All Forum Posts by: Ryan Monty

@Nicholas Bailey - fair enough, I appreciate the honesty.  A long time ago, I was once evicted myself due to roommates who decided they didn't want to pay rent.  They hauled us all into court and the judge gave us 2 weeks I think.  Then you hear horror stories of tenants squatting 6 or 9 months.  I don't understand why the huge spread of time to evict, but that does make the investment extremely risky

I'm trying to get an offer in on a house hack opportunity and the seller states cash offers only for a 2-flat.  The first hard money lender I contacted said they couldn't fund with tenants in place.  While I realized maybe a different lender would be willing to fund it anyway, the lender pointed out that it could potentially be catastrophic for me since apparently there are ways of delaying an eviction for a long time, not to mention the moratorium right now.  FWIW, I don't really plan to rehab much right away - I can do it slowly since I'll live there.  

The 2-flat is priced at a significant discount, and I think it will go fast.  I want to figure out a way to fund it one way or another.  Is this even a good idea?  Anyone have an experience with non-paying tenants during a property transfer?  I'm wondering if, assuming the seller might consider an offer over ask price if it was a conventional loan, will I even be able to get a conventional loan given the circumstances?  As far as condition, best we can tell it's actually in fairly good shape, no major issues

@Henry Lazerow - awesome I like that plan and especially the contingency!  Let's them know not to screw with you or else waste their own time as well.  

Have you ever registered a unit with the City for Airbnb?  Do you know if they check the zoning at all to make sure it's not an "illegal" unit?

@Henry Lazerow- thank you!  So, basically it sounds like the most critical piece of info to have when purchasing would be that the zoning cert matches the units you have.  Does the non-conforming aspect of one of the units use some sort of specific language on the zoning cert, so I can at least know it's non-conforming vs. just being regularly conforming?  

Also, to your last point about the shadiness of what people will tell you - I have heard horror stories about that.  Is the only way to really check this to wait until the closing process?  I think I heard that only the current owner or his attorney can request the zoning cert which of course is needed for the actual closing.  I've heard of last second surprises where they try to just get the buyer to go along with it since it's so far already in the process.  That sounds like a nightmare I'd like to avoid!

This is a few related questions in one:

First, I want to check if my understanding on the differences here is correct?

Illegal unit = you can't rent this unit.  I mean, you *can* rent it, but if the City is ever alerted to it you could get in trouble and have to deconvert the unit

Non-conforming unit = you CAN rent this unit.  It was there before certain ordinances were in place, so it's "legal" in a sense.  However, your building's zoning certificate will not include this unit.  You're good to go *as long as* you never try to make a change to the existing property on a certain scale that would alter its use significantly.  This change would invalidate your grandfathered status and you would revert to the certified level of zoning, thus losing your "extra" unit.  Good so far?

Question 1:  WHAT TYPES of changes to the structure kills your unit's non-conforming status?  Can I move a few internal walls around?  Replace the front steps?  Put up a new back porch?  Can I do anything like this and still retain the non-conforming status?  

Question 2:  how does all this factor into an Airbnb rental?  I've heard rumors that you can do Airbnb with even an illegal unit no problem.  I know there's some registration process with the City to be listed on Airbnb.  Is part of that a zoning check to see if, let's say, that garden unit you have listed is illegal or not?  What about non-conforming?

Thanks!

I visited my brother last week who lives in Denver proper and was a little shocked when I toured his garden apartment for the first time. He lives in a converted SFH where there is a side door that leads into a stairway landing. Going up the stairs they simply built up a wall so you can no longer access the rest of the structure. Going down into the basement there are no other doors, only a few very small windows that would be impossible to crawl out of in the event of a fire. The ceilings are also very short, like around 7 feet high. On top of all this, the management company that manages this building has been jacking him around a bit in the short time he's lived there.

My question is:  can this possibly be legal in Denver?  In the municipality I live in, this would be immediately shut down as a safety hazard.  

Thanks everyone!  @Joe Aiola & @Ryan Howell - what type of reserves do you target before moving to the next deal?  Is it a percentage of your total mortgage note payments or something like that?  

One piece of advice I also heard was to go in when you first buy a property and be liberal about replacing fixtures and other items that you suspect may not last too many years as it's way way easier to do certain jobs when a place is vacant versus while there are tenants.  This helps prevent and insure somewhat against future loss of use

As I get educated on RE investing, I've been drawn to the BRRRR approach as it most closely suits my long-term goals. I keep hearing from enthusiastic people talking about how it's the way to go, how one can lock up SO MANY properties super quickly using this method. This all sounds great of course, but surely there must be some point at which you have to say your risk is too high now to continue locking up properties (and debt) at a break-neck pace. What is that point?

I understand that if applied correctly, you'll be pulling all your capital back out of the deals so you can repeat again and again.  But, with each deal comes a new mortgage, new units that need to be filled, and always the possibility of multiple cap ex expenditures hitting you all at once.  Obviously your ability to absorb these costs is directly tied to how much capital you have ready to use at any given time.  I know that a smart investor has always attempted to project and pro-rate all such costs, but there's always the possibility that too many unfavorable scenarios could play out at once any you'll run out of money and get into trouble?

Are there any BRRRR pros that have had to deal with reaching their property limit and how did you overcome that?

@Prashanth Mahakali - thank you!  When you said "go through a zoning process and legally convert the basement into a legal unit"  and spend $7-$10k, etc., you mentioned the community opposition, but what chance does this generally have of getting done successfully?  I guess I assumed just being willing to spend $10k wasn't the only barrier to adding a brand new legal garden unit, since you are up against zoning rules that exist for a reason.   @Alex Martinez mentioned the ADU ordinance. Let's assume we are outside of those pilot zones, since they are relatively small areas.

Also, when you said you could lose the non-conforming status due to "expansion or change of use", does doing something like, for example, building a new enclosed back porch count as an expansion?  In other words, are you more or less confined to making only cosmetic changes in your property (aka, things that would require only the Easy Permit)?