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Dilapidated Home
Jane Crockett
February 24, 2013 in Design Dilemma
I have inherited this home from my father. It has 4 apartments in it. It is run down and has tenets who are on government subsidies. What should I do with it? The neighboring homes look similar with same kind of tenets.
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Jane Crockett
The tree is cut down, and the yard is dirt.
0 Likes   February 24, 2013 at 4:46PM
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Lizabeth
Jane, Do you want to be a landlord?
3 Likes   February 24, 2013 at 4:56PM
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PRO
Ironwood Builders
Great. Thanks Dad? You have inherited a rental in need of serious repair. I am unfamiliar with Colorado tenants rights..here in California they need to be bought out to get them into another place so that rehab can be done. Start by asking what your rights as landlord are with the local version of HUD...

How goes the Shingle style purchase?
1 Like   February 24, 2013 at 4:59PM
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decoenthusiaste
Sounds like the kind of neighborhood that could use a pocket park in the footprint of your inheritance.
1 Like   February 24, 2013 at 5:02PM
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Jane Crockett
Not really.... Should I flip it? If yes, what would you do to flip it? Right now there is a property manager collecting rent off the tenets. I made a net before tax profit of about $4000 last year. Tax value is depreciated to $0 and I own the house with clear title. The 4 apartments are functional as low income housing. There is nothing appealing about them. I inherited the property and it is 100 miles from my home in Denver.
0 Likes   February 24, 2013 at 5:05PM
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PRO
Studio S Squared Architecture, Inc.
This sort of question is better answered by local experts who can see the house in person and understand this local market--realtors, attorneys, contractors, architects, all of whom would/should have some input in helping you make this decision.
2 Likes   February 24, 2013 at 5:10PM
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semihugger1
I agree with Ironwood, that your next step is understanding Colorado tenent laws- The good news is Calif has the worst laws so smile it could be worse. Obviously you have structural repairs that need to be weighed into the mix that I can't comment on. There are property managers you can hire should you not want to deal with tenents- ours charges 10% monthly. You have a lot of options depending on your situation.
1 Like   February 24, 2013 at 5:14PM
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PRO
Yarbro Home Improvement LLC
Are you kidding me! Wow! Flimsy stair supports on bricks??? Those stairs look extremely dangerous. Repair it before you find yourself in court, or get out from under it and save yourself from legal battles. Sounds harsh, and I understand its a hand-me-down, but....
0 Likes   February 24, 2013 at 5:22PM
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Jane Crockett
My heart pulls me to that house........ I don't know if the realtor likes us now. The home has a beautiful, will constructed garage in the back.
0 Likes   February 24, 2013 at 5:38PM
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carolannr
I live in CO.There are very few tenant's right laws in CO. That being said, if you have gov't subsidized tenants in that place, it looks to me like it will be condemned after their once a year inspection or you will be sued if someone gets hurt there. I'd sell it for what you can get out of it and run! There is definitely hazardous problems with this place and more than likely the prop mgr made more than he paid you - rents are not cheap here.
1 Like   February 24, 2013 at 5:39PM
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Jane Crockett
I own a third of this home with my 2 brothers. My father has this one made up in small apartments also. It is next door to the one I own 100 percent of.
0 Likes   February 24, 2013 at 5:43PM
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Jane Crockett
Thank-you all for your advice and opinions. It makes it easier to make decisions..
0 Likes   February 24, 2013 at 5:45PM
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Jane Crockett
This is a better picture of the home next door.
0 Likes   February 24, 2013 at 5:53PM
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Judy M
I would find a realtor, list it and hope it sells fast. They look like a landlord's worst nightmare.
P.S. I'm a landlord
1 Like   February 24, 2013 at 5:57PM
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Jayme H.
I have property management experience. One thing I would do, as previously mentioned, is deal with the safety concerns a.s.a.p. Any injuries or accidents could be disasterous for you financially. You mentioned before in another post that you grew up around rentals, so u know how it goes...can be very stressful, espec. if you do not live in the same town as the rental. If the one is 100 miles away, I may consider selling it.
1 Like   February 24, 2013 at 6:01PM
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Jane Crockett
Thanks for the comments!
0 Likes   February 24, 2013 at 6:02PM
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Jane Crockett
What is a Pocket Park? That sounds very interesting.
0 Likes   February 24, 2013 at 6:11PM
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studio10001
I'm with carolannr. Your situation is what we politely refer to as a bugbear. As for the realtor no longer liking you - none of them do per se, it's your checkbook that is so appealing They work for the seller, and this one has been hoist by his own pittard. Think of it as an opportunity to looooower your offer, if you really love the place. With patience and a proper eye on the assessment, you may prevail. You're a better man than I, Gunghedin.
1 Like   February 24, 2013 at 6:13PM
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Jane Crockett
Very well put. Thank-you!
0 Likes   February 24, 2013 at 6:22PM
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Jayme H.
Sometimes the crappiest looking properties are the ones that make the money..why? Because they cash flow. Fixing the safety issues and putting on a coat of paint and a few touch ups can do wonders. Depending on how much work these places were and how much work they needed and how much I was willing to sacrifice in time and energy...I would hang on to paid for real estate..it is an excellent investment. Keep in mind, if you buy a rental next door, u may be dealt with renters stopping by frequently with complaints. I came down from my upstairs once to find a renter standing in my living room. No one who has ever been a landlord will say it's a glamourous business.
0 Likes   February 24, 2013 at 6:22PM
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Jayme H.
But again, the one that is not close by could be a pain to deal with.
2 Likes   February 24, 2013 at 6:24PM
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Jane Crockett
Good point! Thank-you.
1 Like   February 24, 2013 at 6:27PM
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Jayme H.
Good luck!!
0 Likes   February 24, 2013 at 6:37PM
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Lizabeth
I guess I would want to know what the market value of the propery might be? What is it's cash value after you pay off realtor? Then I would do a cash flow analysis with what you might want to do with the proceeds should you sell it. What are the tax implications regarding any basis and capital gain? I think since your inherit basis is reset you should both consult and attorney and get some market analysis information to help you make your decision. Of course you will have to discuss with others and see what everyone wants out of the property. They might want to keep and buy you out.
1 Like   February 24, 2013 at 6:38PM
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Jane Crockett
Thank-you...good advice.
0 Likes   February 24, 2013 at 7:47PM
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Lizabeth
And Jane get a good umbrella liability policy if you don't have one yet.
2 Likes   February 24, 2013 at 8:08PM
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Jane Crockett
The property is zoned multi use. Would it be better to convert the downstairs into an office, and the upstairs into a loft apartment?
0 Likes   February 25, 2013 at 5:46AM
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Judy M
After all the work and money you put in are you going to be able to attract a quality tenant? Does the neighborhood support that kind of tenant and investment? I would have a conversation with a realtor that has residential and commercial experience in that town.
0 Likes   February 25, 2013 at 5:51AM
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Jane Crockett
It will be years before the neighborhood is improved. Judy, you answered my question. Thank-you.
0 Likes   February 25, 2013 at 6:09AM
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apple_pie_order
I suggest you get a full blown home inspection. Take photos in every room, all four walls and ceiling. Roof and basement, too. That way, you will not have to arrange for repeated access from the tenants if you forget what condition the kitchen, etc. is in. Then go over the items with a contractor who works on rental properties (not the marble and gold faucets kind of contractor). It'll be easier to make a decision about profitability and possible sale after that. I do hope you have liability insurance. You cannot attract upscale tenants in a downscale neighborhood, so see what kind of rents the neighborhood is getting and what the turnover is.

Do the same with the house that is jointly owned. Then you and your brothers can be on the same page with information as you make decisions.
2 Likes   February 25, 2013 at 6:19AM
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moreismoore
Several years ago I was drawn to a place like this when I was on a kick of helping out the less fortunate. I bought it for very little, but just to get it where I thought it was decent cost much more than I had hoped and the area simply wouldn't support rents anywhere near what I needed to cover the costs. It was an interesting experience and I ment some interesting people, but it was only useful as a sociologic experience - it was a money loser.
1 Like   February 25, 2013 at 6:20AM
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moreismoore
Oh, and most of my tenants were wonderful people, but of course the ones that I really went out on a limb to help tried to screw me using the system very well against me because I didn't know my way around it. Again - interesting but ultimately frustrating and expensive.
0 Likes   February 25, 2013 at 6:21AM
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Jane Crockett
This neighborhood has the potential of looking like "this" neighbor! ( Photo taken in Denver ) If that were to happen it would be years away.
0 Likes   February 25, 2013 at 6:34AM
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Jane Crockett
..photos of the similar homes in Denver neighborhood........
0 Likes   February 25, 2013 at 6:37AM
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aniluap2
First and foremost there are people living there. They may or may not have young children. I think the responsible thing to do is make sure conditions are safe if not beautiful. If you do not want or can't afford the expense of addressing this deplorable state, I would sell it and have a clear consciouns that you are not responsible for unsafe living conditions. These are human beings and we need to remember that!
0 Likes   February 25, 2013 at 7:12AM
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S. Thomas Kutch
First off Jane, you need to determine exactly what you can do and what you can't do as far as your tenants..........Low income government subsidized housing (Sections 8) does have some restrictive measures when it comes to displacing existing tenants, I would suggest you check with your local HUD Authority administering the accounts. The inspection procedures are strongest on paper if you get my drift and are quite often ignored and/or over looked...... especially if there is some incentives being received from the property manager...not saying that is happening here.

The second thing you need to determine is do you want to be in the position of being a landlord.......it's fine if you have a good property manager who is taking care of issues and the property, but from the looks of your photos, I suspect your current property manager isn't all the proactive.

The next determining factor is where is this neighborhood going? The hard realities are that any neighborhood that is predominantly subsidized rents usually doesn't attract the most stable of tenants and the turn around process usually starts not with rental properties but with residing owners who initiate the improvement cycle. You say it is mixed use, well how many other units in the vicinity have stable businesses or office and what kind of businesses are they.......are you seeing some unique cases of interesting business setting up shop or are you seeing more "Pay Day Loan" or "Check Cashing" or the kiss of death...."Bails Bondsman"..........take a drive through the area and do some investigating. What improvements do you see going on?

All that and more will come into making your decision.

The next issue will be taking care of the glaring issues that are life safety issues (i.e the stairs). These appear to be a lawsuit just waiting to happen. Next would be a whole structure inspection by a qualified and reputable service. Just from your photos, I would suspect there are some serious structural issues to deal with and I suspect from the appearance of things, the electrical and plumbing aren't much better........to be honest, if you start any refurbishments or repairs, you could actually fall under code issues that would force you to bring it the entire structure up to current code (i.e, 1 hours separation walls, current electrical and plumbing requirements, life safety issues for egress and secondary exits and such as well as fire and smoke alarm systems).......to be blunt, you could be opening up a pandor's box with your bank account........are you willing and able to do that? Will the rent potential for that area cover the cost of what could be some heft renovation cost....?

I'm all for helping out the folks trapped in this economic level, but sometimes the best course of action is either to sell and walk away or bring in the D9 and protect yourself from financial ruin....and trust me, there is some lawyer out there just waiting for one of your tenants to trip going up those stairs (missing risers) on a contingency case for 33-1/3% of winning.

Sorry, but me personally, based on your description of the neighborhood, I'm selling or demoing and rather quickly.
0 Likes   February 25, 2013 at 8:21AM
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carolannr
Love the Baker neighborhood that you have pictured but if this is Pueblo, is the housing market as strong there? Worked on a couple of those Baker houses back in the '90s when it started its turnabround but most of the problems usually turned out to be structural. But you have to think too of what happened to one of those houses just last year - the whole brick side of the house fell down when they started their remodel- and there a bunch that haven't been re-done. Most of these homes are in the 100+ year old category and CO has never really had any kind of bldg codes until the 80's so what you have is pretty normal structurally at least. I'm guessing from the size of the house you inherited that those 4 apts are very small, in need of updates to not only the structural but also plumbing and electrical. Get an opinion from a local, licensed person to find exactly what needs to be done, then from a local real estate person as to what it may sell for so you have all the information before making the decision. I realize the house came from your dad so there are heart strings attached but I'm sure he wouldn't want you to suffer because of it. Sorry if I got too personal but I sense that this is a really hard decision for you.
0 Likes   February 25, 2013 at 8:42AM
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Jane Crockett
Love the feedback. I feel like I've been in a seminar. Thank-YOU ALL!!! So much to digest!!....So much to go back and read again...and to save to my files. The neighborhood above is in close proximity to Washington Park in Denver.
Well, I'm off to Pueblo....( father in rehab...fx hip ) --- Lots to think about!!! Thank-you so much!! I really appreciate it!
0 Likes   February 25, 2013 at 9:09AM
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moreismoore
In cities, a few blocks can make all the difference. Some day, in the "sweet by and by" this neighborhood might be Washington Park, too, but can you afford to fix up the house and wait?
1 Like   February 25, 2013 at 10:27AM
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Jane Crockett
Think if the original owners of those homes came back to see them now.. What a disappointment -
0 Likes   February 26, 2013 at 7:13AM
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