All Forum Posts by: Jeff L.

Howdy BP -

Does anyone have a Landlord friendly lease template for Northern Colorado, Denver, Louisville, etc? All I'm finding online is the Boulder Model Lease, which I know is slanted in the tenants favor. While legal counsel would surely be the best approach, I am trying to boot strap my first few deals. Any insight, direction, or documents you could pass along would be greatly appreciated!

My very best,

Jeff

Hey BP -

I'm looking for advice/recommendations for a plan to break into commercial real estate investing. I am currently 25 and my end goal is to own/manage a 10-20 man multifamily acquisitions, management, and development shop in the Denver / Boulder Colorado metro area. My big question is, how do I get started and what is the best path?

I currently work in management consulting (Strategy and Operations) for a big 4 firm and travel Mon-Thurs to my clients. If I stay in my current role, next year I will be expected to get my MBA (two years) and come back to the firm for another two years. I am at a crossroads and have three fundamental options:

1. 1) Should I pursue an analyst / associate position at an already established commercial investment company to learn the ropes and gain experience? These positions seem to pay much less than consulting,  but could be well worth the learning experience for a few years.
2. 2) Would a higher level of education (MBA, Masters in Real Estate, or Masters in Real Estate Development) help me achieve my end goal? I am in a strong position to go back to school, but not sure if the investment of time/money will help me in my entrepreneurial endeavors.
3. 3) Should I drop everything, dive in head first, and attempt to start syndicating deals? I have a decent cushion of savings, that could buy me time to get the ball rolling. Immediate next steps would be locating potential deals, putting a full analysis and business plan together, searching for and pitching JV/capital partners, closing deals and building relationships.

I would really appreciate any and all feedback. Thank you in advance for your help!

My very best,

Jeff

@Travis Sperr Thanks for the encouragement. The property is 2 blocks from the railroad tracks along hwy 42.

@Bill S. I appreciate the info on the flood plain, Bill. The city has given me 100% confirmation that it will be off FEMA flood maps within the year. Great point about cash at closing. I spoke with my lender and we are able to apply the credit to my closing costs which will allow me to make the repairs on my own terms. It looks like all of my living expenses with a 10% maintenance buffer will be ~$1,300 which is $300 below what I currently pay. Thanks for the great advice.

 @Daniel Mohnkern@Jon HoldmanI completely understand where you guys are coming from. Since I intend to live in the property for the next two years, I'm considering my reduced living expense as "cash flow". The big questions is whether the property will be able to stand on it's own two feet once I move out.

@James Bell The property is in the Minors field neighborhood, which is currently in a flood plain spilling over from the East side of hwy 42. I'll certainly optimize the rent roll to the best of my ability. Glad to hear you're in Lafayette!

@Dan Mackin An interesting property indeed! I do have confirmation from the city that the hwy 42 redevelopment will actually slow traffic, add landscaped medians, sidewalks, bike paths, etc. In fact, this property will be on a cul-de-sac once the project is complete. Great point on the electrical. I will certainly double check. When you say. “It has been on the market for a while” what do you mean? I know the property was briefly listed in June 2014 and pulled once the tenants renewed. Maybe you know something I don’t! Great intel on Louisville. Sounds like you really know your stuff. Will certainly be in touch over the summer.

Howdy BP –

I have a duplex under contract In Louisville CO and would love all the advice I can get. I am planning to live in one side and "house hack" the first 1-2 years. This deal was found off MLS and negotiated through seller's agent. (Questions at bottom)

The property:

• Price: $326,000
• Duplex: (2br/1ba)/(3br/1ba)
• I will occupy the 3br unit the 1st year (Since the lease is mo-mo), and the 2br unit the 2nd year
• Current Rents: 2br: $950; 3br $1,100; TOTAL= $2050/mo
• Projected Rents: 2br: $1000; 3br $1,300; TOTAL= $2300/mo
• Needs $15,000 of work. Seller to pay $5,800 leaving me $9,200
• Flood Zone AE: Total Insurance Premium w/ Hazard=$3,201/year
• Flood insurance will likely increase ~18% per year
• As of this fall, the city of Louisville is completing a drainage project to remove this property from the flood zone. Within 2 years, the property will be lifted out of the flood zone.
• Built: 1908
• ~2,000sf duplex w/ miners shed. Lot is ~7,000sf
• Ranch w/ Basement: All bedrooms are in basement
• Full 403k $45,000 remodel in 2010
• On corner of neighborhood st and two lane highway.
• City is undergoing a large project to beautify and slow traffic on the highway. The house will end up in a cul-de-sac
• 2 blocks from downtown Main Street
• Neighborhood is going through urban renewal. Large mixed use development project to expand old-town area (See plans below)

Louisville:

• Louisville is in Boulder County (without Boulder landlord/tenant laws) and is one of the hottest markets in Northern Colorado. It has been voted “America’s favorite small town” by Money magazine for several years now. Real estate values have continued to climb, even through 2008-2009

Financials:

• Performed Craigslist/comp rent study and was getting 6-10 craigslist responses per day when raising rents to $1,300 (2br) and $1,500 (3br)
• 2br is currently locked into annual lease at $950
• I intend to occupy the 3br side of duplex for year 1, move to the 2br side for year 2, and hope the property is self-sustaining (w/ property management) by year 3.
• I currently pay $1,600 in rent in Boulder CO

Questions:

• Clearly this is more of an appreciation play from an investment perspective; am I saddling too much risk?
• Will the property management experience, equity buildup, tax benefits, etc. make this worth it even if the property does not appreciate?
• Given that this is by far the best house hacking deal is my neck of the woods, would I be better off buying a duplex/fourplex a few hours away that meets the 1% rule? It seems that the areas where 1% is possible in CO have been more volatile over time, and are not secure growth-stage markets. Is Boulder County a safer bet, and is a safer bet the best course of action when buying my first property?
• Advice?

Thank you all in advance!

Jeff

Brandon-

We have similar stories. While I'm from CO, I also went to college at CofC in Charleston. After spending a year in San Francisco, I recently moved back to Boulder. I have several ideas and would love to help out. PM me.

Cheers,

Jeff

Hey BP -

I'm putting the numbers together on my first deal and would love to hear your thoughts.

The property I'm looking at is in one of the premier South Eastern cities (Call it Charleston, Savannah, etc.) and situated right on the fringe of two large-scale development projects that will transform the area (including 300 new residential apts). This location has tens of thousands of student and young professionals fighting over housing in a confined area. The house itself is a 3-2 that had a stud-out renovation 7 years ago. While it only has 1000sf, it also has two functional lofted areas and a basement (3brs are qualifying but very small). It is currently listed for just over $320,000 and is leased until the end of the year at $2,600 per month (~0.8%). The house next door is currently stripped to the studs and will undergo a full renovation as well. Over the next few years there will likely be construction around the property as the area redevelops. Based on my pro-forma with 20% down it looks like I can cash-flow ~$100 per month. There is much more detail that went into my analysis, but would love to get your reaction. Any advice would be much appreciated.

All the best,

Jeff

Kenneth - 

Carol Lyn Lucas is also fantastic. She has 26 years of Real Estate experience in Colorado Springs and knows the market like the back of her hand. Also, very clever finding ways to save her clients money. I'm not sure if she has HUD experience, but she is highly recommended.

Carol Lyn Lucas

Email: [email protected]

(719) 661 - 7707

Good luck!

Jeff

@Jay Hinrichs Loved the video of your new construction in park circle. Keep up the good work. I'll take a closer look at buy-and-holds in this area and Old Mount P. Both look promising.

@Russ Scheider Sent you a PM. Really appreciate the advice and look forward to staying in touch.

@Anthony Conway I've been keeping my eye on Mount P. and couldn't agree more. Thanks for chiming in.

@Thomas Haskell Thanks for the tip, Thomas. Ironically, I've heard of Cane Bay through their development team MeadWestvaco, bet definitely need to take a closer look

@Account Closed Great advice. After three recommendations, I'll be sure to include Park Circle in my search. Thanks.

Hey BP! Hope 2015 is off to a great start for everyone.

I'm looking for some information on Charleston SC submarkets. I'll be investing in my first buy-and-hold within the next six months and am looking to dial in my search on the hottest submarkets in the area.

I'm well versed in the "Inside Crosstown" area, and this would be my first choice if I could find a cash flowing ~1% deal. Unfortunately those have been few and far between. As such, I would like to expand my search and have heard great things about the "Outside Crosstown"/Wagner Terrace markets. It also appears that Mount Pleasant has been poised for growth and has really exploded.

While I am focused on A-B grade neighborhoods to strike a balance between cash flow and minimize risk of vacancy/low quality tenants/& stagnant depreciation, I'm also interested in what investors are up to in lower grade markets (Goose Creek, Moncks Corner, West Ashley, North Charleston, etc.) I'm less familiar with these markets and recognize that there are high-end areas in each, so I hope not to offend anyone. I know that there is more cash flow potential further from the peninsula.

In summary, I am looking for insights into the Charleston SC submarkets so I can narrow my search and ultimately find a buy-and-hold property that will generate positive (~$100 per door) cash flow in a "booming" market. Thank you in advance for your insights!

My very best,

Jeff

Thank you all for the fantastic (and timely) feedback.

Really appreciate the references @Anson Young Hope to connect soon at one of the Denver Meetups

I echo your sentiments on appreciation @Jon Holdman . I'm keeping cash flow my utmost priority.

@Mark Ferguson While it's getting tougher, It looks like Greely is one area where 1%ers still may exist. Have you pulled back the reigns, or shifted your focus to other markets?

@James Bell Congrats on the all cash Estate deal. What is your secondary market if you don't mind me asking?

@Darren Smith I'm thinking off-market may be the way to go if I want to stay in my own back yard. Excellent point on the caution of historical growth trends.