All Forum Posts by: Mitch H.

Fresh off the Press: http://www.bizjournals.com/denver/news/2015/04/14/...

Current reform bill passed the Senate.  Not a ton of info on WHAT the reform is, however.  

This has been discussed in fragments other places here, but I thought as the buying season gets going (and I see a slew of <$200K condos hit the market) it would be wise to have a contained chat on what peoples opinions are.

Synopsis: There has been legislation in the past that allows HOA's to sue Developers for Construction Defects. Supposedly this has caused a sharp decline in Condo construction in recent years as Developers are wary of the risks. There is a possibility that this legislation will change in the near or medium term future.

As a potential condo buyer in a market where Condos are part of the urban landscape, there are concerns.

Will the law change in favor of condo development?

When will the law change?

When will Condo development ramp back up?

Will it put downward pressure on existing condo prices?

Will it put downward pressure on existing condos in ALL price ranges?

Should I buy a condo right now if I plan on selling in 5 years? 10 years? Buy and Hold?

Im not sure if it was in reference to FHA specifically, but I recently spoke with a local lender in a similar vein. The lender mentioned, when pre-approving me, that for an income (owner occupied duplex) property, my pre-approval would be based on market rents for the property, rather than my income. Basically, I can get pre-approved for whatever I want, so long as the market study comes back with supportive rents. I was surprised at this, and maybe even slightly alarmed. It was my understanding that properties with less than 5-units are treated as residential, and therefore income based lending. Can anyone provide some color on this? Sidenote: the lender also said rates (on small multis) are much better with FHA financing than with Conventional (PMI not included).

Another great conversation about this market. 

I keep seeing deals come online, do a modest analysis, and they arent even coming close to making sense for a Buy/Hold, Owner-Occupant scenario. I am wondering if I'm not quite the financial analyst I thought I was. Reading comments from @Micki M. makes me feel confident about my analytical skills, but a little more depressed about the market I am trying to enter. 

The question then becomes HOW do you re-frame your investment criteria and strategy to (force) FIT yourself into this market? Or do you not?  We had a good discussion on this here recently.

Originally posted by @Scott Trench:

In my view, just because this property won't cashflow doesn't make it a bad deal, or even a bad investment.  This is NOT the midwest, and if you don't at least acknowledge the fact that Denver is a growing city, you will miss opportunity.  

Scott, I am just as bullish on the Denver market as you are, I think the fundamentals are good.  Where it might seem and be crazy for a few more years, I still think the mid term prospects are positive.  However,  like @Bill Bockwoldt notes, there is risk in "investing" in an economic boom, where that investment being a good one is highly correlated to the economy.

One of my general concerns with Denver is rent pricing. There is a lot of product coming on the market now and in the near future, and a deal that is hard to cash flow at inflated rents could wind up costing a lot per month if/when we reach an overbuilt scenario.  

Some really good comments here about a market that has gotten very interesting very quickly.

Thanks everyone for confirming my sanity and someone elses insanity.  I want to meet the guy who ends up on the other side of this deal.

In reality Im not that cynical, just doesn't fit my criteria.

Ran across this deal on the MLS. Side by side 2bd/1ba, B location in West/Central Denver, listed at $450K. I did a quick analysis and cannot even get it to CF. I ran it as owner occupied 3.5% down financing, and assumed each side could rent for $1,200 so $2,400 total. Even assuming an aggressive 28% total expenses (no Management Fee) I can barely get it to break even after P+I, let alone return any meaningful Cash on Cash.

On top of this, while functional looking, the interior could use an update.  The exterior looks a little sadder, and the roof looks like its well into its useful life.

Does anyone care to add their $0.02? Do you have better assumptions?

The Hill: The Federal Housing Administration, the next housing crisis?

This article popped up in my feed this morning.  Have any of you guys read it?

I know a lot of people on here are huge proponents of FHA financing, especially in an owner-occupied house hack situation. There will always be flag throwers out there, but given the FHA's recent reduction of their mortgage insurance premium, it seems they will be that much more challenged to hit the 2% Capital Reserves required of them. Also, it seems to be in reaction to Private Mortgage Insurance taking away some market share.

There are definitely similarities to the subprime crisis in 2008...loosening of standards, huge growth, underfunded reeserves.  Can anyone provide some counter arguments or insight on the real consequences of this?

MOLD is a four-letter world in most real estate circles.  As a buyer, I view it as a bargaining chip!  But thats about as far as my knowledge goes, and I am here to get some help.

1. Is a short sale with (at least) moderate mold financeable? If NO, then I'm out. End thread.

2. If YES, am I required to do a 203k or the like?

3. With a distressed short sale, am I allowed to do an inspection once under contract?

The list price was $100K and similar condos in the building are going for $200K. It is in the Denver area.

Disclaimer: I dont know if the listing is actually still active, so this post is 90% because I am curious, should this situation ever arise again.

Originally posted by @Anson Young:

I think thats a great idea @Mitch H. !

Most of my books are in storage, I'd have to find them but I encourage everyone to take Mitch up on his offer!

Looking at my calendar, I will be in Texas for work.  My offer still stands, though, just not at Mondays meetup.