There is an interesting article about me below written by Margaret Jackson at the Denver Post.
Adjusting my property value saved me nearly $1,000 a year (described in below article), so am I saving money? Well that depends on what my goal is with the property.
Duplex example: purchased at $144,000, was tax valued at $280,000 and had it revalued at $165,000.
Am I planning on owning it for 10 years, where I would save approx. $10,000, or am I planning on selling it in 5 years and needing to provide evidence of the property value. It would be a much bigger loss at that time if I am trying to sell it for $220,000 and it is showing a tax value of around $180,000.
Obviously it is not a direct relationship between real value and tax value, but is worth thinking about before you storm down to the assessor's office and demand a lower tax value.
If it is easier for you to read you can click on the link below
When Drew Armbruster received a notice that said the duplex he owns in the East Colfax neighborhood was valued at $280,000, he knew it wasn't right.
In May, Armbruster and his wife, Susan, paid $144,000 for the rental property, located in a neighborhood that saw home-sale prices drop 2 percent from 2006.
"It was almost double what it should have been," he said.
Armbruster went to the Denver assessor's office to protest his assessment - and the higher taxes that would have gone with it. About three weeks ago, he received a notice that his property had been revalued at $165,000.
"I was actually pretty surprised," he said.
Armbruster was one of about 12,000 people in Denver to protest his assessment this year. That's more than double the number protesting in 2005. Metrowide, the number of people who protested their property values increased 39 percent. Only Adams and Weld counties saw declines in the number of protests.
Of those who protested in Denver, 2,405 - the bulk of them commercial-property owners - have taken it to the next step at the County Board of Equalization because the assessor's office declined to change the value on their properties.
If the Board of Equalization doesn't adjust the value, property owners can take their protest to the Board of Assessment Appeals, district court or binding arbitration. Because protests are still working their way through the process, it's unclear how many people have been successful in getting their home values adjusted.
In Weld County, the number of protests dropped by 200 to 4,390 this year.
"We did lower values in some parts of Greeley because we saw our market coming down," Weld County Assessor Christopher Woodruff said.
Still, the total value for Weld County is up 6 percent, largely because of the booming oil- and-gas industry.
In Adams County, the overall residential assessment increased 3 percent. The number of protests filed dropped 25 percent from 2005, largely because the assessor's office paid close attention to sales verification, Assessor Gil Reyes said.
"The media was really playing up foreclosures, and everyone thought the sky was falling," he said. "We really worked on getting everything as accurate as we could" to avoid an increase, he said.
Denver County Assessor Paul Jacobs blames media reports for the drastic increase in protests compared with the last assessment cycle.
"It's the counterintuitive expectation," he said. "People were reading stories about foreclosures and the housing market being off. But we were measuring in June 2006, and what the market was doing at that point in time was different than this year."
By the time notices are mailed, the data are nearly a year old and don't necessarily reflect current market conditions.
That means people in neighborhoods where home values have declined by more than 5 percent are probably paying too much in taxes, said Lon Welsh, managing broker of Your Castle Real Estate.
"The assessor isn't keeping up, but it's not like they're not doing their job," Welsh said. "They're working with out-of- date data."
It's not unusual for the number of protests to increase when the market takes a dive, Arapahoe County Assessor Corbin Sakdol said. During this cycle, home values reached their peak right at the second- quarter 2006 appraisal date, well before property owners received their notices of valuation last spring.
In Arapahoe County, 4.4 percent of property owners protested their assessments this year, compared with 2.4 percent in 2005.
"When you go back in history, 4.4 percent is not a gigantic number compared to a lot of years," Sakdol said.
In 1995, for example, 10.8 percent of property owners protested their assessments. The number dropped to 6.4 percent in 1997 and 4.7 percent in 1999.
The drastic increase in protests in Jefferson County is likely because of an active campaign to make sure people knew they could object, Assessor Jim Everson said. The number of protests increased 57 percent to 12,974.
"It wasn't related to a big increase in value," Everson said. "We did a lot of public relations to make sure people knew they had the right to appeal."
Denver County is a unique county with respect to duplexes, because they are very willing to let you split them and sell as attached homes fairly easily. Because of that, I have a ton of trouble finding duplexes in decent hoods under 300K for the investor who wants to live in one and rent the other (many times an FHA buyer). They don't want to buy the run down cash flow duplexes along Colfax or MLK for $140,000 to $150,000 - they want one in a relatively nice hood.
Does anyone share the same problem and is there strategies for these buyer's (who are often a little slower to pull the trigger) to obtain a duplex in Denver county?
To search for duplexes you can go to: www.findmyhomedenver.com and see if you can find any duplexes in that price range now.
Colorado Mortgage Broker Licensing In response to the troubled national real estate market and Colorado’s high volume of home foreclosures, efforts have increased to make higher caliber professionals involved in real estate. Licensing, rules and regulations have become more stringent for agents, appraisers, title companies and mortgage brokers. In regards to mortgage brokers, the below items are mandatory. No longer can someone open up the Yellow Pages, claim to be a mortgage broker and then be compensated for placing a loan --- what a novel concept. Before committing to a mortgage broker, please make sure that they are licensed in Colorado by searching for them on the following link: http://eservices.psiexams.com/crec/search.jsp • Licensing All mortgage brokers conducting business in CO must be licensed with the Division of Real Estate and pass the criminal background check. Only those mortgage brokers who are licensed or exempt from licensure by law may broker a mortgage, offer to broker a mortgage, act as a mortgage broker, or offer to act as a mortgage broker. Licensing registration and renewal is $200 every three years.
• Surety Bond Prior to licensing, an applicant for license shall post with the Director of the Division of Real Estate a surety bond of $25,000. Yearly premium approximately $190.00.
• Errors & Omissions Coverage All CO mortgage brokers must carry Errors & Omissions coverage. For mortgage brokers with less than five years of experience, the annual premium is $600. With five years or greater lending experience, the premium is $500 per year.
• New Pre-Licensing Education & Continuing Education 1. Complete 40 hours of licensing education and pass the two-part licensing exam (Mortgage Lending Basics & State and Federal Law) by January 1, 2009. Approximate cost for course is $250 and $74 for the exam. 2. Complete a minimum of nine hours of continuing education every three years.
Investing in Real Estate 9 – Scrapes, Pops and New Construction This blog will discuss a type of real estate investment, scrapes, pops and new construction, in the ___neighborhood__ area in Denver.
What this investment is: Purchasing a small home in an expensive neighborhood that may or may not need work. The home is bulldozed and a new home or duplex is put on the lot. Alternatively, the existing home is renovated and more square footage is added on. A pop-top is adding a second story to an existing home to add more square footage (commonly, a master bedroom suite).
Equity needed: Being able to document your income and your assets will be critical. For a commercial loan, your net worth should generally be at least as much as the loan you are seeking. The good news is that the commercial loan usually does not show up on your credit report, so it doesn’t count towards the “four investment home limitation” from Fannie / Freddie.
Importance of credit: Essential. A 720 FICO is a must. A 740 would be better.
Importance of experience with contractors: Critical. If you have never done it before, start with an easier “paint and carpet” project to build your skills. The more sophisticated the project, the better your contractor management skills must be to make money. Not surprisingly, the simpler projects have lower profit margins than the complicated projects. Make sure you can take the time to really focus on the project. We run classes on how to do this from time to time. Go to http://www.yourcastle.org/events.cfm to see when the next session is.
Important of experience with property managers: Generally not important for this type of investment.
Next week, we’ll continue to explore scrapes, pops and new construction in more detail!
Investing in Real Estate 8 – Condo Conversions This blog will discuss a type of real estate investment, fix and flips, in the University Hills area in Denver.
What this investment is: A synthesis of the fix and flip and rental operations - purchasing an apartment building in a neighborhood dominated by owner occupants, then converting the building from apartment building to condominium. Often requires renovation of the units to meet the expectations of owner-occupant buyers in that area. Complex and time consuming, but has wonderful tax advantages compares to fix and flips and often has superior returns to all other asset classes. Ideally suited for the sophisticated investor with extensive experience.
Equity needed: Being able to document your income and your assets will be critical. For a commercial loan, your net worth should generally be at least as much as the loan you are seeking. The good news is that the commercial loan usually does not show up on your credit report, so it doesn’t count towards the “four investment home limitation” from Fannie / Freddie.
Importance of credit: Essential. A 720 FICO is a must. A 740 would be better.
Importance of experience with contractors: Critical. If you have never done it before, start with an easier “paint and carpet” project to build your skills. The more sophisticated the project, the better your contractor management skills must be to make money. Not surprisingly, the simpler projects have lower profit margins than the complicated projects. Make sure you can take the time to really focus on the project. We run classes on how to do this from time to time. Go to http://www.yourcastle.org/events.cfm to see when the next session is.
Important of experience with property managers: Not important; the majority of our clients manage their own rentals when they get started. Ideally you will have started with some smaller investment rentals and built property management experience. Now, when you have to finally manage a property manager, it will be easy since you have done the job yourself in the past.
Next week, we’ll continue to explore condo conversions in more detail!
Investing in Real Estate 7 – Fix and Flips This blog will discuss a type of real estate investment, fix and flips, in the University Hills area in Denver.
What this investment is: Purchasing a home that needs work. The scope can range from the basic "paint and carpet" to extensive overhauls to scraping a decrepit property and completely starting over. Usually does not involve tenants, and the objective is to get in and out of the property as quickly as possible. Great for beginners with the right skill sets or the willingness to learn.
Equity needed: With hard money loans (defined in next paragraph), potentially 0% and they’ll finance the construction costs, too. Expect a LOT of strings to be attached. A small local lender might give you 75% of the purchase price and the renovation budget, and the terms will be a lot more pleasant than the hard money option. Or you can do 20% down and get a convention, non-owner occupied loan and pay for the renovation with cash or your Home Depot credit card.
Importance of credit: If you get a hard money loan, your credit will not matter as much. These are harder to find than they were last year. If you get a traditional loan, it’ll be a non-owner occupant loan, credit score will be very important. A 720 FICO score would help a lot. Being able to document your income and your assets will be critical. A hard money lender will lend you money based on the value of the property you are purchasing. If the property is worth $200,000 and you are able to purchase it for $150,000, a Hard Money Lender will probably give you a loan regardless of your down payment or credit score. However, the fees and the interest rate will be much less desirable than more conventional forms of financing. Hard Money Lenders can usually close very quickly, and from the Sellers’ point of view, you are purchasing with Cash.
Importance of experience with contractors: Critical. If you have never done it before, start with an easier “paint and carpet” project to build your skills. The more sophisticated the project, the better your contractor management skills must be to make money. Not surprisingly, the simpler projects have lower profit margins than the complicated projects. Make sure you can take the time to really focus on the project. We run classes on how to do this from time to time. Go to http://www.yourcastle.org/events.cfm to see when the next session is.
Important of experience with property managers: Not important.
Next week, we’ll continue to explore fix and flips in more detail!
Investing in Real Estate 6 – Lease Options This blog will discuss a type of real estate investment, lease options, in the University Hills area in Denver.
What this investment is: A lease option (L/O) is Acquiring control of a property (though not necessarily ownership), then leasing the property to a tenant. The lease is bundled with an option, so the tenant can (but does not have to) purchase the property for a given price within a given time frame. Again you are seeking a tenant for a property, but usually for a slightly longer term (12-18 months) and frequently (though not always) with the goal that the tenant purchase the property from you at the end of the lease. If you purchase the property, then it's an easier process; if you find a highly motivated seller to let you re-lease the property to another tenant, it can be a lot of work to set up. However, the re-lease method doesn't require any cash out of pocket and does not rely on your credit score, so it is appealing to many investors. Great for beginners with the right skills and attitude.
Equity needed: If you get seller financing, potentially just a few thousand dollars for your operating account. If you purchase the property, 10% down (best case); more likely 20% down.
Importance of credit: If you leverage seller carry, not important at all. If you purchase the property, credit is important. A 720 FICO score would help a lot. Being able to document your income and your assets will be critical.
Importance of experience with contractors: Some exposure would be helpful, but you are not likely to encounter construction projects any more difficult than you have maintaining your own personal residence.
Important of experience with property managers: Not important; the majority of our clients manage their own rentals when they get started. We run classes on how to do this from time to time. Go to http://www.yourcastle.org/events.cfm to see when the next session is.
Next week, we’ll continue to explore lease options in more detail!
Investing in Real Estate 5 – Large (5+ unit) Apartment Building This blog will discuss a type of real estate investment, large apartment buildings, in the University Hills area in Denver.
What this investment is: Still targeting tenants for 6-12 months at a time, buildings with more than five units are considered "commercial" property. The loans are more difficult to qualify for, and usually a larger down payment is needed. Uncommon for the new investor; this is usually what landlords with several years of experience "trade up" to. Cash flows on larger buildings are more stable than for smaller buildings, and the economies of scale make it practical (and desirable) to hire a property manager to take over most the work for you. This takes reduces the hassle factor of the landlord process.
Equity needed: Being able to document your income and your assets will be critical. For a commercial loan, your net worth should generally be at least as much as the loan you are seeking. The good news is that the commercial loan usually does not show up on your credit report, so it doesn’t count towards the “four investment home limitation” from Fannie / Freddie.
Importance of credit: Essential. A 720 FICO is a must. A 740 would be better.
Importance of experience with contractors: Some exposure would be helpful, but you are not likely to encounter construction projects any more difficult than you have maintaining your own personal residence. We run classes on how to do this from time to time. Go to http://www.yourcastle.org/events.cfm to see when the next session is.
Important of experience with property managers: Not important; the majority of our clients manage their own rentals when they get started. Ideally you will have started with some smaller investment rentals and built property management experience. Now, when you have to finally manage a property manager, it will be easy since you have done the job yourself in the past.
Next week, we’ll continue to explore large apartment buildings in more detail!
Investing in Real Estate 4 – Small (2-4 units) Apartment Building This blog will discuss a type of real estate investment, small apartment buildings, in the University Hills area in Denver.
What this investment is: Purchase of duplex, triplex or quadplex to be rented to tenants, usually for 6-12 month terms. Usually what the rental home / condo landlords graduate to. In most markets they cost a little more than a rental home, but are much more likely to cash flow on the average month. Less cash flow risk; if one unit is empty you have other tenants that still help you with the mortgage payment so it doesn't all come out of your pocket. Many owners will start to delegate some of the property management tasks to an on-site assistant (typically the most responsible tenant), such as yard maintenance and showing empty units. The financing process is only slightly more involved than a residential loan. Relatively small down payment requirements make it affordable. The purchase process is also very similar to purchasing a home. It's a good way for beginners to get started.
Equity needed: 20% - 30% down would be typical.
Importance of credit: Very important. A 720 FICO score would help a lot. Being able to document your income and your assets will be critical.
Importance of experience with contractors: Some exposure would be helpful, but you are not likely to encounter construction projects any more difficult than you have maintaining your own personal residence.
Important of experience with property managers: Not important; the majority of our clients manage their own rentals when they get started. If you get a property manager, you’ll be able to figure it out easily on this small of a scale. We run classes on how to do this from time to time. Go to http://www.yourcastle.org/events.cfm to see when the next session is.
Next week, we’ll continue to explore small apartment buildings in more detail!
Investing in Real Estate 3 – Rental Condo or Rental Home This blog will discuss a type of real estate investment, rental condos or rental homes, in the University Hills area in Denver.
What this investment is: Purchase of a residential property to be rented out to tenants, usually on a 6-12 month lease term. This is how most new landlords get started. You can hire out all of the property management functions, but in many cases you will do many of them on your own. There are smaller down payment requirements than for larger rental buildings. The purchase process and financing process is very similar to what you experienced buying the home you live in now. It's a great way for beginners to get started.
Equity needed: Currently 20% - 25% Downpayment. In some cases you might be able to do it with 10% down, but expect the second mortgage to be at a higher rate. While Freddie / Fannie lenders might only let you have four loans, smaller local lenders will let you have more than that if you have strong credit. Contact me and I’ll put you in touch with the right people.
Importance of credit: Very important. A 720 FICO score would help a lot. Being able to document your income and your assets will be critical.
Importance of experience with contractors: Some exposure would be helpful, but you are not likely to encounter construction projects any more difficult than you have maintaining your own personal residence.
Important of experience with property managers: Not important; the majority of our clients manage their own rentals when they get started. We run classes on how to do this from time to time. Go to http://www.yourcastle.org/events.cfm to see when the next session is.
The next few blog articles explore related topics, such as rentals, fix and flips, and new construction. Next week, we’ll continue to explore rental condos / homes in more detail!
Disclaimer: ActiveRain Corp. does not necessarily endorse the real estate agents, loan officers and brokers listed on this site. These real estate profiles, blogs and blog entries are provided here as a courtesy to our visitors to help them make an informed decision when buying or selling a house. ActiveRain Corp. takes no responsibility for the content in these profiles, that are written by the members of this community.
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