All Forum Posts by: Jamie C.

 Thanks Matt. Partnering with another charity is an interesting idea. I'll suggest this if they haven't broached the idea yet. MIght be a creative solution for all involved.

Thanks Kevin. I believe they've attempted a cash-out refi recently but couldn't find a willing bank - but I'll mention the non-recourse loan, maybe they've haven't explored all refi avenues. A refi is probably the easiest solution. 

 All good ideas. They've got an experienced realtor who's on the board, but not sure it's been viable/easy to reach or market to business/investors who are looking for creative locations for their business. They got no offers from these types of businesses. Rent by the room or elder care was what came to me, but no interest so far. 

(posting this for a friend who’s not on BP)
Situation: My mom and dad have big hearts and made a nice gesture but unsound “personal finances” decision years ago. My mom runs a charity and to ensure the loan would be approved for a new property for the charity, they co-signed a mortgage. They also used my dad’s life insurance as collateral. My dad passed, life insurance payout was applied to the mortgage, my mom paid off the remaining mortgage balance. All of my parents’ financial contributions were under the premise that it was a loan to the charity. My mom’s trying to retire and extract the money owed her by the charity (which the charity’s board desperately wants to make her whole). It’s all very amicable between her and the charity. The plan is to sell the property, and the equity proceeds will pay her back in full and have enough left over for a down payment on a new property for the charity.

Issue: They put the property up for sale, on the market for 5 months, received fours offers…all from other charitable organizations… but the city rejected the offers. The city is hyper vigilant about recent increases in the homeless population. The offers weren’t from homeless shelter organizations per se, but they were affiliated with low-income type of residents, rehab, assisted care, etc. and the city doesn’t think those organizations fit in the neighborhood. They have history with my mom’s charity and know they don’t cause problems but they’re worried about similar new charities. My mom’s lawyer (though he’s not super versed in real estate law) evaluated and said, not much chance of forcing the city to allow acceptance of one of the offers.

Zoned as:
Address type: Residential
Address subtype: Group quarters
Zoning description: Residential neighborhood
Property has 10 bedrooms, 13 baths, 1 big-ish kitchen

No offers came in from an individual family looking to reside, nor from non-charitable businesses. No immediate need to make my mom’s finances whole, but I am the executor of her estate either now or when she passes, I don’t know how to resolve this.

Me: Not sure how to advise my friend, could really use the help of the forum. Leaving the names of his mom, city, and charity out, just in case anyone from the city reads this and also to keep his mom’s personal business anonymous.

 Thanks for the reply Nate! My PM discusssed their 5% recommendation when stepping through their rental analysis report with me; it provided comps in the area. I looked (online) at the properties in the report and others in the area and a 20% rent increase seems to put me too high relative to what's out there in that price range (# of bedrooms, location, parking, condition of property, etc.). Not sure if there is more they should be providing?

As a novice investor, I may be off on the following but my assumption is - low-end tenants are more elastic (i.e., will renew less often) to rent increases since they have less discretionary income. Even though they're aware prices are going up everywhere, they're usually already at the top of what they can afford. While the market may dictate X% increase, if it's too high the tenant will opt to not renew the lease and instead move to a different place at their existing rent rate, foregoing things like location, amenities or even bedrooms -- because they simply can't afford the rent increase. Though that's somewhat offset because there's also a cost to them to obtain a new place.

And there's the not so fun counterpoint perhaps: low-end tenants might be more likely to accept a rent increase they can't afford, intending to default on rent at some point, because they also can't afford to move.

But even if low-end tenants are more sensitive to rent increases, there's a market for properties at every price point so it's a matter of me weighing the costs of tenant turnover vs. what I may be able to get rent-wise with a new tenant to cover my rising inflation costs, I'm assuming.

Thoughts?

These are current tenants so I don't want to price them out, yet, like everyone this last year - my costs are going up - so trying to find that balance. Thanks for your feedback Eliza that helps!

 That's a great idea - thanks Drew!

Going through my first lease renewal process on two low(ish)-end properties in Lakewood and west Denver, a condo and a townhome. I have the obvious goal: keep what have been fairly good tenants, to avoid turnover and turnover costs...yet cover my costs related to inflation. 

What rent increases, as a percentage, have you chosen for your rental properties lately in the Denver metro area? My property management company is suggesting 5% based on their rental analysis of the areas. I see a PM as having a similar goal as me in the lease renewal phase...but 5% feels a little low. Thoughts?

Thanks, Jamie

Thanks for the replies all, very helpful! I've checked four other PMC's and they all have the same <$500 auto-approve policy for repairs. Kind of frustrating. My pmc won't negotiate. So it looks like stick with my current pmc or self-manage.

I'm new to REI and could use some advice. I live in Colorado and recently purchased a condo(Denver) and townhome(Lakewood) Using a property management company is the right choice for me at the moment. The properties will likely be break even cash flow the first couple years if my expense analysis is accurate. That's accounting for a downward adjustment I already made to account for PM fees. What I didn't account for is how much repairs cost that are managed by the PM. $450 for a handyman to install three sets of window blinds and swap out an interior garage door (replacement door was already onsite). $425 to diagnose an A/C issue that turned out to be a thermostat that went bad/thermostat replaced. Waiting on estimate to repair small crack by the door handle of the hollow core bedroom door, that the tenant says is a safety issue. I lost the debate with the PM that it needs to be repaired and that's when I realized this PM company isn't working for me. I asked for veto/approval power over all future repairs but they're sticking to their policy that any repair under $500 is managed under their discretion, I get a say only when the repair is over $500.

1. Are these repair costs via a PM for a med-high market typical? I would guess I could find a business/handyman to do it for about half those prices.

2. Do all/most property management companies have this under $500 repair policy?

I intend to scale my portfolio and with my 9 to 5 and family, using a property management company makes sense for me. I also want to get my feet wet using a property management company with these current SF properties, so I'll be a bit more prepared for future purchases of SF or more likely, MF. But if my only options are A) continue in the red with a PM or B) self-manage...then I'll have to re-evaluate.

Thanks in advance!