All Forum Posts by: Bill S.

@Katie Accashian so you want to connect with @James Carlson as he is the local go to expert on short term rentals. You definitely want to get all that sorted out in your due diligence period of your purchase contract. The whole duplex with two STRs on one parcel is a bit concerning. There may be a work around by splitting the building and lot into two parcels with separate ownership if that becomes an issue. Still they may have some heart burn with it still being one zone lot. 

As for an egress window. This is a must have if you have someone sleeping down there. Your price is toward the low side of what I have seen for them especially if you don't have a contractor already lined up with a written bid. Also that price probably doesn't include repairing the drywall and repainting on the inside. Another thing to watch for is where does the dirt go from the hole as well as the concrete coupon that they cut out of the hole. The cheapest ones leave you with a huge pile of dirt and monstrous piece concrete to get rid of. Contractors don't always disclose that when quoting prices verbally. Be sure to read carefully the scope of work. Some require you to get your own structural engineer to prepare the letter or to pay for it separately as well. Some contractors also would have you pull a homeowners permit for the work as well. Be careful with that approach and make sure you can do that. Denver requires that you live in the unit to pull a homeowners permit so the duplex situation may throw a wrench in that as well. 

As for the basement not having a kitchen. If the property is zoned correctly you might be able to add a kitchen which as others pointed out would make the whole STR thing fly better as well as using it as a long term rental. Not sure how you would rent it out long term without a kitchen unless you are basically do a rent by the room approach. If the zoning isn't right to add more units, you could get a permit to finish the area having an "almost kitchen" (everything but a stove - 220 outlet or gas connection). There are some options for cooking that run on conventional 110 power such as a toaster oven and convection hotplates. Not ideal, but probably a viable workaround for an STR.

@A.J. Murray can you be a bit more specific? What product are you looking to finance? How many do you need to finance? 

Also what advantages do you think a local bank offers vs a mortgage broker with multiple products such as DSCR loans for 1-4 unit properties?

@Lydia Tilahun welcome. It is not clear to me from what I read as to whether or not you currently own or rent where you are living. If you don't own then without a doubt, your first step is a local house hack. Right now the best option is a low down owner occupied loan on a large (many bedroom home) where your rent out the rooms. If you can't stomach that, then find a house you can give yourself you owns space and rent out the rest of the units by the room. If you already own your home then consider going the house hack route and renting out your current place with the highest income potential available. These are hands down the highest cashflow strategies in our or really any market. I would say that real cashflow in out of state investing is usually significantly lower than most folks anticipate going in. 

@Yi C. I don't know what would be different from CA but I'm sure there are a lot of differences. With buying land, you need to be very careful. Is the lot actually in Pueblo or is it just "near" Pueblo. There are a number of legacy subdivisions in the county around Pueblo that have unbuildable lots due to a number of issues. Know before you buy and don't assume anything. You should have someone local who specializes in land to represent you and it will likely costs you around 10% of the purchase price, if it's a relatively small purchase price. Utilities (water, sewer, and electric) are a big issue outside of the City proper. It can cost more than the price of the land for EACH of these items. Please be careful.

@Kylie Kwon you are barking up the wrong tree. It is what it is. You can't change the fact that it is now 8% (at least in the short term) and it does no good to you to assign blame for not getting the information. Move on to solutions. 

@Spencer Holland several of the suggestions can be done for under $10k for 500 sqft. You can easily add a 2nd layer of drywall. I have done a LOT of research on this issue and have done a number of the "fixes". My experience says that this cuts down on the magnitude of the sound but you still hear it.

The very best result was from taking up the upstairs flooring, installing mass dampened vinyl then a mat of 5/8" plywood (2 layers layed at 45 deg angle with green glue between the layers) and then a new hardwood floor, along with blown in cellulose between the floor joists and then j-channel on the existing basement drywall ceiling with a 2nd layer of drywall in the basement. About all you hear in the basement unit is a chair being drug across the floor. Not cheap but it works. I did this because the hardwood floor in the upper unit was trashed and I needed a new floor so I wouldn't recommend the mass dampened vinyl unless you were doing a new floor anyway.

The last item is the heating system. If you have shared ductwork, you are wasting your time and money doing sound proofing. Ideally if you have ducts, you need two completely separate systems. The shared ducting carries the sound between the floors and there is no way around it without creating separate systems. The metal duct even tends to amplify some noise. 

@Kylie Kwon I agree with @Jonathan Klemm to go back to the buyer. Maybe they would be able to buy with another lender if you offered some assistance. They could then work with the HOA to get the insurance limits to conform. I am sure if other owners realize what is happening to their values due to the 3% change in deductible they would climb on board with getting the limit lowered.

@Kylie Kwon very disappointing that your buyer backed out. In retrospect, the buyer might have been able to ask for a waiver from their lender on the insurance requirement. Not sure if that is possible but it is what my insurance agent suggested for a loan I am in process on. Turns out it was not needed but it is worth trying.

Is it possible to rent your current place out until you get a handle on the insurance situation?

This is more long term, but you could run for the board in the HOA and get the insurance deductible changed so it is warrantable. When you think of the increased value it might be worth your time. Usually there is nothing that says you have to live in the unit to be on the board.

Finally, get your agent to give you some comps on non-warrantable condo sales in the area and make a business decision about how to move forward. The quicker the decision the better for your pocketbook no mater the outcome.

@Kevin Perry so another thought is that you should look into funding syndications as a limited partner. Lots less headache and if done right, you can be more hands off. Realistically you have lots of disposable capital and that might bring the biggest bang for your buck. You don't seem too unhappy with your W2 aside from the travel. You also didn't mention what skills from your W2 that you thought would transfer to RE. Having and eye for value doesn't mean you would enjoy the nuts and bolts of owning RE and managing it personally. I agree with Marcus about needing "a love for brick and mortar" if you going to be hands on.

I am not sure I agree with the statement by Marcus that both you and your wife need to work in RE for the REP status. 

I wish you well in your journey.

Personally you can make it work pretty much anywhere. That said, a growing population is a big tailwind. I don't know how those area fair on that front. They are smaller communities so it doesn't take much to move the needle there. I would say the first three you mentioned are tourist areas. I'm sure they saw some pandemic bump but not sure if that has continued. They are smaller communities so that makes it hard in many ways. The main difficulty is finding quality help. Property managers and contractors. I would start there and if you find the right people then I would pick that area vs picking an area and hoping you can get the right people. 

San Luis Valley, has some tourism, some education, but is primarily an agriculture community. I don't see much growth in that so personally I would stay away from there. 

Colorado Springs has a lot going for it but generally speaking the prices vs income make it necessary to pursue alternative approaches such as short term and mid term or some other less traditional approach. 

If it were me, unless I had some sort of inside track to the smaller communities, I would stick to the population bases (ie Colorado Springs) where you can find good people for all parts of your team.