All Forum Posts by: Matthew Haraminac

I work in the Denver market as a broker and inspector. From a brokerage standpoint, I'm seeing a tight market with low inventory where buyers are doing just about anything to get a "deal". From an inspection standpoint, I'm noticing that a lot of the recent inventory is not in as good of shape as what I saw a couple of years back. I think a lot of people are seeing this market as a good time to dump their garbage, and it is, since many buyers are foregoing inspections. 

If I were in your shoes I'd be looking for a condo or townhouse to live in and I'd make your current home a rental. The single-family inventory I'm seeing at the $400k price point typically needs a lot of work and many of the defects are safety issues that could get a landlord in hot water if they weren't addressed in a timely manner. If you move out of your current home completely (find a month-to-month rental) before purchasing your new place it may be favorable to you from a financing perspective as you'll likely be able to use the income on the rental towards qualifying. Find a place with a rental-friendly HOA so you can move on and keep it as a rental when your budget permits. If you find a big enough place you can still maintain your current lifestyle of having roommates to offset your mortgage. Additionally, the financing for a residence will be more favorable than if you are buying as an investor. Keep as much of your cash as you can and invest it elsewhere or keep it on the sidelines until a good opportunity presents itself.

If you are hellbent on an SFH I'd look further north (Erie/Ft. Collins/Loveland). From what I've observed, you'll have more choices for homes that don't need a large investment in repairs upon purchasing.

Hi Mark, I'm interested. Please keep me posted and let me know if I can help out in any way. 

@Huw Evans We wanted to keep our first property as a rental, but, at the time didn't want to jump through the hoops necessary to make it happen (we would have had to move into a rental to get it rented in order to qualify for 2 mortgages). It's now worth 5x what we paid for it 13 years ago! I can't complain too much however, we got into a neighborhood that we wouldn't have been able to afford right away had we gone that route and our current house is worth ~$450k more than we paid for it.

While the inspection wasn't exactly clear as to why it's in poor condition from what I can see the condition of the wood looks poor, the deck lacks a graspable handrail and has improper baluster spacing. That, combined with the fact that you have a warning from an inspector that the deck is in poor condition and a quote from a contractor for several thousand dollars seems to make the decision crystal clear. Personally, I'd put in a patio. IMO as an inspector, decks are rarely built right, are a maintenance headache that most people don't understand, and oftentimes, a liability. 

I'm not trying to throw your inspector under the bus, but if that's their entire deck inspection it might benefit you to find an inspector who is a bit more detail-oriented. When I inspect a house with a deck there are usually at least 2-3 pages of captioned photos. Having a good inspector can help you define your scope of work for contractors. How do you know the contractor was only doing what needed to be done if you don't have a defined scope of work? Also, with a pre-defined scope of work you can get multiple "apples-to-apples" bids. Without it, what's to say the most expensive contractor wasn't the only one not ripping you off or vise versa? 

If you are leaning towards keeping it I'd get a second, more detailed, opinion. A standalone deck inspection isn't that expensive.

I wouldn't want any part of that situation. There's just way too many unknowns for me. 

First and foremost, there are several inspection issues that could end up costing you a lot of money. If the guy's as big of a slob as he sounds like one of my concerns would be mold, another concern would be meth, but there's any number of other expensive things you could encounter. 

Aside from that, the guy sounds like he's pretty emotionally attached to the place. We don't know his history and his reasons for his actions but we do know he's experienced a loss and has obvious emotional ties to this place. His dad was probably his whole life. Even if he leaves, you can't guarantee that he won't be a nuisance in the future. 

The sister seems to have her head on straight from what you've said. I'd ask myself why she isn't dealing with the situation herself. If she can't get him out without property damage you might not be able to either. Or maybe she knows things she isn't disclosing. 

Personally, attending an emotional dumpster fire of this caliber would require much more certainty for me to make it worth my while. This seems like inviting trouble into your life, IMO. 

@Luke Scott The specific questions you ask have a lot to do with what you are looking for in an agent. It can be helpful to identify your goals along with your strengths and weaknesses before you interview agents because that can guide you towards finding someone whose skill set complements yours well.

When I’m hiring someone I generally like to meet up somewhere neutral like a coffee shop and have a casual conversation with them. I’d ask a few questions about their favorite investment strategies, the RE market, any special credentials they have, and maybe talk about some specific neighborhoods. Beyond that, I typically just try to get people to talk about themselves. Most people find it natural to talk about themselves and you can learn a lot about who they are and what they prioritize by allowing them to do so. I like keeping the conversation on an upbeat and friendly note, I feel that can give you a window into their personality which will help you determine if they are someone you click with.

@Julie J. It depends. If there is an abundance of developable land surrounding the development then it's unlikely that the equity will gain fast. In a scenario where once the neighborhood is built there won't be room for more houses in the nearby vicinity then equity should rise at a good pace. In other words, if there is still new construction being offered in the vicinity in 5 years than you'll be competing against a new home with up to date styling and financing perks that your house can't offer and you probably wouldn't have gained equity as fast as you would have if you had bought into an area with established housing stock.

Additionally, quality matters. I've seen 10-year-old houses that were built with low-quality materials and minimal quality assurance and they haven't aged well. I've seen 30-year-old houses built well with high-quality materials and they stood the test of time.

My wife and I purchased our first house as a live-in fix and flip. It’s been nearly a decade since we sold the property. There are several things that I wish I had known then that I know now.

1) If there are other people involved, make sure that you both (all) understand what each other’s expectations look like. This is true regardless of if it is a business relationship or a romantic one. I have both first-hand and second-hand knowledge of the stresses that inviting additional responsibility from real estate investing brings to a marriage. Don’t discount the sacrifices you may need to make and make sure your relationship is strong before agreeing to take on projects that will vie for your time. Thankfully, in my situation, we were able to persevere and our relationship is stronger because of it. This isn’t always the case.

2) Network with and interview inspectors before choosing a real estate broker. Once you find an inspector you trust ask them for some referrals for a real estate broker. I’m both a broker and an inspector. I can tell you that the inspectors know what agents take their clients seriously and which ones are interfering at the inspection with their comments from the peanut gallery.

3) Interview several agents. Don’t work with someone just because they are pretty, handsome, popular, a friend, a friend of a friend, your cousin, projecting an image of success, blowing up your neighborhood with ads, etc.

When interviewing agents keep in mind that your agent is there to advise you on arguably one of the most important financial decisions you will ever make, their competency matters. Your mutual respect for each other matters. Your personalities should be compatible.

Find an agent who is financially stable. You don’t want their ability to pay their bills hinging only on your transaction. They should be able to advise you without the stress of their personal finances being in the back of their mind. With that being said, don’t confuse the image of wealth with actual wealth. The gal driving the 15-year-old paid off Nissan may have more wealth than the guy in the new Audi with wearing expensive clothes.

Find an agent who is knowledgeable in houses, many agents aren’t. Your agent should be able to help you weed out good and bad properties before you spend several hundred dollars on an inspection.

4) Really take a good look at the neighborhood before you commit to owning part of it. There are a ton of resources available to gain extensive knowledge of an area. My first property was in NW Denver at a time when it was “up and coming”. I’m a nice guy, but the neighbors didn’t care; they didn’t want me there. It was an eye-opening, and often uncomfortable, experience living somewhere where I wasn’t wanted. In the eyes of my neighbors, I was destroying the neighborhood. In my eyes, I was making the neighborhood better. Understand that not everyone views gentrification the same way and people who have been living in a neighborhood for generations may not be welcoming of you and your attempts to make the area something it currently isn’t.

5) Have fun. Money isn’t everything and you only live once. Make sure that you are taking time for yourself and those who are important to you. I stressed myself out way too much when we were flipping our house. Looking back I wish I'd relaxed a bit more. 

Investment Info:

Single-family residence fix & flip investment.

Purchase price: $120,000
Cash invested: $40,000
Sale price: $215,000

My first investment was a live in fix and flip. I completely remodeled the interior and partially remodeled the exterior of the property doing the majority of the work myself. I managed contractors for the installation of new HVAC and electrical systems and laborers as needed. The remodeled property was sold yielding a $55,000 profit.

What made you interested in investing in this type of deal?

The appeal of tax-free gains.

How did you find this deal and how did you negotiate it?

We found this as a short sale in the MLS. We went under contract but the short sale did not go through. We watched the MLS for the property and when it returned to the market we pounced on it.

How did you finance this deal?

We used traditional financing and our own cash for the repairs.