All Forum Posts by: Steven Tawresey

Between the 1997 Tax Act capital gains write-off, the current lack of inventory and over-asking sale prices, and the Condo defects law modifications, it's a no brainer for me to sell my Cap Hill condo now. It's going live tomorrow. 

I think I read somewhere that the current condo defect law applies to buildings for 6 years after the building is occupied. Thus, builders have been building apartments to convert to Condos once that 6 years is up. As @Scott Trench said, when this law is passed, I think you will see a lot of those apartments converted. Hopefully builders will be smart enough to slowly roll out their inventory to not cannibalize their profits via decreased prices. 

I used to live in, and still own (albeit for 1 more week), a condo unit just outside of Metro Denver. While I was living there, I noticed a 2 story penthouse apartment that was vacant and in a state of disrepair. It has 3 balconies with amazing views of the city and the mountains. Recently, I contacted the president of our HOA about the unit and he said:

"No one has lived there for the past 10 years. The place is a pig pen inside. Lots of water damage as the place was ignored for so long.

I was looking through some old records last week, and I see that she was suing the HOA in 1995. we've spent a ton of money just trying to get our money. This gal has used all kinds of legal maneuvers to avoid paying us money, including settlements ordered by the court.

Zillow has its estimate at $417,000

Tax Assessor says $377,000

Average $/sqft for a downtown condo is $450 which, using $400 since it's not "downtown," would give an ARV of $645,000.

I can't get in the condo, but can see through the patio windows that it needs a full gut and high end rebuild. My initial numbers say around $120K renovation cost (50K kitchen, 10K per bathroom, 10K flooring, 20K water damage etc.) I wouldn't get a true estimate until I could get inside.

So my questions:

1) I used public records to find the owner's address and phone number. The business address is 2 blocks from my home! How would you go about contacting this person? Phone, email, personal visit? 

2) How would you tell them you want to buy it? Would you offer a price first or let them come up with a number to start negotiations?

3) Based on the above numbers and assumptions, how much would you offer? How much would you pay? 70% rule says $331K [($645,000 x .70) - $120)]. $193,000 seems like a a lot of profit from this deal. Sure it would be great, but I would rather get the deal than insult the owner.

4) How would you go about getting a realistic ARV without access to the unit?

Thanks in advance for the advice!

Great job @Micki M.! Looks amazing.

Hey Seattle! 

I am looking to find local investors, partners, realtors, GC's, PM's, turn-key providers, etc. to connect with and learn about the current Seattle market. I am looking to find fix and flip or fix and hold deals in the Greater Seattle area.

I live in Denver but grew up on Bainbridge Island. And in fact, my job flies me out to Sea-Tac airport twice a month. I work as a project manager / structural engineer and have a few RE deals under my belt. Excited to find some more. 

I'll be in the area April 27th-30th. Hit me up! Let's talk!

~Steve

@Mitch H.

I'm finding similar sub-par deals here in Denver. At this point, I'm 98% sure I'm taking my $0.02 elsewhere. 

I'm reserving the remaining 2% just in case a 2%er falls in my lap, but I'm not going to wait for it.

@Chris A. I'm in a similar boat. It seems my agent has reached her limit on knowledge of commercial properties and hasn't been much help. I'm interested to see what responses you get here.

Hey Danielle,

I just had an 800 SF basement drywalled in Denver. I estimated 85 sheets and was requesting quotes for hanging, taping, mudding, and finishing with knockdown texture (btw, I completely agree with @J Scott that texture should not increase the total cost). 

I got 5 quotes ranging from $3000 to $6500 not including materials! Ended up going with the low quote and after the cost of sheetrock, tape, mud and texture, it came out to $54/sheet. It seemed expensive to me, but as @Matt M. said, Denver labor is hard to come by right now.

I think the guys who did the work were moonlighting since they showed up to work at 7pm. I figure they had just finished their corporate job and they were working for some side $$. They did a great job though. Good Luck!

It seems even finding mini horses in Denver is rare these days.

I think the confusion comes from my use of Purchase price vs. Current Value in the equation. Using my purchase price, I'm around 11%. Using an average value of 7% for Denver Cap rates, and manipulating the equation gives a property value much higher. 

In other words, if someone were to buy my property, I'd sell it to them at a price that nets them 7%. The Cap rate on my initial investment however is different.

I bought this property 7 years ago when the price was low and refinanced when rates were at the bottom. Rents are up, prices are up, inventory's low, vacancy's low.

Hey Friends!

I've got a 4-plex in Denver. Cap rate is 11%. Reversionary Cap rate is 14%. Why don't I raise rents? Cause I have good tenants and they don't bother me. I know a lot of people won't understand this, but it works for me.

That being said, I'm looking at expanding into more properties. I know I won't be getting 11%, but does anyone have an estimate of expected Cap rates within 2 miles of Downtown Denver?

Cap rate = Annual Net Operating Income / Purchase Price

Thanks!