All Forum Posts by: John Prucha

Hello everyone! 

I recently formed an LLC in OH for a newly purchased duplex. I'm a little over halfway through the rehab and excited for my first BRRRR!

Being based in Denver and my question is: is it best practice to use an OH based CPA for the LLC's taxes? If so/not so, why?

Thanks,

John

@Brian Larson Brian! I feel your pain, there were moments when I was besides myself with frustration. It was a good learning experience in RE and resilience.

In truth, I think I would have invested my money out of my local market for a better return if I had known about all the bumps along the way. That said it's a base hit, and I'll take it.

Good luck!

@Robin Hack I used a gentleman named Paul B. He built a wonderful ADU but was unaware of some of the challenges the city threw in our path. He is a man of his word and was grateful for his work however he has since retired!

@Chad New Thanks!

@Bill S. It is in Barnum

@Maria Bakaj Thank you! It's in Barnum. It took quite some time with the city to get a setback variance and some other un anticipated issues that came up with the city. If you are thinking about taking on a project like it I'd be happy to share more details. Purchased Sept 2018.

@Matt M. I do have the appraisal in hand. I'm in the middle of the refi now. 

Investment Info:

Small multi-family (2-4 units) buy & hold investment.

Purchase price: $350,000
Cash invested: $70,000

The goal at purchase was to house hack and convert the detached four car garage into a 2/1 ADU. Due to changing zoning rules with the city of Denver there was significant delay but they eventually approved the project and the project is underway. A construction loan was used to fund the project with relatively low interest rate of about 5.5% during construction.

Cash out refi: appraised at 600K and will be able to pull 62K out after fees.

@James Carlson

It would be great to see that little commercial strip on 1st developed a bit further. It would definitely help the neighborhood appreciate and grow. 

It's going to be a 2/1 carriage house. We are running electric, water and sewer to the unit. The garage did not meet current set back zoning rules and applying for a variance was a bit of a nightmare but I eventually  got permission. I needed surveyor work a bunch of photo documentation and measurements of ADUs around the neighborhood showing that there was precedent for the zoning infringement.  They required a written endorsement of a neighborhood organization (thank you Community Coalition of Barnum) and then a presentation/pitch to a city panel. Fortunately it went well. 

I have all the contacts, neighborhood photos/measurements, and presentation if you known anyone who wants to skip some of the labor in applying for a setback variance. 

@Jason M.

If you are hoping to get closer to the 2% rule consider going out of state. There is a lot more opportunity to hit these numbers in the middle of the country. Your money and returns will go a lot farther. Have you read David Green's book about long distant real estate investing?



https://www.amazon.com/Long-Distance-Real-Estate-Investing-State/dp/0997584750

My emphatic vote for starter homes with upside is West Barnum. 

Many of the properties are zoned E-SU-D1X making it possible to build out an ADU in a detached garage or basement. Since purchasing my 3/2 home in Sept 2018 it's easily appreciated over 50K based on recent sales and house hacking allowed me to live almost mortgage free! After a lot of red tape with the city of Denver I'm finally near completion of an ADU (previous detached 4 car garage) that beats the 1% rule that will rent for about $1,950/month.

Please feel free to reach out if you are thinking about an ADU build in Barnum, I'm more than happy to share what I've learned to help shorten the process.

Cheers!

I just spoke to a Denver Water rep about the details of this project. He was very helpful and seemed like a straight shooter. I think his name is Ben. Message me know if you want his number to pick his brain. 

@Joe Cassandra thanks for the tips, I'll definitely give your approach a try next time and provide some comps and the rehab costs.