New Construction in Riverwood Neighborhood of Breckenridge, CO
Purchase Price Land $487000 in October 2017
Sold Newly Constructed Home for $2,995,000 in January 2019
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This property was purchased at the end of June 2018 for $195k by an experienced flipper. This borrower requested a hard money loan amount of $180k. Rehab for the property was $35k. The flip took 4 months.
Source - Referral to Borrower
Status - Estate
Condition - Poor / Hoarder Home / Arson Property - see below before picture
Title took a good deal of time to close because several deceased persons were on title. All parties of the transaction had to be patient to await clean title from seller’s representatives.
Gas and Electric had been off at the home for a significant amount of time that Xcel required the borrower to obtain new service as if the home was newly constructed. This line item was over budget as that was unforeseen for the borrower.
To accomplish this goal, keep them happy. Here are some ways to consider doing that:
Make it easy to pay rent. There are online services that allow renters to pay through a web portal - often this will add the fee to the renter’s side of the transaction. Here are some options, but there are many out there for you to look into:
Consider allowing a reasonable amount of pets - especially in Colorado where many folks own dogs or cats. It is a very important component for them choosing a place to live.
If possible, add bathrooms. Renters will prefer a place with a bathroom per room rather than shared.
COMMUNICATION - Most problems stem from poor communication. If you’re trying to set someone up for a repair for instance, communicate the timeline so that they aren’t left wondering.
Consider offing a renewal incentive, if you have a good tenant you would like to keep. Good tenants are worth their weight in gold.
Let tenants know kinks about the property and how things work. Hopefully this will lead to fewer calls later about where to shut off water or power etc. Let them know how to look up if there is a power outage in their area rather than something wrong with the home. You would be surprised, but people aren’t always familiar with how to check.
Do not over-inspect the property. Give tenants pace and provide them notice if you need to come by.
If you raise the rent on a tenant who stays, consider making an improvement at the same time as an incentive.
If possible, don’t get the cheapest appliances - they won’t last as long. Consider getting a warranty should repairs be necessary.
Maintain proper insurance - vacant property policy
Cover street viewable windows - there are inexpensive options if you do not want to install permanent coverings
Alternate lights left on - can be done physically or devices set up
Make sure all doors lock. Add piece of wood to sliding glass doors
Keep construction supplies & equipment out of view
Post beware of dog sign
If vacant during winter, winterize the home to avoid potential damage
Perform regular maintenance
Post sign for a security company even if there isn’t an existing alarm
If you are new to real estate investing, there are some things to consider when buying an investment property.
First - Consider the location of the property. Is the property in a desirable part of town? Is it an area with with many tenant opportunities? Is it near public transportation? The area will also determine what the property can rent for. Be sure to look at what neighboring properties are renting for and note their condition.
Property Due Diligence -
Repairs : what repairs will you need to make in order to make the property rentable? If you are used to flipping, there are different repairs that will be necessary if you are now planning on renting. Such as being able to get away with not including some appliances when flipping, but needing to provide those to make tenants choose your property over others available. What repairs are necessary for health and safety of your tenants and to limit your liability as the owner?
Holding Costs : what will insurance, taxes, vacancy, utilities, etc cost you over time? What will you need to reserve for any repairs?
Financing : what financing are you able to get? how much will you be required to put down? and after all of that, will the property cash flow. Not only will you want your investment to cash flow, but your lender will feel more comfortable providing financing to you if your investment “pays for itself”. Hopefully in addition to the monthly cash flow, your property will appreciate over time. This will allow you to sell for a profit on top of it generating monthly cash flow to you over time.
You will hear us preach this time and time again. But money is made on the buy. Make sure you do not get excited about a seller, wholesaler or agent’s sexy numbers of what you can rent a property for. Be sure you do not overpay for the property.
Be a good landlord - if you can keep tenants in the property for long periods of time rather than needing to get new tenants constantly, it will make your life and your wallet better.
TABS provides financing to landlords in Colorado. And our management team has been a landlord - we are happy to counsel you if you are just getting started.
Thank you all so much for your support! We could not have done it without you!
first - what is a home owners association? a real estate developer will generally set up a home owners association in a master planned community. this association will determine rules or covenants for the people who live there, generally to keep the look of a community consistent and to make sure that everyone keeps up the neighborhood - removing trees that are dead, not keeping a recreational vehicle parked for an extended amount of time or changing the paint color unless approved. the HOA will also collect assessments from the home owners in order to maintain common areas. The developer will generally be a member of the HOA until an agreed upon number of homes are sold. A recent development in Colorado is that an association must be managed by someone or an entity with a CAM (community association manager) license. This is generally necessary because the management of the HOA handles funds from sometimes a sizeable amount of people and those need to be properly accounted for and disbursed to protect the owners who live within the community.
another consideration in properties with home owners associations, is whether or not a traditional lender can provide financing. there are instances, such as the case, with non-warrantable condos where a portfolio or alternative financer would be required. a non-warrantable condo could exist for example if there are more owners within a community who do not occupy their property as their primary residence than people who do. this information is provided by the homeowners association. some banks find these loans riskier than a community that is a majority owner occupied. if you do find aproperty within one of these subdivisions, also consider your exit strategy. will your end buyer be able to get financing? or does this limit your pool of buyers?
real estate investing is all about whether or not a deal makes financial sense, unlike your primary residence where there is an emotional element: a desire to be in a certain neighborhood, near a certain school, a property with blue shutters, whatever the case may be. homeowners association dues can be pricey, especially in communities with extra amenities such as clubhouses, pools, fitness centers or golf courses. homeowners dues could rise. these liens also take a superior position to any loan should you not pay them which would be of great concern to your lender. when evaluating a property, it is always wise to think of multiple exit strategies. should this house not flip, what do i do? if the market changes, how do i deal with this property? think of these items: will you be able to rent out the property if needed? would i be able to re-finance my hard money loan?
we are here to help and call attention to these issues as they are discovered. not only do we have experience as being a hard money lender to colorado investors buying properties with home owners associations, but we have developed projects and set up these homeowners assocations, been directors of their boards of directors. if you ever have any questions, we are here to help!
Colorado is known for its "special" soils. If you are coming from out of state, you might not be as familiar with swelling soils. This is something that is very heavily disclosed in new construction from home builders, but not as common in resales. I've included a link here to the Colorado Geological Video regarding Swelling Soils:
This is something to be aware of when purchasing real estate in Colorado. There is a chance that in the lifetime of the home you are purchasing, it may have shifted, may have some sort of compromised foundation. This is fixable, but will be more expensive and generally scare off a new investor. Experienced investors who dabble in homes with foundations know that there is a high risk but potential high reward when fixing and flipping these properties. Some institutional lenders or even hard money lenders in Colorado may shy away from homes with structural issues. Here are some things you need to keep in mind: you will need a qualified structural engineer, a qualified structural contractor, you will need to disclose these issues to potential buyers and you will likely need to come in under market for it to sell. But this also means that you should be able to purchase these homes at a very steep discount if there is existing structural problems that the owners are not willing or able to fix. Proceed with caution and get your ducks in a row. As always, let us know how we can help. We are a Colorado Hard Money / Private Money Lender with tons of experience!
TABS, LLC is a family owned and operated hard money lender and investor in Colorado. We are a privately funded commercial lender that provides loan programs for both residential (non-owner occupied)and commercial properties in Colorado.
What makes TABS, LLC unique? We create value by our ability to act quickly and professionally. An advantage of our private money is our negotiating power and that our clients know they are always speaking with a decision maker. Our goal is to continue to have repeat clients and to bring on new clients so that they are able to create successful real estate deals.
TABS, LLC is also an investor in early stage start-up technology companies and in real estate development opportunities throughout the Denver Metro Area.
Learn more about what TABS, LLC has to offer.
We are constantly working to raise the bar on our services. If you have any questions or concerns about your experience, please let us know.
+1 (303) 429-1990