All Forum Posts by: Steve K.

People in this thread are actually being very nice by giving you sound advice (for free). The only nice comment in your opinion comes from a gentleman who just told you he has only done one deal, and he was smart enough to only ask for $5k towards a concrete driveway that needed replacing, which is completely reasonable.

Have you shared this list with your agent? Any agent I've worked with would try to talk some sense into you to keep you from sabotaging the deal because this is not how inspection objections are normally handled. It’s supposed to be for things that are uncovered during inspection, not that were obvious prior to going under contract.

It's possible you mis-interpreted what your agent meant when they said you could renegotiate after inspection (usually that means for major issues like dangerous electrical panels, structural issues, partially collapsed cast iron sewer line, etc. that weren't obvious at the initial showings, not superficial things like "the AC is rusty" or "we should replace those ugly fans"). I certainly don’t think the seller was offering a blank check when they said “give me the number”.

The seller is almost certainly going to tell you to pound sand (unless they're really desperate, which would make me nervous as a buyer). Are the furnace, water heater, AC, dishwasher, fans, windows, etc. actually broken? If not why would the seller buy you brand new ones? You must have seen all of these items during the initial showing, so why would you think you were going under contract for something different?

I would advise you to think about whether you want the deal or not and come up with a much more reasonable list if you do. This looks like a rehab budget or contractor's punch list, not an inspection objection. Just being honest, take it or leave it.

Who know's, maybe you'll get lucky and the seller will agree to pay for all this. If you're in a strong buyer's market or there's something bigger wrong with the property the seller knows about that you missed, I guess it's possible they'll agree. Worth a try I guess, just be aware that if you piss the seller off it might end up costing you the deal.

Good luck!

2 Votes

Originally posted by @Brittany H.:

Thanks Kathy. So my husband and I would cover any assessment charges as well as closing costs. If for some terrible reason, we lost our jobs tomorrow and couldn't make our payment, we'd move back to Wisconsin, live in a home we own there, and rent out the condo in Boulder. My parents would take all profits from renting.

And thank you so much Teague for the constructive criticism! I really appreciate the suggested plan and think we could totally make that work. But if the numbers don't add up, we'll definitely just stick with something smaller we can afford on our own. We're not trying to bankrupt ourselves over a space that won't be frequently used! And thanks for the heads up on the HOA. I'll definitely dig in deeper on that to have a better idea of what we'd be getting into. Great advice.

Just one note on this comment: Keep in mind there would be no profit for your parents to keep from renting in this scenario because a $600k condo with $150k down will not cash flow. You'd be looking at ~$3k mortgage payment alone, probably closer to $4k/mo. all in when HOA, maintenance, management, cap ex is all accounted for, while you could probably expect about $2,500 in rent, so you'd be running negative ~$1,500/mo even considering 0% vacancy. A duplex would have a better chance of breaking even when fully rented out, although even a duplex would be tight. At least a duplex would be more liquid than a condo if you needed to offload it in a worst case scenario. Just something to consider as renting a $600k condo wouldn't be a good failsafe in this case it would turn into a big liability for somebody.

Did I mention I have a duplex for sale in Boulder right now? Just kidding lol.

1 Vote

@Brittany H.

It's very common in these parts for parents to help out with a starter home, probably more common than not actually, especially if we include simply offering to co-sign on a loan. I mean half the people in this town have large trust funds (not using that in a pejorative way, that's just the way it is here). Much of the Boulder wealth game is rich families getting richer by controlling real estate, so nothing out of the ordinary for your parents to buy you a home. However, having them buy you a condo and then also asking them to make 40% of the payments on it for a potential payday at an undetermined time in the future doesn't scream "Great Investment Opportunity" to me, so framing it that way may not be the way to go as it's more of a huge favor to you than an investment for them. The way it's penciled out now is not something I'd feel comfortable pitching, mostly because I don't think a $600k condo is the best choice. When I think of investment property I think of multifamily buildings, not condos personally. It would make a lot more sense to at least go with a SFH if at all possible (if you shop around a while $600k can still get you a fixer-upper but you might have to look at Gunbarrel/Longmont/Lafayette).

Or what about partnering on a duplex? You and the hubby on one side, managing a STR on the other except for when your parents are in town (this would comply with Boulder's STR laws because you'd live in the property).

With a duplex you wouldn't need to ask the parents to cover 40% of the mortgage on top of making the down payment because you'd pay a chunk of monthly expenses and use the income from the STR side to cover the rest. If you hustle and keep it occupied you might even make enough off the STR to start paying your parents back so they don't have to wait for the exit to recoup their funds. If you put a payment plan in writing and include interest on their money, it starts to resemble an actual investment. You'd be managing and cleaning the unit, washing sheets etc. so not just dead weight in the deal. One thing to keep in mind with this is you have to have a license to run an STR in Boulder, but the fee is nominal, they just don't let people turn homes they don't live in into STR's.

Of course duplexes start around $1M... so it comes back to the overall financial picture and we're not privy to that, so just spit-balling here really but if you can swing it, I think that's a much more solid investment idea than a condo. I guess it all really depends on your family's financials: if $150k is not a life changing sum for your parents, that's one thing, no big deal. If they're the type of people to spend $150k on charity dinner followed by a Lion King performance, sure take the money and might as well ask for a little more for a duplex in order to make it a viable investment. But if they'd be diverting $150k away from their retirement account, paying capital gains taxes on it, tying up money they'd otherwise use for a comfortable retirement, or if it would wreck them financially to lose it, then that's something I'd think real hard about. I'd say if they're wealthy enough to not be effected tremendously by having that money tied up/ potentially lost, then it's a reasonable ask to have them help, but if not I'd be cautious about accepting their money and just look into the L towns or Denver burbs where prices are more reasonable and you can afford something on your own. Or at the very least save up your enough of your own money to at least go 50/50 on the downpayment.

Duplexes can be hard to find but if you get one, pretty darn good chance you'll have great appreciation. Condos also have the assessment issue which could lead to you leaning on your parents for more money to repave the parking lot or something random out of your control down the road, plus HOA fees run $200-500/mo, and condos typically appreciate less than other property types (last few years have been an exception to that rule simply due to anything entry level being in higher demand than other market segments, but I think that will slow dramatically as condo prices are now approaching entry level single family homes).

If a $1M+ Boulder duplex STR strategy is out of the question, I'd recommend going out to Longmont (getting cooler and less stabbier every day). Duplexes there start around $450k or you might even find a triplex or quadplex in the $500-$600k range, rents are in the $1200 range so the other units would cover most of the monthly expenses. Using those units as STRs might even create cashflow, and you'd have a furnished spot that could be made available for the grandparents when they visit (although it won't quite be the St. Julian lol). In terms of appreciation potential I think Longmont is looking really good, but use your own Chrystal ball to speculate on that.

Another option would be for you guys to buy what you can afford on your own, and have your parents buy something nearby that you manage as an STR when they're not there. That would keep things much more simple as their investment would be separate from yours, they can sell whenever they want to and get their money out without making you homeless, etc. but you're still helping them cover their expenses by running the STR. It would have to be outside of Boulder though, as STR's must be partially owner-occupied within the city. You could look in Boulder County (I have friends doing exactly this successfully up Magnolia Rd.), up one of the canyons or up in Lyons (not much inventory at all to choose from there right now though) or even Nederland area if you don't mind crazy wind and crazy hippies (just be aware Ned is considering a total ban on STR's).

A lot of us that have been around here a while got into the market by starting on the edges and working our way in. I house-hacked in Gunbarrel for 5 years, then went up to Nederland for 8 years, and now we're up Sunshine Canyon where it's a little less expensive than being right in town. All of our investments are in Longmont and Denver if that tells you anything. Boulder is not really an investment market per se, but more of an appreciation speculation play as cash flow is nearly impossible to achieve. Pretty safe gamble looking at what Boulder has done in the past, but ultimately a gamble none the less. It's important to understand the difference between an investment and an appreciation play, especially when dealing with other people's money.

Getting your foot in the door here is the hardest part, so you're lucky to have family willing to help. Good luck! Steve

1 Vote

Originally posted by @Jeremiah Clark:

I haven't committed to anything, it's just a simple consult. I am just interested in more information from all sides. Knowledge is power afterall.

You could chat with @Tyler Jahnke or @Todd Burton

0 Votes

Originally posted by @Jay Hinrichs:

Originally posted by @Steve K.:

Originally posted by @Jeremiah Clark:

Originally posted by @Steve K.:

For awhile there any negative comments on his YouTube channel were getting scrubbed immediately. It’s a shame YouTube hasn’t taken that channel down yet. I actually reported the channel as a scam because I got sick of seeing his ads. Maybe if more people report the channel it will get taken down.

This is unfolding like the Real Estate version of Fyre Festival or Theranos. In those cases both leaders (Billy MCFarland and Elizabeth Holmes respectively) doubled down on their scams even when it was painfully obvious their jig was up. They both still deny having lied to customers or misleading investors even after they've been proven guilty. A lot of smart people were duped in those two situations too, not just blind consumers but also sophisticated multi millionaire investors, when in retrospect it should have been obvious to everyone that the products were actually vaporware. There are many parallels to these cases and Morris: the schemes relied on a charismatic leader that inspired confidence and got investors to open their checkbooks with little due diligence, the scammers ended up being victims of their early success in that they oversold something and in the end couldn’t deliver. Also instead of admitting it when they should have they tried to sell and cheat their way out.

Regarding the blame game/ not taking responsibility: the problem with these Morris Invest deals began with Morris and the way they were sold by his company, so passing responsibility on to his partners doesn’t work for me. I think it’s safe to say that nobody could have delivered what he was selling in the volume he was selling it, and that’s probably what Oceanpointe will say in their defense. But let’s say he really didn’t know what was happening with his business and was simply set up by his partners; even given that (undeserved) benefit of the doubt, at the very least it was pointed out to CM early on through many, many investor complaints that he was the face of something that wasn’t right. So he knew then, why not stop selling at that point? He chose to keep taking people’s money. There’s also no doubt that he saw in person some of these burned out, economically and functionally obsolete houses he was selling. He knew or should have known they were not worth much, and connived his customers into overpaying for them anyway. He did this through not just his celebrity status, good looks and silver tongue, but also with a well designed and polished high pressure sales program that relied on fear of missing out and classic bait and switch tactics to rush customers into bad decisions without conducting inspections, getting appraisals or any of the usual due diligence. The way it was set up on both the sales end (his side of the biz) and boots on the ground side (Oceanpointe), seems very intentional and makes it hard to see it as anything but fraudulent in its entirety. At a minimum he continued doing business with the same partners well after he knew they were shady. Using his advice, which he was unqualified to give as a novice investor himself, people over-leveraged themselves on their personal residences, borrowed money from friends and family, scrounged up every penny of their life savings, and sent that money to his company in exchange for “financial freedom”, a product that wouldn’t be delivered. That makes him a willing, complicit, central player and perpetrator in a scheme that defrauded people. Whether or not he was the actual mastermind or just a hapless wingman isn’t that important and definitely doesn’t absolve him of guilt. Oceanpointe wouldn't have been able to pull this scam off at this scale without CM's marketing and willingness to continuing the charade when he knew people were being ripped off. He was robbing from Peter to pay Paul running a Ponzi scheme, that doesn’t happen by accident. But what else can he say except either “I’m sorry, lock me up” or “they made me do it”? Of course it's easier to place blame than accept responsibility, but throwing partners under the bus might not work to his advantage ultimately as I expect they are returning the favor by sharing info on him with the authorities now as well. To a scammer everyone is a mark including partners. I don’t have a dog in this fight, my only involvement is I have a friend who bought a Morris house and recommended them to me so I started researching on here and found all this. Now I’m just captivated by the slow motion train wreck it has become. I believe Bernie Madoff was first reported in 1999 and didn’t get busted until late 2008, so I guess these things just move painfully slow and are allowed to continue all the way up until they reach an absolutely egregious tipping point before authorites finally step in. Too bad for anyone caught in the web in the meantime. I think @Jay Hinrichs is right: sociopathic or at least pathological, but I’m no psychologist. It’s just that seeing it unfold on here, the way it was set up from the beginning then the crazy email chain that began after the unintentional cc’ing of all the disgruntled investors... and right at that point in time, when Clayton had to of been getting overwhelmed with calls from worried investors and their lawyers, I tuned in to his channel and he was releasing a video about how to avoid getting sued, with his wife in their living room. It does seem a little sociopathic. My guess is that he just wanted so badly to believe in his own success that he truly felt he deserved it. There had to have been an unhealthy dose of “dog eat dog” in his mentality. I don’t know if that’s sociopathic or pathological or just a millennial thing or what, all that’s beside the point anyway. Whatever happened/is happening over at Morris Invest, it ain’t right.

"my only involvement is I have a friend who bought a Morris house and recommended them to me so I started researching on here and found all this."

I'm interested in hearing more about this. How long ago did your friend invest? Has he had any problems? One house or multiple properties?

I actually have a consultation with MI on Monday. What questions should I ask? I dont wanna talk to them and just start bashing them for all the negative stuff I've read on here so how should I phrase it to try and get the info I need?

I have a bunch of questions I've already written down that are the standard DD type questions, but anything more I should be aware of?

Jeremiah my friend was an early investor and I’d say on the spectrum of MI properties he did ok in that he didn’t lose his whole investment like many did (just most of it). He’s lucky it was just one house and just a small portion of his overall wealth. He doesn’t like to talk about it much. You should do the call on Monday, I’d be curious to hear how it goes. Definitely ask for an independent inspection and an appraisal, or tell them you want to see the house yourself and have the standard contingencies. The answer to that will likely be revealing (hint: if they say there’s no time for that or make excuses, pressuring you to move quick, that should tell you everything you need to know. I’d also bring up the lawsuit and FFF BBB rating/ ripoff report articles and see what they say. Don’t be surprised if they hang up.

STeve I am of the other side of the coin.. I would advise to just walk away from these folks even if they cleaned up there act they have devastated 100s of investors who lost millions and they just pass the buck they are in multiple law suits AG is investigating hard.. why would anyone who knows all of this in their right mind even considering giving them any business at all.. they simply do not deserve to be in business they should be shut down and No one based on the past bad acts should give them the time of day once they have been made aware of the tragic events of the past.. These financial loss's to many are tragic life altering events Only thing worse is the death of a spouse or child to many of these investors.. With all the other providers in America that run clean shops there is nothing special or unique about what they sell.. they are in every market.. hard PASSS

Well yeah Jay I didn’t mean to imply that anyone should work with them, just that taking the call might be interesting from a sociological experiment angle ;). Then again I’ve been in sales most of my life so I’m entertained by swimming with sharks.

1 Vote

Originally posted by @Jeremiah Clark:

Originally posted by @Steve K.:

"my only involvement is I have a friend who bought a Morris house and recommended them to me so I started researching on here and found all this."

I'm interested in hearing more about this. How long ago did your friend invest? Has he had any problems? One house or multiple properties?

I have a bunch of questions I've already written down that are the standard DD type questions, but anything more I should be aware of?

2 Votes

@Account Closed

Joe have you been following this tiny home village's story in Denver?: https://www.gofundme.com/denvers-first-tiny-home-v...

https://belovedcommunityvillage.wordpress.com

https://www.radianinc.org/project/beloved-communit...

They've been getting a ton of press lately, both good and bad including a short documentary. I think they are located in RiNo as of now but have had some negative reactions from the locals there, even got raided by the cops at one point if I remember correctly. They were supposed to move to a new spot earlier this year but that fell through so now I think they're trying to move up to Globeville there behind the McDonald's but have had some pushback on that idea too.

Maybe you could link up with these guys (if you haven't already), as it seems they've been navigating the legal system as it relates to tiny homes in the Denver area for a few years. Their model is more geared for the homeless population as a charity compared to what it sounds like your model would be, but I imagine there would be some crossover with what you're talking about at least on the regulation side.

https://www.westword.com/news/advocates-announce-d...

https://denverite.com/2017/03/10/denvers-first-tin...

https://www.westword.com/news/denvers-beloved-comm...

I spent most of my 20's living in vehicles being a climbing bum (from as small as a Suburu wagon to as big as an old school bus, and even managed to keep attractive girlfriends around most of the time, so don't listen to these negative Nancys on here, chicks actually really dig this stuff). For me I'm fine dealing with a space that small, it's actually preferable in a zen way. But I do like to be able to jump into the driver's seat and hit the gas when things get weird, so I really like having access to the cab from the living space, and an operable motor of course. Here's my current "tiny home":

1 Vote

Originally posted by @Josue Vargas:

Originally posted by @Steve K.:

@Jimmy Lieu 2019 is probably going to be a better time to invest than 2029. They say the best time to plant a tree was 20 years ago, and the next best time is right now. To be fair, it is kind of hard to find good deals right now. So the answer, like the answer to so many questions in real estate, is it depends. It depends on the individual deal, it depends on the individual market, it depends on the individual strategy. If you’re looking to fix and flip in an extremely hot location, and you’re working with a tight budget that requires hard money, it may be challenging to find a property plus a bit risky on the exit as we will probably have fluctuation in the market soon. If you’re looking for a buy and hold that you plan to sit on for several market cycles, and you have the cash reserves to weather a few storms, I say go for it. If you have access to a deal that cash flows and/or meets your personal criteria, definitely go for it.

For all of us investors, newbies with more than 0 properties or whatever, I want to ask one simple question... How did you feel on your first investment property and how did you think the market was on that time frame?

I can tell you, I felt somewhat excited, but terrified at the same time. I invested in a deep down market about to start recovering (2012), but it was all worth it at the end. If I knew better I would have more properties or deals within that time frame, but I'm not these savvy economist that can predict the future.

Just saying there is a lot of things to consider and learn at once for new investors. In my opinion, today is a good market to invest, tomorrow may be a little bit expensive (or cheaper) but eventually it will fluctuate and average the trend (appreciation or keep up with living costs) . One thing for sure is the cost of living and Gross Domestic Product (GDP) is going anywhere but UP.

I’d say if you can find a good deal in 2019, go for it! And send one my way while you’re at it.

0 Votes

@Scott Houin if the question becomes “is it harder to replace a tenant or a pm”, I’m gonna go with pm every time. Some pm’s are incompetent, some are crooks, and a few of them are ok. Hold on to the ok ones. It’s a hard job, and unfortunately, ok PMs are hard to find.

0 Votes

All Forum Posts by: Steve K.

Steve K. has started 29 posts and replied 2790 times.

Post: Morris Invest and Clayton Morris Review

Post: Negotiating price down after inspection

Post: Purchasing home with parents assistance. How to best split?

Post: Purchasing home with parents assistance. How to best split?

Post: Morris Invest and Clayton Morris Review

Post: Morris Invest and Clayton Morris Review

Post: Morris Invest and Clayton Morris Review

Post: Tiny homes, communities for them and the future.

Post: Is 2019 a good year to invest in real estate?

Post: Property Manager Not raising rents as requested