New Youtube Video on Property Management Fundamentals

This is the first of many education videos. This short video explains the ins and outs of determining normal wear & tear on a rental property, what is enforceable by law and how to determine disposition of the security deposit.

Find it here: http://www.youtube.com/user/residentialmanager

URGENT - New Law for CO Detectors

In case you have not heard, the governor just signed legistlation that significantly impacts owner/landlord/property manager liability when it comes to CO detectors.

The legislation is posted in its entireity on the Echo Summit website at:
http://www.echo-summit.com/mgmt_owners_forms.html

A few things of SIGNIFICANT note:

• Read this section carefully: 38-45-104. Carbon monoxide alarms in rental properties.
• Battery-powered detectors have tpo be installed using NATIONAL FIRE
  ASSOCIATION'S STANDARD 720. You have to purchase the report for ~$40. We did, and it is EXTENSIVE.
• There are very well defined responsibilites for both the landlord and the renter. Understand these and make sure your renter understands them too.
• Anybody installing these things has to be certified to do so...

Our conclusion is this: have only a professional HVAC company install these. It will cost more, but the liability has now become extreme as the legal pendulum has swung to the conservative side.

Calculating Gain... Correctly

Even with advanced Real Estate investors, we often see incorrect gain calculations upon disposition of property. Visit our website for more details, but here is the short summary:

Capital Gain = Adjusted Selling Price minus Adjusted Cost Basis


Adjusted Selling Price
= Selling price
MINUS
o Selling expenses (realtor fees, fees, advertising)
o Expenses to fix up to sell
o Loan charges paid by Seller (loan placement fees, points)
o Excise taxes


Adjusted Cost Basis
= Original purchase price
PLUS
o Costs associated with original purchase (all fees, RE taxes owed, inspection costs, ---not points---)
o Major improvement expenses (---not routine maintenance---)
MINUS
o Deductible casualty losses (e.g. caused by natural disasters)
o Depreciation allowed or allowable if the home was used for business or rental purposes

Scott Lukes
Founder, Echo Summit Properties
http://www.echo-summit.com/

Property Management Lockout Key

Tom the locksmith just stopped by the office and showed us a great tool, the lockout key.

Basically, if you have a move-out/eviction scenario where you need to secure the property before the locksmith can change locks, there is a special type of 2-part key that jams a piece of metal into each lock, making existing keys unusable. The metal is removable with another special 'key.'

So of course the first question is "what's to prevent somebody from just kicking the door down?" That is the topic of a compeltely different discussion thread. If somebody buys me a cigar at Del Frisco's, I would be happy to engage...

Scott

Days on Market for Rental Properties

I was asked the other day how the wintertime is affecting our rental rates. Even though we are entering the late fall period, we are still renting all of our properties without a problem, so traffic is still there. Instead of averaging 21 days on market in the summer, we are now at around 32 days, however.

A few of the added days on market could be eliminated by us being stricter with our owners on price competitiveness. One method that works quite well is to have a loss-leader rate in your advertising (e.g. $900 for 6 months), where you can negotiate a higher lease amount for the additional months. This is a lot better than waiting 2 months to get your desired $1,100.

The goal is to get eyeballs and calls on YOUR ad... not the others. Once you have a conversation going, the deal is typically yours.

Scott

Investor Competition Heating Up - Time for Turn-key Rentals?

Competition for Denver residential single-family investment homes, at least at the wholesale level, has picked up dramatically in the past 2 months. We understand this is due largely to a massive amount of out-of-state money moving in, making cash offers, sight unseen with no inspection contingencies. It is very hard to compete with this, though Echo Summit is still having success via its network of investors.

Given this phase of the market, it is probably time to start thinking about purchasing turn-key rental propertes, and aiming for cash flow, rather than short-term cash-on-cash return. Obviously, almost any property held for a minimum of 5 years will produce some form of cash-cash return based on appreciation alone. What I am a suggesting is to focus away from the masses who are hoping for quick returns on a wholesale flip, and target areas/property types that they are not.

Without getting into the boonies, I recommend focusing on transportation corridors (SSE is off the charts) and anything feeding into the Cherry Creek School District (for those of you who don't know what bond proposals 3a and 3B were for in recent elections... study up. They passed, and will have significance for property valuationn in the coming years).

Scott

Great Website for Zip Code Demographics

We now use this for our Available Rental Properties. Information seems to be accurate...

http://www.bestplaces.net/