All Forum Posts by: Danielle D.

I would like to add one thing to this thread as, aside from being a real estate investor, I work in prison with felons (violent, non-violent, etc.) and I also work for our state innocence project.  I consider @Joe Splitrock 's advice all good except I wouldn't eliminate an applicant if they just got out of prison.  Rather, I would ask them for a resume for what programs they've completed in prison.  If they have, in fact, completed any programs, ask for references from the group offering the program.  Many of these men and women have used their incarcerated time to turn their lives around.  

I have owned a stand alone commercial building that houses a profitable daycare for 15 years now.  I would never consider a lease rate contingent on number of children for a few reasons.  First, there are never the same number of children on roll at any given time.  Second, a childcare center charges a different amount based on the age of the child.  So charging them based on the number of children doesn't necessarily help them.  Third, you'd have to audit their enrollment monthly which will greatly increase your operating expenses.

A 12,000 square foot childcare center is quite large.  I would make sure you have a very experienced operator in as a tenant.  They either need to show other locations have been profitable or have deep business experience (especially in finance & operations) or both.  Essential to running a successful childcare center is putting "butts in seats" and understanding the flow of children between classrooms to limit vacancies.  The bulk of their profits come in filling the last 10% (from 80% full to 90% full - you can't really ever reach 100% full for timing reasons).

That said, if you have a good operator who knows how to manage their P&L, rent should comprise around 20% of their revenue at full capacity (again, which is around 90%).  If you're so inclined, and they meet all of your requirements for being seasoned operators, you could offer them 6 months or so of reduced rent and then raise it to market rates after that.

Hope that helps!

Thanks for the quick responses.  The upstairs has 4 units but there are two retail units on the lower level - which I assume makes it a commercial loan.  The ask is $900k but my proforma tells me not to go over $650k.  So, if I can convince the broker that he's not priced correctly, maybe it'll be mine.  

I mentioned that I'd evict but I'd actually make the close contingent on the former owners evicting (which I think they've started.)

Re: the expenses, I'm conservative so I made them 38% of revenue.  It's small and in the neighborhood and will basically be brand new so I'll self managed this one.

I'm comfortable with the reno work and it's in a HOT area that is turning over, so comfortable there as well.

Appreciate the feedback everyone!

All,

I'm looking at a rundown mixed use 4 unit upper, retail lower.  Tenants currently don't pay rent (because no one enforces it - building owner has died).  I'd evict, gut it, renovate and rent.  Is my only option hard money - assuming I don't want to self-finance?  And how long would I have to be showing good numbers before a refi?

Thanks much!

Danielle (just jumping back in after a year of rest :)

Depending on where you are in the country, sewer line replacement is a big cost (almost always needed in Denver).

I have a garage on a property I own that is one foot from the property line/fence and one foot from the neighbor's new and taller stucco garage.  My garage is probably 40-50 years old and has cheap fiberboard siding on that side, yet because of its protection from the elements it is in better shape than the north side which is totally exposed.  

As far as materials, I'd look at hardiplank lap.  I put it on a commercial building I have which is in what used to be a swamp in Virginia in 2005 and haven't painted or repaired it since.  It gets insane heat and moisture too.

Regarding zoning, I have another house here in Denver with a garage 1 foot from the property line that I just built last year.  Zoning made me put on 5/8" drywall under the hardi as a one-hour fire protection.  A little extra expense but no big deal.  A good contractor should be able to replace the wall for you using header supports.  

No, it's not zoned for an ADU.

I am selling a cleared lot in one of Denver's hottest markets (Berkeley/Highlands).  The home that sits on it is scheduled to be scraped, trees cleared, and utilities cut and capped all by mid-August.  This is a great opportunity for a developer to build and sell quickly (without the 3-4 months of demo, which I took care of).  Comps in the neighborhood are $700-750k.  Cash only please.  Contact me for more details.

HIGHLIGHTS

✓ Mountain Views

✓ Beautiful mature neighborhood with quiet streets and great neighbors

✓ Zoned USU with front set back of 18’, which allows for a HUGE backyard

✓ Area appreciation of15% in 2015

This lot is close to EVERYTHING:

✓ Blocks from Willis Case golf course, Berkeley Park and Scheitler Rec Center

✓ One half-mile to great brewpubs, sandwich shops and Regis University

✓ Less than 1 mile from Tennyson Street’s best restaurants and boutiques

✓ And only 4 miles from downtown Denver’s Union Station

Steven,

That's a tight margin but I looked at your profile and you say you have a reliable GC that works quickly (a unicorn perhaps? :), so that's a HUGE plus. My thoughts are that if you are confident in your $48k rehab (i.e., it's conservative and has a small contingency) and your ARV is also conservative, then a 13.5%, 90 day project return is decent in Denver. From the home's data it looks like it's now a 2/1 and so, you'll add 2 beds? If so, beware asbestos since it was built in 1965.

Danielle

Thanks to everyone!  @TravisSperr, I will contact John today.