All Forum Posts by: Dan Kelley

@Dave Younts, I probably don't have enough experience purchasing commercial to give you a great answer on that, but in my limited experience, it depends on some unknown factors here. 

- What is the normal Cap rate in your area for commercial multi-family properties?

- What's the actual NOI?

I pulled some numbers out of thin air to make a guess and came up with $783k at 6% cap, but I have no idea if that's anywhere near reasonable or if my made up numbers are close to correct. I also ran the numbers using the current rents, not proforma. I believe in purchasing based on the current numbers, not on what the numbers COULD be. Though I'm not sure if, in a hot market, if it's harder to purchase that way.

Good luck should you choose to move forward. Keep us posted.

Have you researched fair market rents for the location/ unit size? If they're all identical units, it is quite strange to me that the rents are all over the place. While I wouldn't buy the deal counting on $900 for every unit until you verify that $900 is an acceptable market rent, I should think there's certainly room to improve on the rents for the remaining units. 

The beauty of commercial, at least in my understanding, as that your debt/income ratio shouldn't play a huge part in the deal. While a bank will look at your personal financials, if you demonstrate a solid deal and can prove without a shadow of a doubt that the rents will adequately cover the debt service, you should be able to get someone to loan you some cash.

Granted there are a lot of financial details you didn't list, it sounds like a great opportunity given the location/ potential upside in the future.

I've been to the free course, the 3-day weekend course, and me and 2 others split the coaching program.

My opinion: 3 free course and even the weekend course were worth it. The 3-day course really gets you excited about all the possibilities of real estate and gives you a taste of all the different avenues you can take (although this was before I found out about Bigger Pockets, which does the same thing but for free.)

The mentor program was not at-all worth it in my opinion. The guy mostly spent the whole time on the phone repeating everything that was already covered in the course books. We thought there would be more hands-on coaching. We figured he'd have us look up deals and bring them to the table and he'd help us analyze them and come up with strategies to purchase or offers to make- no such luck. 

I would advise staying away from the coaching program, but the other stuff was worth it.

@Matt M.  Yes, I've owned an auto repair facility for the past 3 years and I've been in that same field for the past 7 years consecutively. 

Anyone have a recommendation for a Realtor in the Denver area (or even Aurora, Springs, etc.) that I could reach out to to be put on an automated email for multi's that pop up on the MLS? It'd be nice to at least start to get a feel for what kind of numbers I'll be working with and what areas pique my interest. I've already done a substantial amount of scanning through craigslist and realtor.com. I obviously don't want to take up anyone's time until I'm closer to moving, but if I can at least be put on an automated email, that would be incredibly helpful.

@Jean Bolger, that's an excellent point about having that income from my current properties when applying for a loan in Denver. I hadn't really considered that. Thanks!

@Linda Weygant, I will definitely get in touch with you. While European cars have never been my favorite, I did just get a BMW project car that has piqued my interest a bit. I'd love to at least chat with them when the time comes and see if I'd be a good fit. If not, perhaps they'd point me in the direction of another shop that I'd be well suited in.

@Jared Bouzek thanks for the reply- very informative. 

@Bill S. , thanks for the information. I likely would not purchase until after we already moved out there, so I'm not too concerned with trying to close a deal remotely. Just doing my homework so I can start analyzing deals and familiarize myself with the market. That's certainly good to know about utilities and PM. I did not expect PM to be that high, though I suppose with such a hot market they can likely charge whatever the want.

To make a long story short, my wife and I are starting to set our sites on the Denver area to move within the next year or so. I'm self employed currently but I'm looking to sell/close down my business. We have a 14 month old and another due in June. If/when we move, I'll be looking for a job as an automotive technician (for which there seem to be an abundance of in Denver) and I'd expect to make approx. $60k-80k/ year. My wife will likely not work after the move as child care for two kids almost makes working pointless. We are currently in Iowa.

My current experience: I'm owner occupied in a duplex and I own a 6-plex that I self manage which is currently under renovations. I would probably sell the duplex and either sell the 6-plex or put it under management and cash-out refi. and hopefully pull at least a good 20-40k cash out of it. 

My questions for you are:

1. How would a lender in the Denver area determine my eligibility to afford a property? I found a 4-plex in the Denver area for $569 with all 2/1 units that I think would be ideal to house hack, but I know I wouldn't be able to "afford" $569k mortgage if they aren't considering the income of the 3 occupied units. Am I correct, or will the bank consider those units even if it's on a 30yr residential note? I have experience with commercial mortgages where your personal income doesn't really matter, it's the deal that matters, but I'm thinking residential doesn't work that way?

2. Is it common in Denver/ surrounding suburbs for tenants to pay all utilities or does it vary greatly by property?

3. In the event that I would want to move the property into management, what is a typical rate that companies would charge in Denver for a multi?

If you have any other input on getting started in the Denver area, it would be much appreciated. Also, any areas to avoid or areas that might be up-and-coming would be great as well.

We will be having our second meet up on Monday, May 8th at 6:30pm in Dubuque. PM me for more details.

I'd have to second (or 14th?) the vinyl plank flooring. I'm putting it in all of my rentals from here on out. It's super durable, water proof so it won't curl like laminate, cheap, easy to cut and lay, and looks fantastic. I've used it so far in two units and have no complaints so far.

Sorry for the poor quality, but it's the only pic I've got on my computer....