All Forum Posts by: Kenny Smith

Hey all,

I am considering on selling my condo next year.  At the time I sell it, I will have lived there 1 out of the last 5 years and renting out since moving out.

One of my CPAs said I can still be exempt up to $125k and not the $250k.  I thought it was all or nothing deal.  Meaning, if you don’t live there 2 out of the last 5 years, you’re exempt nothing.  If you hit that mark, you get the full exemption.

Anyone have experience with this, or can shed some light?  

Thank you much!

the "secret menu" in home lending...

If you didn't catch mortgage Mondays a couple weeks ago with David Greene, here's a recap!  Not all lenders are created equal. As a borrower it is really important you know what type of questions you need to ask your lender to ensure you are getting the product, rate, and service that best fits your situation.

Let's dive into some...

1. The Rate Schedule - this is a schedule of all the rates and the points that are attached to get that specific rate. So the question shouldn't be, "what do you have rates at?" The lender could be deceptive and give you the lowest rate, but that also comes with paying for discount points, or higher closing costs. The question should be "what is my break even point?" Meaning, maybe you take a higher right where the lender actually gives you credits back at closing. If you know you're going to refinance down the road, or you're not going to hold onto the property for long, you need to figure this out.

2. Which Rate is "On Sale" - when thinking about permanently buying down your rate, people don't realize that the cost to do so is not proportional. For example, buying down a rate from 7% to 6.5% may cost $5k, but buying it down from 6.5% to 6% may cost $15k. So you need to figure out what the sweet spot is, and that goes the same if you take a higher rate. Those credits you can receive back can vary as well. Figuring out the rate stacks, and "what's on sale" is something every good loan officer should be able to help you with.

3. Closing Dates - when you finally close on your property, you typically have the next month free of any type of mortgage payment. So if you close in July, you likely will not pay your first mortgage payment until September. However, verify with your lender if you close in say early July, you are almost getting two full months without paying a mortgage. Whether you're a flipper, investor, or everyday home buyer, if you are tight on funds, this could really help out.

4. Escrow Waivers - when you close on a house, your lender will typically set you up to pay for your entire PITI each month. Your principal, interest, taxes, and insurance. What a lot of people don't know is you can actually pay your taxes and insurances separately on your own. It can be a savings because lenders typically collect more in reserves than they need to pay your taxes and insurance for you. Maybe a 2-4 month buffer at closing, which can be a significant amount at closing. So the question here is "does this loan product allow for escrow waivers?"

These "secret menu" items could be a game changer for your next loan...

as we head into fall, don't forget about these...

When you buy a home, nobody gives you a "how to" manual. For the most part, most homeowners are uneducated of what needs to be done to maintain your home throughout the year.

It may sound monotonous, but routine maintenance on the home is CRITICAL. Letting certain things go can cost you thousands don't the road. Don't let this be you..

Here is just a sample list of important items to think about as we head into the fall/winter months.

1. Furnace Filter Change - if you have an HVAC system, it is critical that your furnace filter is changed out at least every 3 months. Without doing so, dirt and dust build up quickly and can cause your HVAC system to work harder and puts more wear and tear on it than needed.

2. Irrigation System Blow Out - if you have an irrigation system, ensuring all the water is blown out of your lines is very important. If there is any standing water in the lines, when the temperature drops below freezing, that water will freeze and expand, likely bursting the line while doing so.

3. Water Softener Change - if you live in an area where traces of lead affect your main water line, you could have a water softener. If you do, just like anything else, this needs to be changed out periodically. That will be determined by how bad your water is affected by lead. But, I would check every 3-6 months to see the condition of it and if it needs to be changed.

4. Winterize A/C - whether you have central a/c or a swamp cooler, it is almost time to start thinking about winterizing this. Again, forgetting to do so in something like a swamp cooler could freeze lines or cause mold/mildew buildup. If you have a central a/c unit, simply powering off the condenser may be all that is needed.

Do sellers have to disclose this...?

Whether you are a buyer or seller, the seller is required by law to submit what is called a seller property disclosure to the buyer, while under escrow. This disclosure is essentially a list of ALL of the features of the house, with the seller required to claim if they have any knowledge of any work, repairs, issues that are they are aware of.

So, this begs the question, what if there are issues going on with the house, but the seller has no knowledge of this?

This may be more common than most people think. A buyer moves into a home, the inspection came back clean OR the inspector missed a major issue with the house, the issue arises shortly after closing, and they immediately blame the seller.

The buyer reaches out to the seller and asked if they had any previous knowledge of the issue. If the seller had no prior knowledge of the issue, they are not held liable. Also, it is very important to distinguish the difference between assuming issues and proven issues. You can assume that if your home is built before 1980 and you have popcorn ceiling that there is asbestos in it. However, if it has never been tested, you don't know for sure and do not have to claim that as a seller.

If the seller DID have knowledge of it, whether that is through their own experience with the issue or a contractor informing them, they can be held liable and the buyer even has means to sue them for damages.

If you are a seller, and whether it is a bug infestation, gas leak, foundation issue, etc, do the right thing and claim all of these on your seller property disclosure. Nobody wants to deal with a lawsuit after closing :)

@Henry Lazerow

Not trying to dog IL!  I am sure there are still opportunities out there.  I was just trying to make a point comparing CO to other higher property tax states, and how big of a difference it can really make.

@Chris Seveney

appreciate the feedback!  If only it was that easy..we will cash flow like crazy on this property when we move out..which we are shortly to buy another house hack.  Plus, we have a 3.3% rate on it..I can't get rid of that.

Hey BP community!

I have a bit of a delicate situation with my neighbor directly across from me. I am currently house hacking a non-conforming duplex here in Denver and we bought this SFH back in late 2021. Since then, almost all of our neighbors have been very friendly and no issues at all. However, we noticed when we moved in, that the property directly across from us was very distressed, and we were wondering if they would being a potential problem neighbor down the line.

Our assumptions proved to be true.  They have caused nothing but problems since we have moved in.  It is a household of 3.  1 teenager, 1 early 20's, and a grandmother who either doesn't care what their grandsons do or simply cannot control them.

Based off public records and looks like one of the kids has been arrested multiple times due to things like theft, but it seems nothing too egregious yet to put him in jail.  Since we've lived here, they constantly have other kids over blaring rap music, smoking and drinking in their front yard and overall causing perpetual noise disturbance.

I look at all of this through the lens of an entrepreneur who has to do what is right for his business.  Therefore, I've let those small things go and haven't notified the police or complained to them.  However, summer of 2022, they decided it was okay to throw beer and liquor bottles in the street/my driveway and smash glass everywhere.  I had some words with them and it seems to have worked because there were no more major issues like that since last summer, until this past weekend.

They decided to buy 2 goats (which is illegal to be in possession of past 7 days in our municipality).  It wasn't an issue of owning them, but they decided not to lock them up and they got out, walking through all of the neighbors yards defecating and eating peoples shrubs/flowers.  My wife sent a stern but polite message to them on FB that they need to come home asap and tend to their goats.

They decided this was not "appropriate", and when they got home decided to swear and yell at us for harassment.  They called the police on us the next morning, which is comical.  I spoke to the police and explained the situation, and they were clearly on our side.

Since then, they now are yelling profanities at us any chance they get and I've bit my lip.  From a business perspective, I want/need to keep the peace and ensure it does not affect the perception of my property as a viable rental.  Nor do I want to engage in any type of altercation with people who are clearly mentally ill.  At this point, we are planning to ignore them, and will only notify law enforcement if there is something egregious taking place over there as was this past weekend.  I feel as though calling the police on everything they do will only escalate the situation.

Sorry for the long explanation, but curious on what YOU would do in this situation?  And what is your worst neighbor horror story?

Thanks in advance BP! 

-Kenny

Owning a home has a lot of great benefits! Building long term wealth, growing equity, stable monthly payments just to name a few. But, some people do forget about some of the tax write offs that go along with owning a home.

1. Property taxes - although property taxes are the one variable when it comes to increases every 2 years, the IRS DOES allow these to be written off for up to $10k (or $5k if married and filing separately).

2. Mortgage interest - so this is the big one. Property owners can write off all of the interest they paid each year in interest (The rule is that you can deduct a home mortgage’s interest on the first $750,000 of debt, or $375,000 if you’re married and filing separately.)

3. Residential energy credits - you probably hear about it all of the time the next solar guy stops at your door, but you CAN write a percentage of these off. Things like solar panels, solar water heaters, geothermal heat pumps, and small wind turbines can all qualify for a write off. However, it is only a percentage of the total cost, and that percentage is going down year by year, so if you are thinking about doing it, best not to wait.

In summary, make sure you are taking full advantage of all of the write offs the IRS allows you to take!  After all, you've earned it :)

The area I am speaking to, is Colorado and 9th or "9+CO" as it's called. This development stretches from 8th avenue up to 11th avenue on the east side of Colorado Blvd.

This area started off by tearing down several buildings back in 2015 to make way for a new AMC movie theater, several bars and restaurants, a coffee shop, brand new apartments, and much more!

With it being only 10 minutes from downtown and cherry creek, it is an ideal neighborhood for many young professionals.

I had a chance to check out one of its most popular restaurants this past weekend, Culinary Dropout. With a very expansive layout, eclectic gastropub menu, live Jazz, and high end cocktails, what is not to like.

More developments like this will help revitalize certain areas, and also help disperse the high cost living areas like Rino, Wash Park, and the Highlands.

It's great to see our city continue to grow, and as it grows, there is always opportunities with Real Estate. 

Looking for the next hot part of town?  Shoot me a DM!

Property taxes is something some may forget about when shopping for homes in other states. Believe me, I get it. Your home here in CO has appreciated tremendously over the last couple of years, and why wouldn't you consider cashing in and moving elsewhere?

However, just because you're buying in another state that may have cheaper home prices, doesn't necessarily your mortgage would be substantially cheaper.

Colorado has the 3rd lowest property taxes out of all states throughout the country. Now this can and will vary by county within the state, but the average state tax rate is .51%. That means (ballpark), you'll pay .51% of your assessed value of your home, in property taxes.

If your home has been re-assessed this year at $500,000, on average, you'll pay around $2,550 per year.

On the contrary, let's say you want to move to a state like Illinois, where you can get a lot more bang for your buck in certain parts of the state. However, their state property taxes are some of the highest in the country at an average of 2.23%

That $500,000 home in Illinois is now costing you an average of $11,150 per year in property taxes. That is 437% more expensive taxes than Colorado!

Certainly each state is going to be different than what advantages and disadvantages, and you need to figure out what makes most sense for you...