All Forum Posts by: Kenneth Westervelt

Update:

I got another postcard from the same guy. I called the number to be removed from the mailing list. The person who sent the postcard answered the phone, and accepted my request with no interest in engagement.

I certainly overthought this particular interaction. Hasn't been the first time, probably won't be the last. I appreciate all the commenters who tried to empathise with my situation. Hopefully these habits serve you well in business.

@Jim K. Of everyone who tried, you get it the most. Good on you.

1. The image on the postcard does not match Google Maps. It was taken roughly one week after, given the progress of construction. Someone else took the time to photograph this neighborhood again.

2. The ratio of mail that wants my money, my possessions, my vote - compared to the mail that wants my time, my attention, my presence - tells me society has only two expectations for me: spend money or get out of the way. I do have a problem with the mass of Wendy's & Kroger & Home Depot & Democrats & Renewal By Andersen & NPR & Verizon & solar panels & Republicans & wholesalers. 

The mail tells me my place in the world and it is depressing. I am a consumer first, a target for faceless charities second, barely a citizen, and nobody's neighbor. It may sound dramatic and needy, but that is how I see it.

Given this, it should make some sort of sense that I must force my way to create relationships and value from the smallest of openings - if I am to create a environment where I feel good about my place in the world. Wendy's does not care; this man might.

So I live in one of the cheaper neighborhoods of Aurora, CO.  One guy has been mailing me "Will take in any condition!" postcards for a few months now. I have no intent to sell, and the prospective buyer (a RE broker) lives about 10 miles west of me.

Here's the thing: the photo he used for the front of my house is 4 years old. It's very obvious that my landscaping was under construction at the time of the picture. On one hand, I am annoyed he isn't bothering to update their records. I want to yell at him that if he's going to offer to buy my property, at least have post-pandemic photos. The waste and mental load of throwing away postcards is small - but it's real.

On the other hand, I wish there were ways to engage this guy in a way that would be to my advantage. I just have a complete failure of imagination of what this might look like. My frustration is clouding my judgement.

How would you deal with this situation?

TL;DR - First investment property is a major rehab.  Good idea or bad idea?

I'm looking at a post-WW2 house that hasn't been occupied for roughly a decade. No running water, no electricity.  I am in talks with the brother of the owner (kept in the family since it was built).  They are considering their options for what to finally do to offload the property.  I'm trying to position myself as their best choice, considering I live next door.

Here's a list of issues, in no particular order:

* Nonconforming floor space. The county still sees this house as a 2bd/1ba and 720 sqft.  Neither of these are true any more. If I was able to get permits and pass inspection on everything, it would be a 4bd/3ba with 2080 sqft. (basement digout + additions)  I got confirmation from a county assessor that I would not be liable for back taxes, so I feel that the only hurdle would be the permitting process.

* Cost of rehab.  My roommate has been a handyman for over 15 years, and led the rehab on a property this year less than 5 miles away.  I trust his ability to quote a ballpark estimate of rehab costs and he thinks $100k is a reasonable estimate. Did I mention the property was unoccupied for a decade?  Leaking roof, vagrants cutting out plumbing/electric, old shingles...if the foundation weren't solid, I'd only consider scraping it.

* I'm cash poor. Just got off paternity leave with my first, and I'll have less than $10k available for any kind of down payment on a loan. On the bright side, I expect my house would appraise for at least $150k more than what I paid for it. I bought at $285k, upgraded from 3/1.5 to 3/2, and a smaller 3/2 on my block sold for $435k in March. One option could be getting hard money for the purchase and fund the rehab with a HELOC. Is that my best option? Not sure. I would consider owner-financing during rehab if my girlfriend were working...but without income on her end, I'm concerned about having the cashflow to make it work. (Net income of $2000/month after bills, taxes, and groceries.)

* Best price to offer? If everything works perfectly, I'd have a rent-ready 4/3 by this time next year. I feel like my main risk is the basement space being too shallow to pass inspection. In which case, I'd have a 3/2 with nonconforming space...and I already have a comp on my block to tell me what that value probably will be. I'm leaning towards offering 75% of ARV of a 3/2, minus 150% of rehab costs. That comes out to between 175-200k. I hope this is a valid estimate.

I am placing a lot of emotional weight on the idea of owning two adjacent properties: one for my family, one as a rental. This feels appealing, because I can keep a lot of things close to the status quo. (e.g. roommates can just move next door)  But starting RE investing with a rehab project of this scope will definitely force me to learn a lot of things very quickly. I'm sure I still have some blind spots, but I don't know what else to research at this point to cover what I've overlooked before I make an offer.  Any help would be appreciated.

He has the land up for sale.  Maybe he doesn't want to be a part of the construction process?

There's are two vacant properties near me that have been fenced off for years. I've done some open records searching and know the owner is a property manager in the area. It's also zoned for mixed use and has a 5-story apartment immediately south of it.

A couple weeks ago, I saw FSBO signs placed on the fences. I talked with the owner to learn more, and I got a sense of his strategy. He hired an architect to develop plans for new apartments. If he gets his way, there will be over 60 apartment units added to the neighborhood.

I know I'm over my head as far as understanding the full process from bare land to first lease.  I have never been part of a project like this before.  Most of my skills are in open records research, office suites, interviewing for community journalism, and unrelated technical skills (811 utility location, electronic repair). Construction management? Not yet.

How can a guy like me add value to the process?

Location: north Aurora, Colorado.

Size of lot: 8.21 acres

Planned for mixed use, 338 dwelling units (264 studios or 1-beds) & 14,000 sqft retail space. Owner appears to be hiring a development & construction firm to demolish old garages & build a new mixed use apartment complex. Unknown if the property will be sold after the fact.

Nearby 1/1 apartments (within 2000 feet) are currently being offered between $810-$920/mo. These buildings at least 30 years old, however.

What more information would you want to learn before considering investing in a property with this situation? I have never researched multifamilies before, and have little frame of reference on what an average new-construction deal would look like.  Local podcasts claim that older complexes in Denver tend to have cap rates of 6 or lower, but I'm guessing that's an apples & oranges comparison.

I know I need to learn more, but I don't know what I need to study up on. Any ideas I can follow up on would be appreciated.

I bought a 3/1.5 last year in Aurora, Colorado. Currently, both spare rooms are rented out at 75% of the mortgage.  My house is not the worst on the block, but I'm working on making improvements to get up to par.  

Internally, the back of the house leaks air like a sieve. Getting a proper climate control environment is priority #1. Had a contractor come out to take a look at the attic today, and got some really bad news: the HVAC piping is taped with asbestos, and they will not begin work unless it's mitigated somehow. Debating whether or not to cover it with duct tape or hire a certified removal tech. Advice is encouraged. 

Externally, I'm working on replacing existing some old cypress bushes with a raised bed garden.  It'll cost a slightly higher water bill, but having better curb appeal will matter in a lot of ways. Probably likely to get higher-quality roommates as well when the current ones feel ready to move on.

Brief intro: bought a house last year, have been renting out 2 spare bedrooms. I'm thinking about setting up a separate business account to deal specifically with all house related expenses (mortgage, taxes, utilities, saving for CapEx). The major downside of this is that it will likely negatively affect my DTI (without rental income = high 40s, with rental income = mid 30s). I decided to wait until I could file income taxes this year before considering which direction to take.

So I'm looking for y'alls input - who has set up a business account for their house hacking, and who hasn't?  How do you think it's affected your available credit and your future investment planning?  Any more information you'd need to know before you would feel comfortable offering advice?

Bought a house last month for 285k in the suburbs of Denver. Looking at various rooms for rent in the area, it looks as if fair market rent this year will lower my cost down to roughly 25% of the mortgage.  In a perfect world, getting down to 0% or even -25% would be grand but I don't see that happening until at least 5 years down the road.  It will take probably at least that long for inflation and demand to shift to that point.

What strategies have you used to accelerate the process towards getting tenants to pay the entire mortgage? Is such a thing even feasible?