All Forum Posts by: Shawn Loftis

We purchased a 8 unit property last year in Aurora, Colorado and are having issues with the homeless. The 8-unit is a 2 story split level with basically a long hallway on each floor with 2 units on each side of the hallway. There are 2 exterior doors on the building one on each end of the hallway. The homeless will basically come by during the day and break off a key in the exterior door which requires the tenants to prop open the door. This allows the homeless to come back at night and sleep in the hallways and/or laundry room. Obviously this is hurting our ability to retain quality tenants. We hired a security company to patrol the buildings which helped but it is cost prohibitive to do on an ongoing basis. We are hoping that we can go to a keyless entry solution and have some kind of alarm or alert when the door gets propped open in the future. We would also like to install some security camera's onsite to see how the doors are getting propped open in the first place so we can crack down on the practice. 

Anyone faced these types of issues in the past? Where there any good solutions? We reached out to a security company but they were looking to quote a $100k solution which isn't something we are going to be able to take on at this time. We are open to replacing both exterior doors and getting some kind of keyless entry solution in place. Curious what others people experiences have been. Any specific recommendations on doors / locks / access control / cameras?

We do have our own wifi / electricity at the building for continuous remote monitoring we just would like some recommendations from people of have been there and done that. 

Thanks!

Shawn 

I did walk the property with the appraiser. I didn't flat tell him a number but I did say that I don't see anything for sell or selling under 130 times monthly rent. Which would get me to where I needed to be. My lender also ask for additional comps to be added and to have it reviewed again. The CMA was just low - while no weight at all was given to the rental income.

I would like to be confident in a way forward before spending $750 / per appraisal for them to come back low. 

Anyone have any commercial lender recommendations in the Denver area for Adams county? 

Thanks for the ideas

We have a 4-plex in commerce city, colorado (80022) that we purchased in 2015. I tried to cash out refi this year but the appraisal didn't work out. 

I'm hoping that someone could point me to a lender that will use a gross rent multiplier for a cash out refi in the area. Or give me other ideas / options. 

I feel like the property would have multiple offers the first week if I listed it at $600k (which I wouldn't do) but the appraisal came back at $425k. They are saying based on comparable sales (which there aren't many in this location) it is worth $425k - based on gross rent multiplier is it worth $528k. They didn't blend any of those numbers. They just flat said it is appraised at $425k. For the refi numbers to make sense we need it to appraise for $600k. We are getting $4500 month rent on the property in Denver. They said I should be getting $4800 a month for rent based on comps, and still said it was only worth $425k!?!? (If you are in the Denver market that should feel like a different planet) 

There is nothing remotely close to listed in denver (even in adams county) for less then a gross rent multiplier of less than 130 times monthly rent. I feel like everyone walked away from reality on this appraisal but I'm not sure what I can do about it. 

I owe $240k'ish @ 4.5% - for it to make since on a cash out refi (around 5.75%) we were hoping to get $170k out of it. Else I would do a HELOC or 2nd on a different property if I was only going to get $70k or so.

Do I have any options? They are limiting the comp area to west of Quebec and north of I-70 and just to get 4 they have to go back a year. Nothing is really going up for sale in this area that matches this property. Would it do me some good to call around to local banks in that area? Just looking for a way forward.

Thanks!

So - I had hail damage from the May 8th storm. I hired a general contractor to make restorations. We are having an issue over $1800 of non-recoverable depreciation. He thinks I owe it and I don't.

Once the repairs are complete, can I withhold any of the money owed until there is an agreement on the $1800? Basically, I want to pay the "final" amount due - Not the amount I feel I owe and then still have the $1800 hanging out there. If i do that then I don't have any leverage to close the issue.

It was around a $30K job. I have paid $19k. We pretty much agree on everything other than the $1800 and one or two items on the Statement of Work.

Can I legally hold 10-20% of the job back until they give me full lien release? There isn't much in the contract outlining payment disputes. Just that I owe the balance upon completion and will be charged 1.5% interest on the balance. 

What are my options? 

Thanks,

Shawn

I used VanEd and passed (1st attempt) in Jan 2017. It is all CBT (computer based training) with an additional yellow book for studying. 

You will learn about legal processes / land descriptions. Very little in the way of practical real estate or investment advice. 

VanEd was sufficient. I have no experience with any other course to make a recommendation. 

We bought an insurance policy for our property through an insurance broker. We received significant hail damage from the May 9th, 2017 hail storm in Denver, CO. We have been very patient in allowing the process to work itself out. SafeCo is telling us we didn’t have the appropriate policy for our property and they aren’t going to cover a claim of over $15,000 in damages on the 2nd building on the property. They are pointing us back to the original insurance broker for writing an incorrect policy.

We aren’t getting anywhere with the original insurance broker.

Does the insurance broker have an agency responsibility to make sure they are writing us the appropriate policy?

The mistake is that they wrote the policy as a 4-plex instead of the property being 2 duplexes. Because there are different buildings with different addresses SafeCo is saying they aren’t on the hook but we should go after the broker.

What are our options? Do we have any recourse in this type of situation? 

I called Torrco, Inc and Complete Basement Systems off HomeAdvisor's today.  We will see how it goes over the next week.  Not looking forward to the $2-6k quote for this one.

Thanks,

Shawn

Had a tenant text me tonight that there is water seeping in from the foundation into a closet.  Carpet is wet and either paint or plaster is starting to chip off the wall (hard to tell from picture).

House is 60 years old in Commerce City.  Apartment is a garden level basement unit.  

I'm guessing a lot of the plaster is going to need to be removed in the closet to better determine the source of the water.  I haven't had the best of luck getting good contractor's so I'm going to use this experience to get better at it.  No more craigslist for me.

Should I go out and remove a portion of the wall tomorrow so that I can have a better understanding of the scope of work before I start contacting people for bids?  Or at least identify where the source of the water is coming from? 

How bad is it to have a partial wall striped down to the foundation for a tenant for potentially 4-6 weeks before someone could get to the project?  Labor is tight out in Denver at the moment.

Also, if it is the foundation should I only go with someone that will warranty the work? or is that typically not necessary.

Any advise or recommendations would be appreciated,

Shawn

I own a home in the Firelight subdivision in Highlands Ranch, CO.  My wife and I are planning on moving closer to the DTC within the year (Centennial or Aurora).

The house is approximately worth 400k - rents (best guess) around 2300 - 2500 / month. We would pull money out as owner occupied to get down payment on new place so assume 320k would be financed around 4%. I'm assuming insurance would be $100 more per money for rental. PITI 2k per month. Assuming 3k vacancy and 6k capex / maintenance per year.

I would be coming out of pocket 3k -5k / per year on average.  

House has 2 year old appliances - painted 2 years ago - new roof / gutters this year.  Will need AC unit ($3.7k) - water heater ($2k) sometime soon - Carpet is end of life - would replace after 2 or 4 years of rental ($6k).

I know this isn't a deal you would buy for a buy and hold because it is most likely an alligator and the transaction costs would be a killer.  I've already bought and already have the transaction costs regardless. 

I would like to get feedback on potential vacancy rates on the higher end of the market.  This is my biggest concern.  If it doesn't rent out June - August is there still a market for it? I would guess 98%+ of homes in this area are owner occupied and most people would rather buy then rent.

I would basically be speculating that there is 15% more market appreciation in the next 3 years before it levels off and I would be paying 9-15k for $60k potential on the back end.    

Is that too thin for the risk?  

Thoughts and feedback welcome - Thanks

@Meghan McGuire

You certainly aren't obligated to refund any of the money.

In my basic rental criterion sheet that applicants have to sign at the time of filling out an application I specifically say that their $40 application fee is non-refundable and they all understand that going into the deal.  

@Peter MacKercher

My point was that you could still do better by people.   

Let's say you only have one rental criteria that applicants have verifiable income of 3 times monthly rent.  If the applicant is able to prove that then you run a background check and credit check.

Applicant background check is clean and credit is FICO 720.  Are you going to run 19 other applicants to see if someone has a FICO 760? And then tell the applicant they are approved but the apartment is no longer for rent because there was a better applicant? 

If you are going to do it this way then you should be very transparent about your policies and procedures upfront.  I would not waste my $80 ($40 for my check / $40 for wife) in applying to the rental. My credit score is only 760ish and I'm sure if you process 20 applicants there will be someone higher so I'm not going to waste my money. 

You get the best tenants by having stringent criterion and a thorough screening process. Run applicants through one at a time until someone meets your standards and at that point refund the other potential applicants fee since you didn't spend the money to run the background or credit check for them.