All Forum Posts by: Michael Wentzel

Hey Julie,

I have an inspector I used on my first purchase in Pueblo and I'm heading down for two more inspections tomorrow. I'll send you his info in a message. Again he is highly recommended by the Realtor I'm using.

Mike

This is an obscure topic, but I figured someone might have some experience with it.

We're looking at picking up a 2 bedroom, 1 bath house about 40-minutes south of where we live. I've been following the local news from that community to learn more. Over the weekend the local newspaper ran a story about a particular neighborhood having issues of high lead content in the soil. I did a bit of research and my potential new rental is in this neighborhood. The neighborhood used to be home to a "smelter" in the late 1800's. There has been a very small sampling of soil in the neighborhood which showed 5 out of 13 properties had elevated lead levels in the soil. The community is split on what to do. Some are pushing for the neighborhood to get "Superfund" federal money for clean-up while others are saying the whole thing is a non-issue. More extensive testing is being done.

We're expecting the seller to sign our counter offer tomorrow if they have not already done so. I have an inspection scheduled for Thursday morning. Should I test the soil in the yard for lead? Hire someone? Buy a kit of the internet? Ignore it?

Any experience or insights on this one?

Mike

Hey guys,

Good idea! I wish I would have thought of this when I talked to the guys working on the project this morning. I'll give them a call tomorrow morning and discuss the possibilities. I guess it might be too late to implement this plan since they started running new pipe late on Monday morning.

Live and learn.

Mike

It is Monday night and more details have emerged. Not necessarily good. My Realtor checked with the inspector and he said he "checked" for gas leaks. I'm not sure how well he checked since the gas company seemed to find 8-10 leaks in less than an hour. Is there a detector I could buy to check future purchases for gas leaks myself?

The cause of the leaks. How about a house built in early 1900's and converted to a duplex 50 or 60 years ago? The gas piping is really old. The HVAC company working on the repairs were doing "air tests" to try to identify leaks. But they said many of the leaks must be within the walls. They were also concerned that the 10 pounds of air required for the air test was creating more leaks in the ancient system. They didn't make much progress Friday afternoon or a few hours on Sunday. Monday morning they said they could start ripping apart walls to find the leaks or just run new gas lines. I chose the new gas lines. Estimated cost is $3500 to $4000 for labor, material, obtaining the permit and getting the gas turned back on. It is a single house made into four units with only one meter. I had placed $5000 in my head as worst case scenario. So we're not far off of that. Hopefully the gas is back on by Wednesday when the cold weather rolls into Colorado.

I'm still okay with the deal. I purchased it for $85,000 and it rents for $1950 per month. I pay the utilities, but the margins are still good. $4000 out of pocket isn't fun, but I probably would have still made the purchase if I knew it needed $4000 in repairs.

Thank you for the input and feedback.

Mike

@Tara Brodersen Click on your profile. Then account settings and privacy tab should give you an option to click a tab that will hide your last name.

As for looking at markets, I would start in Rock Springs. Meet with a couple realtors, interview some property managers and/or attend an investment meet-up if there is one. Looking outside of Rock Springs, I could look for metro areas that are either within a two-hour drive or a cheap direct flight. Type any city name into the search bar up at the top and it should bring you plenty of posts and insights into markets. Memphis, Atlanta, Dallas, Kansas City and others are talked about as the top markets. At the moment I'm staying in smaller market where there is less competition and purchase prices are low. It allows me to learn a bit and make a few mistakes with lower risks (25% down on properties under $40,000).

Mike

Relaxing on my couch on Wednesday evening and my property manager calls. This is unusual and she has some bad news. In our newly acquired 4-unit building, one of the tenants smelled gas and called the gas company. The gas company came and found 2-3 leaks in each unit. They promptly cut the gas to the whole building. No more heaters, no more gas stoves, no more hot water.

I jumped in my car, purchased two electric heaters for each unit, a $50 gift card for each unit and drove the 40 minutes to the property. Although it was after 10 pm, I was able to meet with three of the tenants and give them the heaters, the gifts cards and commiserate a bit. I assured them I had no idea and would do everything I could to get it fixed as soon as possible. One lady said the gas was cut with her half-cooked turkey in the oven. Thankfully they all seemed to have family living in town so they could go over there on Thanksgiving.

I got home around midnight. I did nothing Thanksgiving day. Friday morning my property manager jumped into action and got a licensed HVAC company out to the house. They started repairing the leaks and moving the gas meter to bring it up to code. If all goes well, the regional building guys can come out on Monday to approve the repairs and then the gas company turn the gas back on. I'm fearing $2000 to $4000 out-of-pocket for the repairs. The good news is that the tenants seem in good spirits and it is such a good building I would have willing paid $10,000 more for it than I did. Nobody wants to drop a few thousand dollars on repairs, but at least nobody was hurt and we should be in good shape when the repairs are done.

Questions...

1) Am I a bad owner for not trying to get someone out there on Thanksgiving to start the repairs?

2) Does the process (repairs, regional building board, gas company) and costs seem inline for those of you who have dealt with this before?

3) Does my inspector bare any liability for not catching 8-12 gas leaks or is he just a bad inspector?

4) Any chance insurance covers gas leaks?

Please tell me this only happens once in 100 years. I told my wife that as I left the house at 9:00 pm on Thanksgiving eve.

Mike

@Tara Brodersen Welcome to Bigger Pockets! There are advantages and disadvantages to both options. Presumably, you know your home market well and it is nice to be able to look at potential properties in 15 minutes. You also have the possibility of managing your own properties if they are close by. But managing your own properties can be a lot of work and a lot of headaches. Even if you purchase in your town, you might want to consider a property manager.

We turned our original home into a rental property and were forced to use a property manager when we moved overseas. It was great. The best 10% I ever spent. Basically, they deal with 95% of the issues and get in touch with me only when there is a major problem.

Recently I heard the quote on a podcast by the Real Estate guys which said, "Live where you want to live, but invest where the numbers make sense." If you're willing to utilize a property manager, it opens up most of the US to you. I would recommend doing some research on a few markets and then picking one to really get to know and invest in. It doesn't have to be a major market. We've found great buys in a community of about 100,000 people 40 minutes away from us.

So weigh your options. If you can find a market that doubles or triples the returns of your own market, I would make the jump. If you find markets that are only marginally better than your home market, I would stay at home and enjoy the local knowledge and convenience of being close to your properties.

Mike

I vote for...

free

basic

pro

Unless you're willing to do away with the two tiers and just have basic (free) and pro. That would be my vote if we can think outside of the box.

Mike

@Geremy C. I understand now. Buying in Colorado makes sense if you're looking to move back this way. I actually don't know of an attorney who handles "subject to" purchase deals. We've been pretty conventional so far just looking for properties that meet our criteria and purchasing with conventional financing. If you start a new thread asking just that question, it might draw in some of more of the Colorado people who might have some recommendations for you.

Mike

@Geremy C. Welcome to Bigger Pockets! What makes you want to invest in Colorado. We have one single-family and one multi-family at the moment. We hope to add another single family by the end of the year. Right now we have one property in Colorado Springs and one in southern Colorado.

Mike