All Forum Posts by: Brian Kohn

This is all great feedback and helps me put everything into perspective seeing it all written down.

Our minimum credit score is currently 660 - but really we are looking for on time payments within the last year, no collections, and not a massive amount of debt.

Is 660 too high or is that realistic?  I haven't pulled enough credit reports yet to gauge the different levels.

I appreciate everyone's feedback!

This is my first go-around.  We just put our unit up for rent a couple weeks ago.

We are not desperate to rent it out, but it will get harder once the snow comes.

As far as I know there is no maximum security deposit in Colorado.

I just received a call from the potential tenant.  Turns out the debt is mostly from 3 auto loans (~50k).  The tenant claims that two of the auto loans are just co-signers for their kids (which accounts for one of the delinquencies a few months ago).

The collections were from medical bills 2-3 years ago (total collections amount is around ~6k).

We have an out of state tenant that has applied for our rental.

Nice couple with 5 kids.  They want to move in site unseen because they both have job offers locally that start in the next couple weeks.  The income from their new jobs is about 4.5x our rent amount, which is good.

However after pulling credit, both of their scores were around ~560.

Multiple collection accounts, a handful of delinquencies over the past few years, and around $70k in total debt.  Looks like they are paying the minimum towards that debt each month (~1,500).

They have stated that some of the debt is medical.

No evictions or criminal records.

We are debating whether to deny outright or approve with conditions such as a co-signer and extra security deposit.

Any thoughts?

I haven't used them for a CPA (yet), but you might try contacting Long Law Group in Denver.

It looks like they specialize in real estate investor tax issues.

http://longlg.com/

@Kelly Crone I think the website @Bill S. is referring to is : 

https://www.thslawfirm.com/

It might be a good deal, but really depends on comparable rents, which were all over the board for the area I was looking at.

I noticed that Challenger Homes was building in Peyton.  The base model with no frills was ~235k.  I am slowly educating myself on the Colorado Spring area.  I've made several trips to explore various neighborhoods, but don't know it very well yet.  I do know that Castle Rock is crazy right now, with most single family houses out of my reach.

I am still a newbie learning as much as I can - here were my assumptions:

Price: $235000

Closing Costs : $3000

Est Repairs : $0  (new house under warranty)

Down payment : 25%

Int Rate : 4%

Term : 30 yr

Prop Mgt : 0% (I'd manage myself)

Vacancy : 7%

Cap Ex: 0% (at least for first 7-10 years since its new and under warranty)

Maintenance : 5%

Property Taxes : $1300 (guess)

HOA : 30/month (guess)

Insurance : $50/month

Rent : $1600 (guess)

P&I : 841.44/month

Total Monthly Expenses : $1222 (including vacancy, maintenance, prop mgt, and capex)

Cash Flow : $378

Down Payment Total : $58750

Total Cash : $61750

CoC : 7.350%

1% Rule : .68%

There are a few home builders in the denver / castle rock / colorado springs area that are starting new communities.  Some of their base houses (with no options or upgrades) have a decent price point that might make sense for a rental (after some initial analysis).

Has anyone purchased a brand new house to rent?  What are the pros and cons?