All Forum Posts by: Gretchen P.

I am under contract for a property and will be converting the garage to a cottage, I will also be adding updates to add value to the main house. Ideally I'd like to refinance it after the cottage is completed and rented. The property is in CO Springs. I plan to put at least 20-25% down for the purchase plus use my cash to do the conversion. We have excellent credit, other properties with equity, etc., I just would rather not keep all the conversion costs in the property for a year. 

I am considering making an offer on a property that has some settling and foundation issues. All doors and windows operate correctly, and don't appear to be affected. The engineer's report says it will need 10-12 underpinning piers some of which would be located beneath the garage floor, so excavation would be required.

There are some interior drywall cracks and exterior cracks on the brick veneer. There is noticeable sloping of the floor on the main and upper levels. The engineer's report also calls for fixing grading around the property and replacing the sump pump.

What kind of costs will I incur for these items? The engineer's report says $2000 per pier, is that realistic? Are there other issues that will need to be addressed that I should account for prior to offering on this property?

I am not familiar with the property but that 8% vacancy after the first year is high for the springs, my last one rented in a day, I figure 5%. That said, your other numbers are low.  

I would suggest paying for trash, as some tenants won't and that's a nightmare. 

You also need to build in 5% CapEx expenses for long-term big expenditures like roof, furnace, water heater. I typically figure 5% repairs, plumbing, electrical, 3% miscellaneous (tree trimming, gutter clean-out, landscape upkeep, lock changes, etc.)

That deal is tight. 

I would spend a few hours painting the bathroom pale gray, paint the vanity darker gray and an inexpensive all chrome handle,  add some towels in turquoise or yellow and a shower curtain to match (but leave it open) or something. Stage the rooms with the paneling in "farmhouse" type stuff, even a few pieces or artwork propped up will help. 

And you probably need to drop the price. 

Hi April, 

So sorry to hear about your dad. 

I have some similar properties in CS that I renovated and. I manage them myself. The properties are probably worth a lot more than your parents paid for them, and if your mother is retired, and if she wasn't involved in the business, it may be less stressful to sell at some point, but you should take some time to assess the situation, especially after a sudden passing. Please reach out if your mom decides to sell.

Best of luck finding management in the meantime!

This is purely hypothetical, I just rented four units and find that in my area, and in the type of rental I have I occasionally find perfect tenants, but there is usually some "issue", or I have a sense they may not stay long in the unit, due to location, unit size, etc. 

Hypothetical unit - $1000/month, 1bed 1bath bungalow in a blue-collar area

Hypothetical Prospective Tenants: 

Joe: needs to get out of bad roommate situation, is facing eviction due to roommate non-payment confirmed by landlord who consistently has gotten joe's half of the rent. No problems with previous landlord.

Income:  $2000/mo plus $1200 tips (he is a waiter and has been employed at the same restaurant for 3 years)

Savings: $9,500

Credit score: 685 all accounts current, late payments several years back on a credit card that is now paid off

Debt: Credit card and auto loan payments: $255

Nick and Nora - couple moving in together, both were living with relatives and have no rental history.

Income: $5800/month - he is a mechanic, she is a call-center employee both have stable employment history

Savings:  $150/$50

Credit scores: 695/455; Betty has collections and multiple late recent payments

Debt: Car payments and credit card debt $1600/mo

Tom: just finished graduate school, looking to start a new life, stable housing history, looking for a full-time job in his masters discipline, working at 2 part-time white collar jobs he has held through school.

Income: $3100

Savings: $1200

Credit score: 775, lots of debt, but pays on time. 

Debt: $58,000 college loans, $14,000 auto loan, $3800 credit card debt; total payments $1100.

You or your realtor can be there with the appraiser. Might be better for the realtor to be there. 

Have you considered looking into traveling nurses for the cottage? I wonder if your wife could contact the person who hires them at her hospital. The advantage is that they already have background checks, etc. 

I saw that on the MLS, super cute house. I own a house/cottage as rentals and my lenders treated the property as a single-family. Just make sure your lender is aware of the situation and you shouldn't have any problems. The C5 zoning doesn't matter to the lender, but could be good for you down the road if you keep this as a rental, and decide to do something else with it. Don't use an online mortgage lender, find someone local. I really like FirstBank.

@BryanCork 

"we aren’t even in the same conversation when it comes to the music scene."

Seriously??? There is nothing that comes close to the Golden Bee sing along anywhere in Denver. ;-)

I would do the things above,  and also contact him telling your sister/brother-in-law/uncle is a judge (don't mention they judge cat shows) and you were advised this is a felony wire fraud, or just fraud, whichever seems more plausible, punishable by a minimum of 2 years in prison. Tell him you want the work performed by X date or your money back, and that it won't cost you a penny to prosecute because you have multiple lawyers in your family. Tell him the judge has connections at the consumer fraud division in your state, etc. or with the DA, let him know he picked the wrong mark and that this will make his life hell until you get either work performed to your satisfaction or money returned. 

I just had this happen with a person building a shed. I never, ever give money to contractors upfront but had a moment of overload/weakness/temporary insanity and wrote a check (luckily less than the one you wrote). Later, when there was no progress on the shed, I found out he didn't tell me his correct last name, and there were eight others after him. I did the above, and I now have a decent shed. Part of what I told him was true, and part was BS (my brother is actually a real judge, but I never spoke to him), I added enough detail to make it seem like it was real. You aren't dealing with a rocket scientist, and he will not want law enforcement involved or legal troubles. He also knows the average person who he defrauds doesn't want to pay a lawyer to chase 7K, but it won't cost you anything. It is worth a shot, my scammer was on the job site the day I sent the text. That said, your guy probably spent the $7,000, and couldn't afford materials without scamming someone else, but you have nothing to lose.