All Forum Posts by: Michael Wentzel

@Levi Pollard I was familiar with Colorado Springs because this is where I've lived recently when I've been stateside. I bought a 2-bed, 1-bath foreclosure last year in the Springs. It has worked relatively well. But when I was looking for another property this year in Springs, the prices had started going up again and most properties less than $60,000 are snapped up pretty quickly. It seems like there is a lot of competition here.

Hence I started looking in Pueblo. I interview three Realtors and two property managers down there. I found one I liked. She showed me about 7 multi-family properties and taught me a bit about the city. I am really impressed with Pueblo and happy to be investing there. I hope to build a portfolio of multi-family and single families down there. So I'll be happy to share with you as I learn.

@Ali Boone I took a look at your website. It looks like you have a great model going. You do invest any place that isn't California, including Nicaragua! That's awesome. I've lived and worked in Africa for many years and traveled extensively. So international markets intrigue me, but I need to build a strong portfolio at "home" first.

I'm also in a different niche than you. Right now I'm experimenting in units that rent for around $500 per month. My Realtor encouraged me to look in "better" neighborhoods. But the returns are half of what I'm projecting and I'm limited with a small lump of cash to start with. Eventually I'd like to have a balanced portfolio, but I'm starting in areas where purchase prices are a bit cheaper.

@Ali Boone We are new in this but we're targeting 2% on rents over purchase price and cash flow of $200 to $300 per door. I think those numbers might be difficult to find in Denver and Colorado Springs. That has actually led us to look down in Pueblo, CO. The purchase prces are much lower down there and the rents are only slightly lower. We're under contract on our first multi-family down there right now. The numbers look good. We'll just see how it performs over the next six months.

I would guess good numbers are harder to find in California than in Colorado. What markets do you invest in? What numbers do you look for in a purchase?

@Christian M. We are actually living in the Springs and have one rental here. We went down to Pueblo for better numbers. A four-plex here is $200,000 USD. The four-plex we are under contract on down there is $85,000 USD. So the rents are slightly lower, but are still high enough to project really good numbers. Should cash flow about between $600 and $900 per month on the whole property after accounting for mortgage, taxes, insurance, property manager, vacancy and insurance. 14% cap rate and 35% return on cash if you're into those number. Rents are more than 2% of purchase price. And there's less competition down there.

So people don't like Pueblo, but we've really enjoyed going down and getting to know the community a bit. This is a relatively small investment, so we'll be to watch it for a bit and see how it performs.

@Xing Zhu I think you are correct. Here in Colorado I believe it is the county that is collecting the property taxes. I'm in two counties with my properties and both seem to be extremely cheap on property taxes. How do investors make it work in areas with high property taxes? How much would you pay monthly or yearly in property tax on a $100,000 property in the community where you invest?

We are purchasing buy-and-hold properties for cash flow in Colorado Springs and Pueblo at the moment. Both seem to have extremely low property taxes. We are looking at paying a bit more than $30 per month on one property worth around $65,000 (COS) and another property worth around $90,000 (Pueblo).

We are originally from Ohio and looked at properties there this past summer. The purchase prices and rents were similar, but the property taxes were about 5 times higher. I'm told this is because Ohio funds their schools through property taxes, where as Colorado does not.

When I'm looking at a property that cash flows $200 to $300 per month, an extra $100 in property tax per month just kills the model. Hence we've decided to continue purchasing properties in Colorado.

So my question is which states have the lowest property taxes? And is this a major factor for investors who are choosing out-of-state markets to invest in? It seems like it should be a huge factor to me, but I haven't found much information on the subject.

Mike

I am a husband of one lovely lady and a father of three amazing children. We had lived and worked overseas extensively and only relocated back to the US in 2013. We are currently living Colorado Springs, CO and investing in buy-and-hold properties in Pueblo, CO.

We turned our primary residence in Colorado Springs into a rental when we moved overseas seven years ago. We then purchased a town-home in Colorado Springs in 2012 to add to our portfolio. In 2013, we sold the first property to finance our first multi-family purchase. We are currently under contract on a 4-plex in Pueblo, CO and hope to close by the end of the month.

We would like to build a portfolio of multi-family and single-family rental properties which will eventually replace our income through cash flow. Beyond that we hope to continue to grow the portfolio to fund social enterprises and charities we are involved with overseas.

I am currently seeking to learn about real estate investing in general and buy-and-hold strategies in particular.

I really appreciate all of the feedback. Thank you all.

@Jerry W. I am happy enough with the neighborhood. It is on the edge of one of the less desirable areas of the city, but the block has many single-family houses which are well-kept and "feels" safe. The units are 1-bedroom, 1-bath. I had my inspection this week. There is some slight hail damage on the roof that we're asking the seller to take care of. The only vacant unitwas recently renovated and the the other three units are in good shape. It is an older house, with updated plumbing, electric and windows. I expect to put less that $100 into the vacant unit before it is ready to rent. It was listed at $95,000 and we are under-contract at $85,000. We might be $10,000 to $15,000 under true market value due to the motivated seller.

@Troy Fisher I was reluctant to even consider properties where the owner is covering utilities, but it is very common in this community where small units are renting for $500 per month. $320 per month is for electric, gas, water and trash on all four units. That is also the high-end. The upside is that the property manager said she would have a line out the door for people with unpaid bills at the utility company to get into these units. So we might have high turnover, but should have no shortage of tenants. The current tenants in the three units have all been there for over a year, so there is hope of long-term tenants.