All Forum Posts by: Rodolfo Canon

What they are saying is probably this: "We think the property is under-rented. With 10-year tenants, there is room to raise the rents. So the 'potential future rents' will get you to a 5.11 cap rate."

You then should examine the market rents for similar properties to be certain they are "under-rented," and determine what upgrades, if any, would be required to get the higher rents. 

My crystal ball is cloudy, but to minimize the risks of a possible (maybe likely) negative price appreciation, look at a few things:

1. In downtown Detroit, Dan Gilbert (Majority shareholder of Quicken Loans and the Cleveland Cavaliers) bought a large number of buildings, renovated them, and induced the owners of small companies in which he invested to locate in those buildings. The result? Downtown Detroit is attracting other investors and it is "moving on up."

2. In your area look for the potential economic drivers that are operational today that may attract outside investment. The area as you described in is at stasis, meaning it's going to stay the same unless some outside economic force moves it. What is going on in the immediate vicinity of your target location? Are there new businesses? Investment in infrastructure? New transportation modes? If so, hang around. If not move on. 

In Denver, the biggest employers are the airport, hospitals, universities, and financial institutions. They all are having catalytic economic effects. That is what you should be looking for. 

Our client's have had great experiences with Grace Property Management. Daniel Preshaw is a great asset to that company. He is responsive, competent and easy to work with. 

By the way, on their website they list alphabetically the top five property management companies in the Denver market:

Top 5 Denver property management companies – listed alphabetically

Assured Management

Colorado Realty & Property Management

Echo Summit Property Management

Grace Property Management

Integrity Realty & Management 

Jennifer,

There are many options for you:

1. Continue to rent the property and enjoy the cash flow and the inevitable asset appreciation

2. Sell it in a 1031 Exchange which, as you know, is time bound so you need to have a target property for your next investment. Since a 1031 us time-bound when you decide to go that route be sure you have everything accounted for to get to closing. For example, if you invest in a property that may have environmental concerns you run the risk of not closing in time. You should know really well some critical items about the buyer of your property: reputation, financial capability, and their intended use. If their intended use could cause delays for the closing tread carefully.

3. Cash out and move to Florida...

The basic question for you to answer is what is it that you want, what drives your real estate decisions? Is it to build wealth, get cash and go, leave a legacy asset for your children? What is your planning time horizon? Short-term, long-term? Once those questions are answered and you have assessed your financial capability and you management expertise, then move forward. The planning part is critical. 

Development with someone you don't know is risky. A 1031 Exchange can be risky. Holding an asset in hopes of appreciation is risky. So lastly, I would say, assess your risk tolerance. Are you comfortable with higher risks?