All Forum Posts by: Sean Chen

@Michael H. Thanks for the info. I had that worked out with the neighbor. He is a kind gentlemen who owned the rental next door for many years but is tired of managing it remotely (he used to live here but moved out of state couple years ago). I bought his rental units from him inheriting the small damage (firefighter had to cut through one of the garage doors about $800 damage and some soffit and fascia damage under the roof). It all started when he called me about the collateral damage to his garage but he actually wanted to unload his property several months prior to the fire.

@Matthew Kreitzer This may explain where the attorney's stand on this so thank you for pointing it out and explaining it. I am still not convinced that the tenant is completely not liable for all happened: the tenant invited uncle to the party on premises but decided to kick him out. Knowing that he has no means to leave the premises without a car thus has to wait for a ride somewhere outside in the freezing night, should not he be watchful and mindful of what might happen? 

I reviewed the lease agreement and found the following clause that indeed stated that the tenant and/or their guests are liable for any damage caused by them. It should be something I can work with. I will need to check if this tenant has renter insurance for liability coverage. 

"Resident shall promptly notify the landlord in writing of any damages or repairs needed to the property, and shall be liable for any and all damages or repairs caused by the action or inaction of the Resident(s), their guests and/or invitees. Resident shall be responsible for maintaining the premises in the condition in which they were received, including liability for broken windows, doors, and other portions of the premises."

It was close to Christmas when my property manager called me and gave me the bad news: one of the tenants was celebrating his son's birthday and invited the boy's uncle to the party. They got into altercation and the uncle was asked to be out. While waiting in the detached garage, he started fire to keep warm and got the fire out of control. The folks detained him before he can flee till the police came to put him in custody. But the damage was done and the entire garage was ruined.

The insurance company covered the expense for restoration except for $1k of deductable and more than $6k of non-recoverable depreciation (insurance policy). Though they started subrogation process to collect that $1k deductible from the perpetrator, I doubt I can recover anything from that guy. My neighbor's garage was also affected and he wanted me to go after the tenant to try to recover anything for my loss and his loss. I talked to my property manager but he said no because he has spoken to two of his attorneys and they both said that the tenants are not liable. Therefore he is not going to threaten to sue them for his loss. If the next door owner wants to sue someone he should go after the uncle who is named on the police report as the person responsible.

So the whole thing seems unfair to me. I am not sure about the attorney's stand on this: the perpetrator was invited to the party, their altercation caused subsequent events to occur. Anyone on this forum ever ran into this situation? Is there anything a landlord can do to minimize his loss? Should the tenant be at least responsible for part of the damage?

@Bill S.@Matt M.

 I have decided to go with World Window. The price they quoted to me is very reasonable. They have been around (Denver franchise has been around for 15 years) and it seems that they have pretty good ratings by JD Power. Hope it is the right decision. I will have to see how they execute the contract - I did purchase their elite value warranty which gives owner a piece of mind if anything goes wrong with the window for life.

Sean

Thanks all, will check them out.

Hi, 

I need to replace all the windows in a rental house. The old metal windows are not energy efficient, in bad shape and need of replacement. Can anyone recommend a good company / contractor with reasonable prices around the South Denver area? 

I have checked out with HomeDepot and Lowe's and learnt about the bad reviews on their sub-contracted installation. Though Simonton CV500 from HomeDepot and Pella 250 Series/Milgard Styleline from Lowe's seem to fit my requirement, I am not so sure about giving the work to the big store. Does anyone have good experience with the local HD or Lowe's installer? Would you recommend me going with them or find other windows replacement company? 

Sean

Thanks for all the opinions. It takes one to know the market and Denver is no doubt HOT seller's market right now. I pulled the trigger to play a long game for buy and hold. Comparing numbers with my previous several investments, this one would be looking really bad but even this kind of deal, you could have several buyers competing. 

Again I am staying at where I feel more comfortable, so no out of state investment even though you may find the numbers pretty impressive. Without a trusted team to run the whole 9 yards, I just do not feel confident that is my game. Within an hour or two hour driving distance may be possible but I yet need to find out if I will pull the trigger.

@Bill S.

Good point on the rent increase. It seems to have been the steady up trend for the past 4 or 5 years and no sign of immediate stop. 

I have found 2% rule never could apply to Denver area market (very rare but I did purchase one in 2011 that is a bit over 2%) but 50% rule is still relevant. Your view on Denver area is aligned with my view as well. I recently learnt from the news that Denver ranked 10th richest city, which reflects your comment about high wage earners moving into the area. 

I am not sure if present is the best time to invest using buy and hold strategy. I have seen the best time (as I mentioned before during 2007 to 2011) but it could still be a good time to invest considering the upward rent movement, steady appreciation and large pool of renter population with limited supply. 

There was time when Colorado Spring market became so attractive and beat Denver, I did not move in for the same reason you have: prefer to be near my real estate and home. I think I will continue to stick around Denver metro area.

I was using the 50% rule to calculate the cash flow. Gross monthly income at $3,080, 50% goes to management, maintenance, and etc. then minus debt service $1,330 which includes tax, insurance, mortgage.

The 50% of gross monthly rental income should be able to cover my 8% management fee, 10% maintenance, 8% vacancy, 5% utility cost.

At this rate, the NOI on my 20% down payment and additional non-financed rehab $30K would be merely 2.9%. It just does not look good to me. But if property appreciates at 7% per year (Denver metro annual avg. appreciation rate about 11.5% in the last two years) with tax benefit from depreciation, it may beat having the money sitting tight in a CD account.