All Forum Posts by: Bill Coleman

Okay so i just went to contract on two properties in the same neighborhood and these are my first real deals. Both are SFHs with need for substantial cosmetic rehab. I am planning to rehab and rent with the possibility of flipping if the deal was too good to pass up. But primarily I am a buy and hold investor.

My goal is to rehab to a level where it will attract a higher quality of tenant plus be as indestructible as possible without breaking the bank.

Here are the areas where I have questions:

1. One of the houses does not have a garage - should I add one?

2. Neither house has central air - should I install it?

3. Kitchens are in need of substantial repair but with work, could possibly be reworked so that the room functions, but is not really up to today's granite countertop standards - should I renovate the kitchens with new cabinets and appliances?

4. Bathrooms are run down but serviceable - is it worth a complete renovation?

5. One of the houses has a horribly maintained yard but is a blank slate - is it worth investing in landscaping to raise curb appeal?

Thanks everyone!

@CK Hwang Exactly what you are saying happened on Long Island in 2004-2008. Prices shot up faster than income levels and rents. Then it popped. I am nervous that I am seeing the same pattern here in Denver. Income has to rise relative to the rise in housing prices or people can't afford to buy (or they get loans they should not have been qualified to get and you know what happens then.)

@Account Closed When you say things like "if you think prices are high now, wait until next year" that was the thinking back in the internet bubble days. Better buy now before the price goes up tomorrow and you miss out on all that gain. Same thing with the Long Island market. I had tons of friends who were underwater as a result.

I think caution is in order. I don't plan to pull the trigger unless the deal meets my financial requirements. And if I don't do any deals this year, it would suck but I know I will be better off waiting. It takes a strong stomach to stay on the sidelines.

Bubble anyone?

Thanks guys!

@Sterling Seizert Welcome! Don't forget about the podcasts. They open your mind to many ways of doing business plus you get tons of real life actionable tips that can make a big difference in your business. Good luck finding your first deal.

I am using a couple agents, Auction.com, Hubzu and the like. Still trying to find a wholesaler who doesn't mind working with a new investor (only sort of new) with modest needs.

There was just a piece on NPR this morning about how hot the market is in Denver. Wish I had some completed flips right about now!

@Bill S. No doubt! There are some really small towns 2 hours from Denver. I am not interested in those at all. I want the option to self-manage so I am staying within 45 minutes of my house. I'll get back into the business, see some success and then decide if I have the time and energy to branch out.

I am trying to figure out seller closing costs on the back end of a flip before I set my offer price. Does anyone have a formula or percentage that has proven reliable?

I've searched the BP forums and didn't find anything concrete.

I'm in Denver and the house is in Golden if that makes a difference.

Thanks everyone. Great comments. I am also finding 2% rule to be unattainable with the properties I have seen. I am looking at online auction sites as well as working with investor focused realtors. Still, even the decent properties on the all-cash auction sites are being bid up to levels that increase risk tremendously for a property you can't even get into for a peek.

I do wish that I had a few more wholesalers in my contact list. But I have also heard that even they are having issues buying deep discount properties.

I listened to nearly all of the podcasts and I hear about all these people scooping up great deals and hitting good cash flow numbers and I feel like I am doing something wrong. I don't need that many properties - only two per year.

I was originally looking for condo deals but the more I do the numbers, the more the HOA fees (and special assessments) when compared to the rents are making such properties low cashflow BEFORE debt service. Once you factor in the debt, they quickly go negative and that's not a property I am going to buy.

I am pretty sure that Colorado will continue to attract young people as it has done for many decades. People from all over move here for the lifestyle and the pro-business attitude so I am pretty confident that we will get pretty good appreciation over the long term. I came from NY and when I bought my own house, it was half the cost I would have had to pay on Long Island.

But, when you look at the deals from an investor perspective, rents are simply not high enough to justify the costs. In many instances, I would not turn enough cash flow even if the property was free! The HOA fees are out of line. I've seen $200 HOA for a 600 sq ft apartment that will rent for $650.

I am never going to place bandit signs and knock on doors to find deals - it's too much time and expense for what I am trying to do.

I may have to switch up my strategy a bit and try to land a few SFH. Sad thing is that I have cash ready to go and I can't find a place to buy.

I have been analyzing condo and townhome deals for the last couple months in Denver metro and I am having a really hard time making the numbers work. I am looking for a little advice from some seasoned pros as to what is a reasonable NOI before and after debt service. I am afraid that I am setting my expectations too high and might be tossing out perfectly good deals because of unrealistic expectations.

For instance, I found a condo for $60k (list price), $200/yr taxes, $184 HOA, 10% vacancy, 10% management co, and $60/mo insurance. I am estimating rents at $760/mo. If I ignore debt service (assume I buy cash), then my NOI is $208/month.

Is that good for this market? Seems like a ton of risk and work for $200/month. I feel like I want $500/month minimum NOI to make me feel like I am getting compensated for my risk and hard work.