All Forum Posts by: Steve Shafer

@Chester S. Chincuanco Good news: the whole 2 years of tax returns thing you might be thinking of does not apply when you're a W-2 employee, only as a contract employee. You probably have a good deal of equity if you bought 14 years ago, and yes you can absolutely tap into this in the form of a HELOC. Call around to some of your local credit unions—in my experience, they have better terms and can go higher on LTV than many for-profit banks (don't know if this is a thing or just my perception). The loan originator at whatever credit union you select will be able to tell you in the first phone call what HELOC amount you will qualify for. This is a great time to open a HELOC, despite rates on the rise. Even the high rates are lower than inflation, so if you want access to capital, a HELOC makes a lot more sense than saving up money in the bank where it's losing 8% as it waits to be deployed.

@Harold Miller gregor I can't tell from your post whether this a lender requirement, or just your own personal criteria for peace of mind. In either case, you can market the property for rent pending the closing of the purchase. If you're in a strong rental market, you should be able to find a high quality tenant willing to do this. Most listing agents will allow showings for future leases if you need to take tenant prospects through the property. Hopefully your numbers on the investment aren't so tight that you don't have reserves for some vacancy though, i.e. 8-10% in year one. Another factor in your favor is that USUALLY you have at least a month, if not more, until your first mortgage payment is due, giving you time to do any needed work on the property, get a tenant moved-in, etc. If you are working with a good agent, they will be able to hold your hand through this process.

@Sabine French What an ordeal. Living in Colorado, the Contract heavily favors the Buyer in almost all cases, so I'm not used to hearing that Buyers don't have legal recourse when issues like this arise. Since you're asking for perspective, I can share my experience from past real estate setbacks. Whether it's an unexpected repair, a tenant issue, or just feeling like you overpaid for a property, time really does heal (almost) all wounds. In a year from now, the hit to your bank account won't sting as much, and you'll have built back up the reserves you had to pull from. Your morale will recover too, and you'll have a story to tell. I try to ask myself, regularly, what do I want my story to be? "A tenant trashed my place, which I hadn't budgeted for, so I decided this was the last property I would ever purchase. Better not to risk unknown expenses." That is a lame story. Instead, your story will be about how you pushed through the challenge, and if you bought it right, you'll also be feeling like a genius in 2-4 years time when that home has continued to appreciate, your other projects are completed, and your portfolio is stabilized. It's been said a million times, but fundamentally, real estate is about the long game. You got this. Best of luck!

The best (and quickest) way to ascertain STR regs for a local area is by contacting an agent who has experience in this space, ideally, as an STR owner/operator. In my city of Fort Collins, for example, the rules and regs are now pretty clearly posted on the City website, but they went through many changes and iterations over the last four years. Then there is the added layer of possible restrictions imposed by an HOA. I suggest you find a market you want to be in, then have an agent give you a briefing on the STR situation for that market. Best of luck!

Everyone knows our market here in Northern Colorado, and Fort Collins especially, is highly competitive right now. And yet, we don't think it's too hot to handle. We're going to discuss:

• What does it mean that the market is "hot?" Why is it that way? Is there a bubble, or super bubble, that's about to burst?
• How should we view real estate market cycles big picture, and where does our current moment fit along the curve?
• For homebuyers—How to get your offer accepted, even when you're up against multiple offers (and you will be, nearly every single time).
• For investors—Can you still find deals? If so, what do those deals look like?

Itinerary:

• Arrive at 4:45PM—find your seat and grab a beverage (on us).
• 5:00-6:15PM—Presentation and discussion
• After 6:15PM, you are welcome to hang out for a bit and carry on the conversation

This event will be especially helpful for folks who are newer to real estate, but there will be plenty of time to get into the weeds for any attendees who have more experience. With our many years in real estate as investors and as brokers, we hope to be a helpful resource to all who attend, and we always plan to learn from the discussion ourselves.

@Ben Cochran I agree with Katie that this is a good situation for you in terms of likelihood that you'll get full rent each month on time. But, as she mentioned the U+2 laws are for real here in fort Collins. If you Google "Fort Collins Occupancy Limits Disclosure" you'll see a form that technically Landlords need to have their tenants sign. If you, as the Landlord, sign a lease with all of these parties you've mentioned, you're already in violation. Obviously there are ways that Landlords get around holding this liability.

@Melissa Harris I'd stick with your plan to use an FHA loan for a multi-family—this is how I did my first deal and it's one of the better decisions I've ever made. FHA is pretty good about keeping their loan limitations in line with local market realities, with $774,050 being the current FHA loan limit on a 4-plex (see below, chart straight from HUD). That is definitely something you can find even in this competitive market, not to mention a duplex under the HUD limit of $515,200. I just bought a duplex at the beginning of this year for $385,000 that needed a bunch of work. Be persistent and creative with your search and I know you can find what you're looking for—feel free to message me if you are stuck and need some ideas.

@Marshall Easlick Try Blue Credit Union and First Bank. I've only done deals with the latter (which is Colorado-based), but know several who've had good service and rates with both for HELOCs specifically. Not sure about Blue, but First Bank is able to keep some of its loans in house (portfolio), allowing them more flexibility for outside-of-the-box deals.

@Joseph M. I would echo what @Sam Grooms shared about using 3% for a 30 year time horizon. The way I see it, a more "aggressive" approach would be to zoom in on those particular markets you mentioned to analyze shorter-term market conditions where >3% appreciation is absolutely a probability. The data I found most helpful for this comes from the Federal Housing Finance Agency, which sorts its data out by MSA (Metro Statistical Area), i.e. much more granular. Here you can look at each MSA by quarter, 1-year, 5-year, and since-1991 appreciation. 

@Rachael Britton You do not need a realtor to submit an offer for a property, but if you are dealing with the Seller's Agent directly, understand that unless/until their status changes to Transaction Broker, they will continue to be the Seller's Agent, meaning they are only working in the Seller's best interest and owe you basically nothing besides fair and honest treatment. In Colorado, dual-agency is not permitted. From what you're question indicates, I would highly encourage you to have a Realtor you trust, in your court, serving as your agent. You'll need to sign what's called an Exclusive Right-to-Buy contract with them, but as others have stated, it can be limited just to the property for which you're making an offer. If you need any more specific advice, feel free to reach out.