All Forum Posts by: Greg Weik

Where did @Jacob Stokes go?!

@Nick Scullin I actually would have the opposite concern with lower rental rates.  The people in the Denver area (and, I suspect, most metro areas) who can afford $2200-$2800 tend to have more stable jobs. It is a really important part of the screening process - knowing what you're looking at when verifying income and employment. 

One of my tenants is a truck driver (pretty stable, at least before the autonomous trucks go online!), one couple works in insurance and property management (two of the most stable industries), and another is a couple with a brother where all 3 have income.  

Those are just my personal properties, but in our managed portfolio of other people's properties, the small handful of unpaid rents are from self-employed tenants and a guy who worked in construction.  

Just be careful also, in Colorado and probably other states, you can't discriminate based on the source of income.  If someone comes to us as a server in a restaurant, we can't ask for a larger security deposit even though we know their source of income is higher-risk.  Like a lot of bad legislation, this was designed to keep landlords from avoiding Section 8 tenants, but now that we've seen what a pandemic can do to certain industries, that could make finding the right tenant more difficult. 

I think your head is in the right place and more expensive is better (within the parameters of the variables you alluded to), for exactly the reasons stated.  Higher rents and more realized gain in equity.  

To put it another way, 2, $200k duplexes vs. 1, $400k duplex.  The cashflow math might suggest the 2 duplex option, but that is usually missing the forest for the trees.  Two sets of systems (HVAC, appliances, plumbing, etc.), 2 sets of tenants and possible tenant issues, etc.  I usually explain it in the "5, $100k condos or 1, $500k house" - and most people think the 5, $100k condo is the smarter play, but they are mistaken. 

I personally go for higher-end single-family homes that rent near the top of the market, but still at a price point where there are a lot of qualified renters.  

Hi @Russell Schwartz, you can terminate a m2m lease, this is not part of the eviction moratorium. 

Research your state laws on the necessary notice period, and give the tenants as much notice as possible. 

If you post a notice of non-renewal, and the tenant does not vacate by the end date, you will then have to post a notice of non-compliance and move forward with eviction.  This, too, would not be covered by the eviction moratoriums we've seen - as those are based on non-payment of rent, not other lease violations (like failing to vacate.)  

Hope that helps. 

Hi @Evan Scott I can relate to your situation.  Coming up with the 20-25% down payment (usually plus 6 month's cash reserves) is a heavy lift.  

IMO, if you are confident in the type of appreciation you will get from buying a $650k single family, then yes, use your 401k to finance the deal.  If you have to put $130k down to make it work, but the house appreciates 10% after 1 year, that $130k made you $65k.  To me, this is concept is > than the 1% rule so many talk about, and it's what I personally use when investing.  

Down the road, you can pull some equity if needed and repeat the process for your next single-family and so on.  Bigger (more expensive) houses mean more equity build-up, faster. 

@Jon Q. - if you have the tenants on the same lease and "joint and several liability", then it's not rent by the room.  It's a single lease for the home.  Lease dates for rent by the room are inherently different, rooms are different, some people rent parking in a garage, etc. -- they  have to be independent leases, managed independently.  The overlap is the house rules that everyone signs onto. 

@Tom Wagner - My experience in the rent-by-the-room world is limited.  We have a single client currently with a 6 bedroom home in Arvada that we are working on.  Denver area rents (by the room) tend to range from $650-$800 depending on the location of the home and room size and parking.  That range assumes all utilities (including internet) included. 

As @Jon Q. said, I don't think house hacks are worth it, even from my limited exposure.  It's like running MTV's "Real World" only no one wants to be a contestant.  It's a classic "spreadsheet investor" pitfall.  The numbers on paper look incredible, but in practice, it's almost impossible to maintain full occupancy unless you're an owner-occupier.  The room rental prospective tenant is a very different tenant from the long-term tenant I'm accustomed to.  Working with room rental tenants - in my experience so far - is like herding cats.  

Hey @Anastasia Bourdon, I own a property management company and we just started managing house hack properties.  One of my employees also "hacks" his own house and has for a couple of years now.  It's an interesting world, to say the least. 

On price:  It sounds like you're pretty close to market value for how you've described the home.  I highly recommend you do not split out utilities, internet, etc.  The logistical application of this can be a legal nightmare for you if you ever have to evict.  Accepting rent with a known violation (like non-payment of utilities) could waive your right to enforce.  I've been at this for a long time (and went to law school) and I can tell you with certainty that your best bet is to have an inclusive rent price and leave it at that.  

On tenants: The biggest differences I've noticed on the HH properties is that the tenants are flaky and usually less-qualified.  We've had multiple tenants say they are moving forward on a property only to disappear into thin air.  Believe it or not, this is pretty uncommon in our world with about 500 doors under management.  Prospective tenants for HH properties seem more inclined to post selfies on FB groups and saying "contact me if you have a room" vs. seeking out a good room for rent.  So the dynamic is completely switched from what we are accustomed to.  I think this is fine for an owner-occupied situation where you can scour FB groups to find a good fit for your property (it's difficult for us due to scalability with this approach.)

I would highly recommend doing a thorough background and credit check on anyone you are leasing to.  Make sure you have a good lease in place.  I also suggest individual digital door locks for each bedroom (where you, as the landlord, retains the master key) for added security.  Make sure you have solid "house rules" that everyone signs off on.  

Hello, BP Investors and DIY Landlords in Denver and Colorado Springs! 

Let me know if this type of event has value or interest to you - please message me if you would be interested in attending.  I will limit the first meetings to 15 people and if demand warrants, I would move to a larger venue for future meetings. 

The premise of the meeting is that I will go over a lot of what I know as a professional property manager (since 2008), as a local Denver area single-family home investor, and I will discuss a lot of the information below, and answer questions.  

If you decide there's value in our services, you'll have an opportunity to sign up as a property management client to Real Estate Solutions at a discounted rate. If you're not sold on why you should hire us, you'll learn something (probably a lot of somethings) about DIY managing your rental properties. 

Some topics will include:

-Property selection.  Criteria that prove most effective, areas that are on the upswing, areas to potentially avoid. 

-Property preparation.  What needs to be done to a property to make it not only attractive within the rental market, but also safe and legal in Colorado. 

-Tenant selection.  What you can and cannot screen for, what you should be looking for, and the profile of the ideal tenant, which varies by property type and area. 

-Pets or no pets?  Strong opinions abound on this, but cooler heads do the math. 

-Long-term vs. short-term rentals.  Furnished vs. unfurnished.  What's the math and how do we value our time in the context of monthly revenue?

-Rent-by-the-room or "house hack" renting.  Is this an emerging trend?  Is it viable long-term?  What are the pros and cons, and how should an investor navigate this space?

-Process.  The backbone of success in tenant screening, lease preparation, move in, and move out inspections, receiving payments, handling lease violations, handling repairs, etc.  Let's talk about checklists, this is a personal favorite!

-Liability.  What are we up against and what are some best practices to limit our exposure? 

-Communication.  What's the best way to communicate with tenants, vendors, and other parties? 

-Leases.  What are some must-have clauses, and how long is too long?  

-Finding expert vendors.  This can be one of the most challenging parts of owning or managing rental properties.  What's the best approach to finding the best vendors - ones who can do the work, who are professional and honest, and who communicate best? 

-ROI math. How we see ROI, how you see ROI and some light math.

- Questions and answers. Let's all leverage this time so that it has a high ROI for the time spent. Everyone should come out of each meeting with new knowledge and better prepared.

Last - while I did go to law school and have been practicing as a property manager since 2008, I'm not an attorney.  Nothing discussed in the meeting should be construed as legal advice.  

Hey @Travis Hatch, one other thought might be the window(s) as a potential area to address heat loss or poor insulation. Also, maybe consider if there are common area vents you can close off to force more heat into the colder bedroom. 

@John Mayer's suggestion of the wall heaters from Home Depot seems like a winner.  

It's not going to happen.

Even if it does, there will always be ways to make money. No need to worry about the sky falling.