but wanted the no-hassle so bought it furnished. Don't discount your rents for renters trying to fish for a deal! They won't treat the house well anyways.