All Forum Posts by: Mike Stephens

@Mike Stephens - anyone, anyone?

So an interesting tax situation here with a second home converted to a rental, and I can’t seem to find the same question in the forums (a first!).

I have a condo that was previously a second home.

- February I became aware of a significant special assessment coming ($8k).

- May I received the invoice due by August 30th.

- July I listed the unit for rent. I placed a tenant in August and they moved in Sept.

- August I paid the assessment

Is the special assessment eligible as an expense against the rental income since it was paid AFTER the property was marketed for rent, and the actual repair work on the building started after the tenants moved in? Or is it based on when the expense was reasonably known to be forthcoming?

Is it bad that I am kind of hoping for a recession to help filter out some of the poor performers, and in some cases, bad actors in real estate investing? I've grown really tired the 5 years of the :

• 1) "Investors" who think they are geniuses because they have done well in an extended up cycle. Not at all giving credit to market timing.
• 2) AirBnB/Short term rentals rule the world crowd
• 3) Realtors who think they run the show in some markets, and also think they "too good" to hustle for some clients because they have had some success in an extended sellers market
• 4) Contractors that don't return calls or deliver on time/on budget (I will give some slack here because demand has been crushing and skilled labor has been short, but I'm looking forward to a balanced market)

While I don't personally wish financial misfortune on anyone, I am looking forward to watching housing that belongs to overextended short term operators go back on the market at a discount because the "investors" underwrote it to only perform at optimal short term rates/occupancy. I'm looking forward to subpar "investor friendly" realtors washing out of the field. I'm looking forward to "investors" who have insufficient reserves, over extended credit, and poor PM, realizing they aren't the geniuses they thought they were.

Yes, the prices of my portfolio in Denver and Boise may take a hit, but I think it will be a paper hit, and since I'm in this for the long haul, and I'm in it in a position of financial strength, I'll take the short term turbulence if it means less of all the above.

Hi @Jim S. - I'm taking the same approach. Strong believer that patience, and a reasonably conservative approach will prove to be the right move in the long term in the Denver market.

@Brian Cornick - curious how all of this ended up working out for you?

Hello Colorado BP Members,

I'm nearing the end of the my studies for a Colorado Broker license, and I'm looking for a low cost brokerage to hang my license at to meet the 2 year requirement. I have no interest at this time in actually providing agent services to anyone, but rather I'm just interested in unrestricted access to the MLS, and the ability to schedule my own showings for properties that I am interested in. I will definitely use an agent for the next couple buys, and indefinitely for sales, but I'm looking to get more independent on the buy side. I have no interest in debating the pros and cons of getting a license, I am simply looking for suggestions on a brokerage who would meet my needs at a low costs (i.e. no monthly fees, but no issue with % of commission or flat fee on any acquisitions).

Thanks - Mike

@Robert Herrera - I know you're a big fan of Pueblo, and I honestly don't know much about the area. I'm curious where you think future job growth will come from? My experience has always been that for a community to grow at an above average rate, there needs to be outside jobs coming into that area. I haven't seen "self-contained" communities, i.e. communities where most of the jobs are local to the community, e.g. teachers in local schools, workers in local restaurants, etc. ever "boom".  For Pueblo to really experience price growth, at some point it will need to have jobs that are exporting goods or services outside the area. I'm not saying that isn't, or won't happen, I'm just curious where you believe that will be coming from? Has the city been courting any major employers with any success over the past decade?

Hi All,

I've grabbed coffee recently with a a few newer investors here in Denver that I've connected with via BiggerPockets, and I was surprised to hear how many of them had reached out to very active members of BiggerPockets trying to connect for a coffee and just learn a little more about what people are doing in this market, just to have their messages not responded to, or conversations drug out with no obvious intention to connect. 

I'm curious what the consensus is here on proper etiquette? We tell new people all the time to try to hook-up with more experienced folks, and learn from them, and so it's strange to me to hear that frequent posters would also lack the common business courtesy of a response, even if just to say no thanks. If you're in the forums daily, it can't be a lack of time issue. Thoughts?

Mike

@Linda Weygant and @Jim S.  - Yes, after Amazon's search for an HQ 2 was announced last week, I've seen just about every major city and a lot of medium ones think they're the right. Think we're still a year or more out from seeing how that all works out. My guess is a lot of speculation between now and an official announcement.

I know there have been quite a few posts on this topic, but as a current owner of a few Denver area rentals, I'm just have a really tough time seeing our market go much higher, and in fact firmly believe we're just about at the top, and over the next few years, units like mine (2-4 unit multi-family), is actually heading for a slight retreat.  I am aware of the all of the Denver growth and jobs metrics that get posted in rebuttal to this every time it comes up. I also know all about the record low inventory, coupled with continued demand, and the pressure that has price.  All that said, here are the items that have me standing where I do on this:

1. Price to Income:  Like it or not, we are nearing an affordability ceiling with our local salaries that is going to slow growth to our state. While we had enough growth in 2016 to still be a top growth state, our growth slowed with Colorado adding 7.5% less people year-over-year in the last census cycle
2. Condos Conversions: I believe we're going to see a growing number of rental conversions to condos over the next few years. This will take pressure off the lower end (under $300K), which has driven a lot of the price growth in low end SFH the last few years. Additionally, I think this will soften rents a bit, as more people convert to owners.
3. Slim Margin Purchases: Watching closed deals, people are simply buying deals with way too little margin to be sustainable. They either don't know what they are doing, or they are counting on unrealistic rent bumps. Either way, many will crash and burn, and this will effect us all.  Below is a perfect example in @Mindy Jensen's backyard. Current rents are $1,860 and there isn't a ton of upward movement there. With 25% down, PITI alone is around $1,700, add in opex and capex, and this property doesn't even come close to making sense. Yet if recent activity bears true here, the status of this property will move to pending within the next 10 days. Link to Duplex in Longmont - simply not sustainable.

Other Markets: The other wild card here is other over heated markets, that tend to be more cyclical. I believe there are other markets that are even more over heated and are headed for corrections even sooner than Denver. What does this have to do with us? Well a large amount of the price increases in Denver have been driven by investors. As other markets retreat and become ripe for investments, dollars will flow out of Denver, putting downward pressure on sales and sale price.