Landlord Tips: Habits to Help You Be More Successful

The life of a landlord and real estate investor is busy and can be stressful if you let it. Working with a property manager can help keep your life manageable, but you still need to adopt a few habits to keep things in order. Successful real estate investors have many of the same qualities, here are a just a few…

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Important Summer Property Maintenance

Summer is one of the busiest seasons for real estate, rental units included. With kids being out of school and the weather looking nice, it’s a great time to move. With all the business of move-in and move-out inspections, it can be hard to find the time to complete basic summer maintenance on your properties. It’s important to keep your…

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Avoid Design Trends and Save Money When Renovating Rental Property

Home design goes through just as many fads and changes as fashion. Renovations to your rental property are inevitable, but following trends can end up costing you money in the long run. A trendy unit will be highly marketable for a bit but will quickly feel out of date. Here are a few current trends to avoid during your renovations:…

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BuildSmart Regulations in Boulder County

Boulder County implemented BuildSmart regulations a few years ago and since then they have been tightening and perfecting the requirements for new developments. These building regulations are part of Boulder County’s Sustainable Energy Plan. All new developments in unincorporated Boulder County are required to follow BuildSmart regulations. Outside of the actual materials and inspection of the completed building, the BuildSmart…

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5 Simple Tips to Help You Keep Good Tenants

Vacant units are expensive. Not only are you not bringing in rent while a unit is vacant, you also incur costs marketing it and finding new tenants. Instead of losing money to vacant units, work to keep good tenants around. It doesn’t take a lot to keep most tenants happy and it can save you a lot in the long…

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Common Move-In/Move-out Misunderstandings

There are a wide range of expectations when it comes to moving in and out of a rental. From the tenant to the owner to the property manager, there are a lot of people to make happy. So what should these walkthroughs cover and how can you manage the expectations? Here are 3 common misunderstandings for move-in and move-out walkthroughs:…

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Understanding the Common Reasons Tenants Sue

Tenants don’t sue often. Most times a landlord is threatened with court it’s an empty threat. But it does happen and it is rarely expected. Understanding the most common reasons for a lawsuit is the first step to avoiding them. Here are the 4 most common reasons tenants sue: Mishandled Security Deposit Laws about security deposits vary from state to…

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Reasons to Turn Away a Potential Tenant

When you have a vacancy all you want is to fill it, and filled quickly but that doesn’t mean you should let just anyone in. Of course, you always need to comply with Equal Housing guidelines but there are plenty of reasons to say no to a tenant. It’s not worth having the risk of dealing with an eviction to…

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5 Tips for Staging Your Kitchen to Help Sell Your Home

As they say, the kitchen is the heart of the home. Make your kitchen stand out by giving it some attention before you list. A clean and organized kitchen can wow almost any buyer and all you need is a little elbow grease. Here are our 5 tips to stage your kitchen before you list: Clean – And Again Kitchens…

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Tips for Handling Unimaginable Tenant Situations

After a few years of working with tenants it’s likely you’ll have stories to share you never would have imagined. Despite tight screening things with a tenant can go wrong quickly. Maybe they lost a loved one, lost their job or are struggling with their health. Life happens and some tenants aren’t able to manage and start to go off…

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5 Aspects of Setting the Right Price

Listing your home at the right price can feel like a scene out of Goldilocks and the Three Bears. Too high and you might be on the market for a while, too low and it cuts into your bottom line. So how do we pick the price that’s just right? Well, it’s more of an art than a science. Here…

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What You Need to Know About Landlord Liability

Does the word liability make you cringe? You may be surprised by what you as a landlord can be held accountable for. Luckily, most liabilities can be avoided with good property management and tenant screening. Here are 5 major landlord liabilities to stay on top of: Hazards This is a relatively obvious one and should fall under common sense. The…

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Tax Time in Colorado: How Your Property Taxes are Determined

Under Colorado law, all counties must reappraise real properties every two years. The Notice of Valuations (NOV) must be mailed to the property owners on or before May 1st, on odd numbered years (2017). The taxes will be for the following 2 years. The tax rates are set in December each year. For most properties, 2018 (Intervening tax year) taxable value…

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Is a Condo a Good Investment?

Many people consider buying a condo to be a good investment, one you could live in for a while and rent out later or buy outright as a rental property. Are these purchases really all they’re cracked up to be? Let’s take a look at the numbers for the Northern Denver area: 2015 Average Sale Price For Condo October 2015:…

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How Property Taxes are Determined

This post describes how the property taxes are calculated and what are the timelines in order to appeal if your property tax seems too high. Property taxes are determined on odd-numbered years for 2-year tax periods. Property taxes determined in 2013 will be the taxes for 2013 and 2014 State statute requires that each property in the county be re-valued…

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Higher Sales at Foreclosure Sales Auctions?

An article from the Certified Distressed Property Expert (CDPE) website stating the additional evidence supporting the shortage in the housing market. It is more difficult nowadays  for investors to pickup bargains. In the past the investors have been able to wait out the “preference” period given to home-occupant buyers. The HUD and many banks have a period of time giving…

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SB 70: The Uniform Residential Landlord and Tenant Act Passes Senate Judiciary

The Colorado Senate Bill 70 – 2012, creates the Uniform Residential Landlord and Tenant Act describing the obligations of both landlords and tenants as it relates to rental property and rental property agreements. The industry stakeholders including the Property Managers community, Colorado Apartment Association and Colorado Association of Realtors are in opposition to the bill. We are involved in and/or…

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Case Study – Analyzing an Investment Opportunity

The purpose of this case study is to illustrate the steps involved in analyzing a residential investment opportunity. It may not cover all aspects of the investment analysis but it is very comprehensive. Where applicable, there are links to more explanation of the topics throughout this post. The objective is to show how one, systematically and objectively, can quantify the…

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Pertaining Laws

Law & Regulations investors and managers should know: Risk-Based Pricing & Credit Score Disclosure HB10-1278 HOA Registration LBP Compliance Guide LBP Pamphlet Renovate Rights Pamphlet HB09-1276 Delayed Foreclosure HB10-1249 Expedited Sale Protecting Tenants in Foreclosure HB08-1356 Warranty of  Habitability HB09-1091 Carbon Monoxide Law  

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Investment Decision Points

Decision Points Unlike purchasing a property as a home, where the buyers are emotionally involved, the purchase of an investment property mostly is (should be) a business decision. Below are some of the decision points: Initial cash needed for down payment, closing costs, repairs, etc Cash flows (before and after tax) Tax impact (liability or savings) Return on investment Financing,…

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Leverage

I’ve discussed the first component of wealth building, Time Value of Money, in another post. In this post I am discussing the second component Leverage, the pros and the cons. First some definitions and I’ll have examples. Leverage is the use of borrowed funds to finance an investment. A Positive leverage is when an unleveraged investment has higher returns than…

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Time Value of Money (TVM)

The two principals in wealth building that an investor must understand are the Time Value of Money and Leverage. This post describes TVM and a few things about financial calculators. But first 5 definitions: Compounding(i) & Discounting(i), Present Value(PV), Future Value (FV), Payment (PMT), Holding Period (n). (A)Let’s say you invest $1000 today (PV) at 10% annually for 5 years…

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Tax Due on Sale

The taxes you owe on the sale of an investment property is made of 2 parts: 1) Tax on the gains Taxable Gain = Sale Price – Cost of the Sale – Adjusted Basis*. 2) Tax on total cost recovery (depreciation) Tax on the total cost recovery taken is at the maximum of 25%. For Example, You purchased a property…

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Adjusted Basis

Adjusted basis refers to the total cost of acquiring a property less any cost recovery (depreciation). So, Adjusted Basis =  Purchase Price + Acquisition Costs + Capital Improvements – Cost Recovery. Example, You purchased a property for $80,000; paid 1.5% mortgage origination fee; Put a new roof for 5,000; and, kept the place for 10 years. The land is, say,…

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Quantifying After-Tax Cash-Flow (ATCF)

The methodology behind figuring out the After-Tax cash flow (ATCF) is to take your Before-Tax Cash-Flow (BTCF) and add to/subtract from it your tax savings/ tax liability. Here are the steps: Taxable Income = Net Operating Income (NOI) – Annual Interest Payments – Cost Recovery See below for Cost Recovery (a.k.a. depreciation) calculation. Tax Impact = Taxable Income X Investor’s…

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Using the Cap Rate

The Capitalization Rate is defined as CR=NOI/Price. Cap Rate is often used to valuate and compare investment opportunities. It is a simple way to do so. It takes into account expenses but not the financing, appreciation, tax impact, etc. An Example: There are 2 four-plex buildings. Building A with an annual income (NOI) of $30,000, priced at $335,000 yielding a…

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Calculating Net Operation Income and Cash Flows

Net Operating Income (NOI) , as one put it, is the center of the universe. Practically all valuations are based on NOI. It is the Net income from the property as if there are no Mortgages. A couple of definitions first: Gross Scheduled Income (GSI) is the income expected from the rental property assuming fully rented + any other income,…

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Sale of Primary Home

Single filers can exclude from their income up to $250,000 and married couples up $500,000 of gains from the sale of the primary home meeting the time-test. The seller(s) must have lived in the house 2 years out of 5 years prior to the sale. The 2 years does not have to be consecutive. There are other rules and exceptions…

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Methods of Valuation

There are several ways to estimate the value of and analyses of an investment property. Each method has advantages and disadvantages. All should be considered when applicable. There are 3 key areas that would impact the value. Like a 3-legged stool, all 3 must make sense to for the investment to stand straight. Income from the property Operating expenses of…

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Tips for Successful Real Estate Investments

Pay careful attention to 3 key areas Income Expenses Financing Run the numbers BEFORE buying Cash-flow analysis before and after taxes Tax Savings or Liability Project the cash-flow for the holding period Disposition plan and overall investment performance over the holding period FMRR – Financial Management Rate of Return is a system to capture a the points listed above. I…

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