All Forum Posts by: Teague Anderson

Here's what I'm thinking for the inspection objection.  Let me know what you all think.

Either seller installs new septic system prior to closing, or seller gives credit for estimated cost of new septic system plus 15%.

The 15% would cover any potential snags and the pain-in-the-butt factor of me having to handle it.

What do you think?

Today I had a sewer inspection for a duplex I’m under contract to buy. The sewer inspector called to inform me that the house was actually on septic. (Not a good sign if the owner doesn’t even know this piece of information.)

The sewer inspector said he could also inspect a septic system as well, but the lid would have to be dug out, and the tank pumped so its condition could be assessed. They would also do a flow test to see the state of the leech field.

Total cost including initial sewer scope: $1650

I’m about 2,000 miles away, in the middle of a busy day at work. Not a perfect time to be calling and vetting other septic inspectors, but to my credit, I did get one other price and it seemed more or less consistent. I really didn’t want to spend that money though. $1,650 is real money. I could buy new kitchen appliances or go on a vacation. I didn’t want to spend it inspecting a literal s**t hole.

I told the inspector I’d call him back in ten minutes. I needed that much time for the logic of the decision to percolate through my brain. Pay the money and have peace of mind; don’t pay and maybe get screwed down the road.

Boy, am I glad I paid the money. The tank was filled to the brim, falling apart, and the leech field refused to accept more than a cupful at a time.

We haven’t got an estimate yet, but with the way the area is overgrown, the inspector thought it could be upward of $15,000 to install a new system. We’ll see what the seller says to our objection, but either way, that cost won’t be on us.

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@Jesse B.  Do you manage your STRs yourself, or do you have people help manage them?  I live in Boulder, but was considering buying a place for airbnb in Laramie.  What do you think of that market?  This biggest hurdle I see would be figuring out how to manage it from afar.

Man, I'm a Colorado native, and I had to look up Rangely.  What's it like there?  Any good deals?

I'm a Boulder native who currently owns a condo and a townhome here.  The last few years have made the front range less feasible for investing for cashflow.  I am about to sell the condo and hopefully will clear a nice little chunk of cash.  I was going to reinvest it in Longmont or Lafayette, but I was always confused when I heard people talk about the 1% rule.  

"Something that rents for 1% of the purchase price... How can that be possible?  What kind of fairy land is that?"

Then I started to look in Colorado Springs and saw that not all markets are created equal.  Colorado Springs looks like a decent place to invest, but then I figured, why stop there?  Now my wife and I are planning on buying some places down in Tennessee.

I haven't looked into airbnb very much here, but I do think Colorado Springs could indeed be great for that.

Good luck,

Teague

Thank you for this post.  Some super cleaver ideas.

@Andrew Postell

@Andrew Postell, I have an idea for using the personal loan method in conjunction with a 1031.  Could you let me know if this would work:

* Lets say I sell a property for $200k and I make $100k in proceeds and I intend to use a 1031 exchange.

* I find a replacement property for $200k that I get under contract

* I use the $100k of my own money, and take out a $100k loan from a family member (my Mom), and file a lien in her name.

*After closing I go to a bank to refinance the loan.

My question would be, could the bank refi with an 80% LTV, or would they only refinance the amount to repay my mom?

Thanks,

Teague

For those who use lines of credit, is that only for acts-of-god types of repairs or vacancies, or for ordinary capex, like a new roof?  If the latter, it seems (dare I say?) foolish to go into debt to pay for expected repairs.  

Also, will a bank consider a line of credit as a reserve when they're deciding whether to approve your loan or not?

@George Skidis  You brought up something that keeps bouncing around in my head when I hear about people prepaying their taxes:  Can't you only deduct property taxes if you're itemizing?

I feel like there are going to be a million people around the country who prepay their property taxes, but 900,000 of them who did it for nothing because they're taking the standard deduction.  After all, it would be hard to get up to and track $24,000 (if married) of personal deductions.

Also, while you're here George... can you clarify a a couple other points?  This law won't affect the ability to deduct property taxes or mortgage insurance on rental properties, because those are expenses, right?

Thanks for you brains.

-Teague

Where do you guys keep your reserve funds?  It seems like a waste to just have them sitting in a checking or savings account, but other accounts usually either have risk, or make it hard to pull the money out.  Does anyone have any clever investments to keep their reserves in?

Thanks,

Teague