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All Forum Posts by: Steve K.

Steve K. has started 29 posts and replied 2782 times.

Post: Airbnb fights back against Boston!

Steve K.#4 Investor Mindset ContributorPosted
  • Realtor
  • Boulder, CO
  • Posts 2,885
  • Votes 5,151

Personal opinions aside, like it or not, courts have ruled time and time again that cities are within their rights to regulate STR's as they see fit, and many are planning to do so if they haven't already. The question of whether or not they can was decided years ago, now the question is to what degree can they. STR's have consistently been ruled as commercial activity and thereby subject to zoning, taxes and regulations like any other business. The assertion that STR regulations infringe on personal property rights has limited legal basis, as overwhelmingly courts have ruled that the rights of STR owner/operators does not supersede the rights of their neighbors who bought in with the expectation that commercial activity would not be allowed in a residentially zoned area.

 AirBNB knows they wouldn't win a case to overturn any of Boston's regulations, as they've lost every similar battle against other cities, even in their own hometown San Francisco, so the legal precedent is extremely strong against them. The current suit against Boston is not about overturning regulations. AirBNB is suing because in addition to regulating Boston also wants to make online listing providers entirely responsible for enforcement and liable for the actions of the sites users, which is a step beyond what even the strictest cities such as Santa Barbara and Jackson Hole have done. What AirBNB is trying to achieve with this suit is to shed liability to their hosts, to not be responsible for enforcement, and to stem the flow of the tide against them as DC and other areas get ready to kick their own new rules into gear.   

Post: Morris Invest Review (after 8 months of ownership)

Steve K.#4 Investor Mindset ContributorPosted
  • Realtor
  • Boulder, CO
  • Posts 2,885
  • Votes 5,151

Sorry you’re going through this @Eric Seppala.  I think there is at least a partial list of investors available because one of these threads mentions that someone from MI sent out an email blast to all investors and forgot to blind copy everybody. This was back in April/May I believe. I’d be surprised if a class action wasn’t in the works. Perhaps @Colin Zhu or @Tyler Jahnke or @Brian Freeman or @Ben Lacher  can steer you in the right direction to join a suit. Good luck, I feel for those involved and can’t understand how this scam has been allowed to go on for as long as it has. Hopefully justice will be served soon. 

Post: How the 1% rule could cause you to lose a lot of money

Steve K.#4 Investor Mindset ContributorPosted
  • Realtor
  • Boulder, CO
  • Posts 2,885
  • Votes 5,151

Great post @Neal Bawa!! Very well written and right on. Thanks for sharing. 

 Another way the 1% rule can lead investors astray is by applying it to inexpensive properties. I mention this because I've seen posts where folks are looking at something like a $35,000 house that rents for $525, which achieves the 1% rule PLUS .5% to spare. So they're saying, "Great deal, right?" Not so much, because owning a $35,000 house gets expensive just like any house, and $525 doesn't go very far at all in offsetting the unavoidable costs of the occasional capital expenditure. When something as simple as the water heater crapping the bed happens, you've lost any profit you might have had, and now you're coming out of pocket to replace the water heater/roof/deck/sewer line/windows/driveway etc. whatever it may be. Whereas a $300,000 property that rents for $2,250 falls short of the 1% rule, but since you're pocketing at least enough money to cover things like a new water heater every so often, you're doing better in that you're less likely to lose money on cap ex. A water heater costs about the same for a $35,000 house as it does for a $300,000 house. 1.5% looks better than .75% on paper, but not if 1.5% isn't enough actual money to maintain a property. 

Post: HELP! Got the inspection back on our 1st property--stay or walk?

Steve K.#4 Investor Mindset ContributorPosted
  • Realtor
  • Boulder, CO
  • Posts 2,885
  • Votes 5,151
@Lindsey Thomspon Hard to say without seeing the house but 5k won’t get you very far in addressing issues of long term water penetration which appears to be what you’re looking at from your description. I second the folks saying to get bids from several experienced contractors, perhaps including a restoration company. Mold isn’t that big of a deal in itself if caught and addressed early, which means stopping the cause (water penetration) early, but if you have rotten wood, saggy floors, ceiling damage etc. then the ship has sailed on nipping it in the bud early. Now you very well may be dealing with structural issues, and the masonry damage is a concern for that as well, so you’re potentIally looking at a very expensive rehab. Get some expert’s eyes on this one. nobody wants a money pit as a first or even 50th Investment property. In my experience as a carpenter, when you have visible rot, you’re opening a can of worms and want to budget for a big project. Take the bids you get from your trusted contractors to the sellers and ask for a price reduction. If they say no then walk. If they agree, make sure you’re prepared/capitalized to take on the work and can afford the vacancy time. Projects like this often run well over budget and take months to complete because once you start pulling things apart more and more problems are discovered. Let us know how it goes!

Post: Rent Your Roof for Solar, Has Anyone Tried This Before ??

Steve K.#4 Investor Mindset ContributorPosted
  • Realtor
  • Boulder, CO
  • Posts 2,885
  • Votes 5,151

@Dan Broughton forgot to tag you, see comment above

Post: Rent Your Roof for Solar, Has Anyone Tried This Before ??

Steve K.#4 Investor Mindset ContributorPosted
  • Realtor
  • Boulder, CO
  • Posts 2,885
  • Votes 5,151

Hi Dan,  There are a lot of solar contractors operating in Chicago, which is a good indication that solar electric systems make economic sense in your market, but it will depend on the specifics of the roof, electrical usage history, type of meter at the property, and net metering agreement available from the utility. Best place to start would be to contact local installers, who will be able to provide free consultation and put together quotes for you. I would get 3 quotes to compare. Energysage, a rating website of solar installers, is a great place to find local companies to talk to. 

Post: House age. Does it matter?

Steve K.#4 Investor Mindset ContributorPosted
  • Realtor
  • Boulder, CO
  • Posts 2,885
  • Votes 5,151

Call me crazy, but I like my houses like I like my wine. Scope the sewer line. Check the roof and plumbing for leaks. See if the floors sag. Check for settling (indicated by gaps in the door frames and cracks in the plaster/drywall). Check to be sure walls are plumb. Look for any cracks, moisture or decay in the foundation, especially if it's brick or stone. Make sure the lot has drainage/isn't in a depression or flood prone area. Smell and look for mold, termites, rodents, birds, bats, and critters. Check electrical, not just for knob & tube but also fuse boxes, FPE panels, anything less than 100A main, signs of arcing (black burns around an outlet or breaker), aluminum wiring, etc. Windows can be a big expense that is often over looked. So is maintaining or removing mature trees. Utilities will be more if it's poorly insulated, with dated appliances. Lead paint and asbestos aren't too big a deal but you should know the scope of remediation project you're getting into. Often times, these completely addressable issues can help you negotiate a better price based on what you find during inspection. You will have to do some work on an old house, but working on old houses is fun. I'd prefer an old one with good bones to one built last week out of glued together sawdust, nearly identical to it's neighbor. Just be ready to make some repairs, and whatever you do, don't buy in a historic district! 

Post: Stock Market Stinks (Down -800 points Today) - Real Estate Great

Steve K.#4 Investor Mindset ContributorPosted
  • Realtor
  • Boulder, CO
  • Posts 2,885
  • Votes 5,151

@Account Closed If I were your heir, I’d prefer to inherit passive dividend yielding stocks over aging physical structures that require constant influx of capital and effort to maintain. Poor kids better know the business end of a sewer snake!

Post: Stock Market Stinks (Down -800 points Today) - Real Estate Great

Steve K.#4 Investor Mindset ContributorPosted
  • Realtor
  • Boulder, CO
  • Posts 2,885
  • Votes 5,151

@Account Closed So you’d have to buy 12 houses that cash flow $500/month reliably. Not easy to do. In fact completely unrealistic in most areas of the country currently. Plus don’t forget closing costs on each not to mention most properties need at least a little work and additional cap ex to turn into performing assets. So much more time invested and room for error than clicking a few buttons or making a call to your stock broker. Also the tax benefits aren’t so hot when depreciation recapture is accounted for. I like RE because I can fix stuff with my hands, but if an RE investor doesn’t bring a special set of skills to the table such as being able to source discounted properties, force appreciation through sweat equity, consistently making deals like the one you described in your other post, etc., they may be better off focusing on their day job and loading up on dividend stocks. $500/month cash flow and $70k profit on a single subject to deal is not the norm. 

Post: Stock Market Stinks (Down -800 points Today) - Real Estate Great

Steve K.#4 Investor Mindset ContributorPosted
  • Realtor
  • Boulder, CO
  • Posts 2,885
  • Votes 5,151

@Account Closed  2.92% dividend yield on top of doubling your money if you held for 10 years, with zero work on your end, isn't good enough for you? That's fine, don't invest in WFC. But that doesn't make your statement that stocks don't provide cash flow any less incorrect. Saying stocks don't provide cash flow is simply not true. Someone else might have enough WFC that they collect more than enough in just dividends to cover their expenses, and they would laugh at your headache-laden RE investments, which they could never scale big enough fast enough to cover their expenses, whereas the click of a button get's them plenty of dividend income to live off very comfortably while compounding the rest. Probably 99% of the people on here buying property they think will return $100/door are actually unknowingly losing money, while if they had bought WFC at least they'd be making 2.92% dividend yield on top of appreciation.

It takes a lot of work to build a strong portfolio of cash flowing rentals. Stocks are so much easier to acquire by comparison. On top of that, what if all of a sudden you need a new roof, or windows, or a sewer line, or the irrigation system freezes, leaks and floods the basement, or a fire guts the place and your insurance only covers some of the vacancy/rebuild costs, or a flood washes it away and you didn't have flood insurance, or your tenant stops paying and their estranged lover/stiffed drug dealer breaks in and destroys the place, or any one of a myriad possible bad things happens because you have an investment that hinges upon human behavior, and therefor needs constant baby sitting, and 5 years of your glorious $500/month is wiped out in one afternoon, and the bank takes the property? None of that happens in stocks. Sometimes companies go out of business, but look up how many aristocrat stocks have gone to zero recently compared to the number of foreclosures. 

I personally would never have been able to invest in RE if I didn't have dividend income from stock investments first because I work in sales and lenders hate fluctuating, commission-based income, even if the commissions are substantial. So for me having dividend stocks was a critical piece of getting into RE. Why do you think lenders love seeing a strong history of dividend income? Because dividend income is consistent and reliable. Arguably more reliable than rental income. Saying only one is the answer for all investors is like saying people should only invest in Pokemon, Bitcoin, or 90's baseball cards, it's just bad investing advice. 

 Look, I can't get into a back and forth argument with you. It seems you have convinced yourself that only one form of investing makes sense, and you're only going to accept data points that support your point of view, while discrediting any facts pointing in a different direction than your narrow minded beliefs. I don't think anything anyone says will convince you, which doesn't matter because you're all set with your RE investments, and kudos to you for that.

Most people agree that both stocks and RE have their advantages and disadvantages. Each strategy makes sense for someone's personal situation and individual investment goals. For the majority of people, the answer is both. In my experience most successful people, millionaires, billionaires, whatever, will have some sort of mix of stocks and RE or at least REIT's in their portfolio.

 One of the main reasons there is opportunity in rental property is because less people want to do it than investing in stocks, and there's a good reason for that.