All Forum Posts by: David Colthart

Quote from @Account Closed:

@David Colthart Before you invest or buy in The City of Cleveland I would suggest you google "Tenants First Initiative" and become aware of all the extra fees and problems the City of Cleveland gives "Out Of State Investors". I am managing 40 doors there right now an it an absolute nightmare. You should also speak to a knowledgeable RE attorney to better explain what it takes to own and manage rental units in The City Of Cleveland. 

We are exiting the market there is no winners inside Cleveland go elsewhere. 

GREATLY appreciate you putting this initiative on my radar Devin. Looks somewhat onerous from the outside, but sounds like you're saying it's worse than that.  If I may ask, which aspects are the most painful, to the point that you're exiting the market? And are these issues Cleveland-specific or present in other parts of Ohio?

@Remington Lyman - seems like sound advice for sure. Assuming some hypothetical foolhardy person chose not to heed your advice and jumped straight into BRRRR, do you think they could significantly improve their odds of success by putting an uncommon amount of effort into finding and building a mutually beneficial relationship with an investor-friendly GC? For example I'm thinking of David Greene's suggestion that you agree up front to provide a monetary incentive for the GC to get the work done correctly and on time, along with a penalty for blowing past the deadline. Have you ever seen this in the real world and do you think it could be effective?

@Patrick Drury - greatly appreciate the tips regarding Columbus! From what you've seen, do you believe 30-40k is enough cash to take on a BRRRR in these parts of Columbus, or do I need to beef up my capital significantly? (using hard money for acquisition and rehab)

Quote from @Nicholas L.:

@David Colthart

unless you're going to go there in person to oversee it, then... don't. i know those purchase prices seem attractive compared to Denver, but it is exceptionally difficult to execute a successful BRRRR from thousands of miles away. part of BRRRR is sweat equity and watching things closely, and that's exactly what you can't do remotely / from Internet.

you tell me - how will you not do this?

https://www.biggerpockets.com/forums/963/topics/1195280-expe...

and why not stay local and BRRRR in Colorado where you can be hands-on? too expensive? save up more =)

Thanks for taking the time to reply Nicholas! To be honest, @Luka Jozic (from the thread you linked) doesn't seem to be in terrible shape in my opinion, despite the discouraging comments he received.  Assuming he actually got the majority of his capital back in each of his 10 or so BRRRRs (which seems to be the case) he's likely accumulated a good amount of equity and is benefiting from debt paydown and tax advantages (with potential appreciation and improved future cash flow once the properties are stabilized being nice-to-haves if they happen). As someone without a ton of capital who's eager to "take action" (buzzwords, I know) and put in the necessary work and due diligence, BRRRRing OOS in a cash-flow market seems like a reasonable option (even if it isn't for everyone).  Seems to me that at scale, a portfolio like Luka's would indeed build wealth over time and open up options to transition into higher quality appreciation markets several years down the line, with the benefit of more capital and (more importantly) more experience.  I know this isn't the path everyone would choose, but it seems like AN option to me.  Would love to know if you think I'm missing something here, or what other options you think someone in this position could explore to start getting their feet wet and moving forward in the near term.

Today's Question: Big picture, what actions can I take to increase my chances of success on my first Cleveland or Columbus BRRRR? Take that wherever you want to :)

Why: I am fortunate that my job has given me far more than most of my closest friends and family, and I want to provide others with opportunities and support where it's most needed. Unfortunately my work is not scalable and does not allow me to extend such opportunities. Developing the tools to scale a substantial real estate portfolio would enable me to help people in a way I currently can not.

Me: I'm an investor located in Denver, CO preparing to execute the BRRRR strategy in Cleveland or Columbus, OH (aiming to use about $30-40k of capital). I already have a rockstar agent, but always looking to learn from additional voices. I have read David Greene's BRRRR book and countless biggerpockets posts on the topic, but recognize there are market specifics I don't yet know. Your recommendations, referrals, and words of caution will be invaluable. I have too many questions for one post, so keeping this post broad and will ask more specific questions in the coming weeks/months.

I have a good 6-figure job and some limited real estate investing experience (own one short term rental in the Denver area and recently Airbnb'ed a second property under the rental arbitrage model). 

Goal: Develop the tools to build generational wealth through real estate by executing one successful BRRRR by year's end ("success" would be getting most if not all of my capital back through refi of a property that genuinely cash-flows). Then evaluate what went right/wrong and execute at least four more BRRRRs in 2025.

@Zeona McIntyre,

Thanks for the reply!  I have absolutely noticed the limited supply of true duplexes, and expect that an unofficial duplex (converted basement) is the most likely route.  I had no idea Arvada was one of the few areas where airbnbs were allowed after moving out, so thank you for the pro tip!

I am totally prepared to put 5% or more down, depending on the property, with $60,000 or so to play with, so definitely makes sense to go conventional.  I know you have a ton of experience in this area so I’m excited to hear from you - I will definitely reach out.  

Quote from @Joe Garretson:

Why are you moving to Denver? 

 We’re moving for work.  

Quote from @Matt M.:

You will have a hard time competing in this market being FHA, small down payment with no ammo to go above ask, and your price point. It will be almost impossible in those areas. Why FHA? Can you do 5% down conventional? There is the funding fee and FHA appraisal that can cause issues.

Is your wife 100% on board with your plan? Sharing a house with someone while having kids can be a sensitive issue. 

Why not take down a townhome, live in it a year, move on and get another one?

Thanks for the reply Matt!  Appreciate the warning about FHA loans.  We definitely can go with a conventional vice FHA loan, and our down payment can be anywhere up to 60,000, depending on the level of renovation the property requires - so could be well above the 3.5% mark. $500,000 is my ideal price point based on my (rookie) number crunching, and I have seen things in that range pop up on Zillow - however I realize the price advertised on Zillow may not accurately reflect what homes are actually closing for.  For a property with enough income potential, I would certainly be willing to go higher than $600,000 (we are pre-approved for $650,000).  

Great question about the wife - fortunately yes she is fully on board with house hacking, so no worries there.  

The townhome suggestion is interesting, but I do have some hesitancy in that regard because of the limitations and upredictability of HOAs.  What are your thoughts on the upsides/drawbacks to townhomes?  Maybe my bias is misplaced. 

Quote from @Conner Olsen:

@David Colthart I live in Austin which is very similar to Denver in that it has seen high appreciation with lagging rents. I changed my strategy for my house hack and decided to rent monthly instead of renting on a yearly lease. I live in one side of the duplex and furnished the other side and listed it on Airbnb, VRBO, and Furnished Finders. I spent around 5k to furnish the 2/1 and increased the rent revenue from $1,200/month to $2,750/month. It is now covering my mortgage and I'm making around $200/month after accounting for vacancy, capex, and maintenance. I'm sure there's a high demand for monthly rentals in Denver just like there is in Austin!

Thanks Conor, sounds like you’re killing it with MTR.  Can I ask what elements you think made your 2/1 so competitive as a medium term rental?  And do you have more success on furnished finders or the vacation rental sites?   

Quote from @Dan Guenther:

@David Colthart 

Welcome to the forums and congrats on the move to Colorado! 

The Denver metro is as hot as any other market in the U.S. right now but luckily WE house hackers are still finding opportunities out there. You will find that a lot of single-family homes in the area are set up to be split into non-conforming duplexes. With a back entrance and a simple wall addition, many homes here can be separated into two units for pretty cheap. Depending on your comfort level, you can take multiple routes from there. Short-term rental, rent by the room, furnished medium-term rentals to traveling nurses, etc. 

Awesome Dan, I would love to learn more about what you have learned through your house hacking experience.  What are your thoughts on the cost in terms of both time and money to add a separate basement entrance where one does not always exist?