No Vacancies

It's about damn time. Finally all the apartments are rented and noone has given notice that they plan to move. Now, if nothing blows up, burns down, cracks or drips for awhile maybe ! can get back to doing more than just struggling. Actually, life is really starting to look better for me. It's been a long, tough year.

Wake up

Click on the link and put in 1102 in Colorado to see pictures of the 2 bedroom apartment.
! woke up this am, had breakfast then went back to bed since ! don't get nearly as much rest as ! need. Of course, as soon as ! got to sleep the phone rings. #1 has a stopped up toilet and tub. AND there is a pool in the basement dripping from the ceiling. The plumbers came and fixed things up. Good thing it's Sunday so they'll be able to afford stuff ! can't now. Then ! find out the hot water isn't hot. Another trip to light the pilot light. A couple hours later the same call. Only the pilots lit, not the burner. 3 trips and about 4 hours up there on my day off.
! really hate to whine and the 2nd time it gets really tiresome. ! had this all typed, checked the preview and when ! tried to publish it it vanished. That's the way my whole life is. Nothing just works. It seems like ! have to do twice the work to get half the results. ! calculated that this building (job) will make me about $100/mo IF (that's a big if) every unit is full all the time AND there are no problems to fix. ! wonder what that is like. ! am on call 24/7 and actually spend about 40 hours/mo up there. That means it costs me ~$25/hour to work for someone else. The last owner was never around and never fixed anything. !'ve fixed all his deferred stuff and done more yet rents are plummetting and ! still can't get tenants in. He bought for $400k and sold for $700k after 4 years. @ that rate of return ! should be able to sell for ~$1.5 million after 5 years. That would make it worthwhile. Of course, if things go the way they normally do for me ! may end up selling for $400k so ! could keep paying for it even after !'m no longer getting rent That would suck.

Wake up

Click on the link and put in 1102 and Colorado to see pictures of the inside of the 2 bedroom apartment. ! got up this morning, had breakfast then went back to bed. ! need a lot more rest than ! manage to get. So once ! finally get to sleep the phone rings. #1's toilet and tub are backed up and there is a pool in the basement. No relaxing for me. There was indeed a pool in the basement and a pool in her bathroom. The plumbers came out and did their thing. You know how plumbers are about working on weekends. !'m still waiting to hear back how many weeks !'m going to have to work to pay this off. ! did some calculations. IF (in really big letters) all the apartments were rented all year and no repairs or other expenses came up ! would clear just over $100/month. Taxes and insurance are $500/month. ! pay nearly $100/month just on advertising in the paper w/vacancies and of course no rent from them. That means ! have to work another job to provide a place for them to live plus pay for their repairs before ! can spend anything on myself. Basically !'m paying a few $hundred every month to work a part time job. If ! manage a big gain when ! sell it in 2 years it will be worth it. The last owner bought for $400k and sold for $700k after 4 years. All w/out fixing anything. The same rate of return would get me about $1.4 million. that would be nice after all the improvements and repairs !'ve made. ! still don't understand why some people can put no effort into a project and profit mightily while ! bust my ass and spend a bunch of money and go backwards. One day....

New baby

Jenniferr and Ian are having a baby. They are also moving out. They have been tenants for over 2 years and decided to buy a house to raise the little girl in. Her name will be Eleanor, not Emma. Emma was one of their top picks, but she will have a cousin named Emma already. Too bad. What little girl wouldn't want to be an Emma? She is due 4.6.5.
The Duc' has been snagged. ! had her locked to the window bar and someone cut the cable and made off w/ her. ! got to store someone's property for 5 months for free. For some reason ! can't get fair compensation for all the work etc. that ! do. But that is a subject for another blog wherein ! vent about life's inequities.

Lamont

For several years now Lamont has been living in the building next door. Lamont is a friendly old guy who smokes a lot and hacks and weazes. He would always be out on the corner watching everything that was going on. Tuesday morning ! was over to do a showing and ! saw Beth who is one of my tenants. ! told her that the next day (3.2.5) was Lamont's 63rd birthday. She told me he was dead. He had finally gotten an apartment out in Lakewood and was thrilled about it. Then he had a stroke. ! guess it's been a few weeks. Beth said she wanted to tell me the last time she saw me, but she didn't feel like talking about it. ! hadn't seen him in quite awhile. ! had just assumed it was because it was cold out. When Beth was getting ready to move in, Lamont came over and introduced himself and proposed to her.

Sell out

!'ve decided to sell the place after June 7,'7. That will be 5 years. That way ! won't have to pay tax on any of the capital gains to Colorado. Any capital gains now are long term so the most ! would have to pay would be 15% to the bastards @ irs. Except for the capital gains due to depreciation taken. That is capped @ 25%. W/ the new boiler and all the vacancies last year my loss came out to be more than the $25,000 maximum allowed so ! had to eliminate most (almost 75%) of the depreciation that ! would have taken. If my tax rate in '7 is 25% or higher that will save me $1,700 in tax. ! just hope the housing market stays strong for 3 more years. Maybe the rental market will firm up some this year so ! can actually almost break even. ! hope to sell for $1.2 million or more to make it worth all the trouble and expense. The tenants who call whenever something goes wrong and expect me to hustle over there to fix it. Then they leave whenever they want to save $10/month rent. That's 1 or more months of no rent, advertising and cleaning and maintenance, zipping up there 30 time/month to show to people who aren't really interested. That doesn't even include the weekends ! can't even consider leaving town or the work ! have to miss to show or the 2nd jobs to pay for the shortages every month or the lost earnings on the money ! took out of mutual funds that are now returning 30% w/out me and the risk that the market could tank leaving me owing a big chunk of money after years of paying to work my ass off. !'m thinking of doing a condo conversion. That may be the best way to maximize the selling price.

New Roof and gutters (finally)

Last September the tenants that bailed on me called to announce their ceiling was collapsing. Denver had been in a drought for a year when ! bought the place and that continued until mid-2004. We had just had a couple days of torrential downpours and there was a leak in one of the troughs in the roof. Water dripped through and settled on top of the ceiling until it finally caved in that corner. ! had to roofers come out to do an estimate and patch the hole. There were 3 layers already so they all had to be stripped off. Another 2 days of labor to pay for and a big mess to clean up later. That's the way my luck goes. Everything ! do has to be as difficult and expensive as possible. 4 months later they finally show up to do the work. They told me Wednesday they should be done Saturday. They finished Friday. The Friday after that Saturday. $9,060. That includes new gutters and downspouts. It looks good. The shingles should be good for 20 years.

Abandoned Ducati. You should abandon your children first

It must have been the beginning of November, '04 when the Duc' showed up. ! thought maybe one of the girls had a cool boy visiting her. Then it snowed. The Duc' hasn't moved. ! e mailed all the tenants. No one knew anything about it. One of the girls who bailed on me thought it belonged to a friend of her's who was out of town for the week. It still had temp tags on. Chris finally noticed the tags expired 12.17.3. Over a year ago. One wonders if she was stolen. The cops don't have a report. ! was going to try to get an abandoned vehicle title so ! could sell it to recoup some of my expenses. ! e mailed the city and they sent me a long list of things ! had to do. 1st thing was be a licensed tow company. In other words, ! get to store a vehicle for free on my property until ! give it to a tow company. They have to track down the owner. If they can't they get to post a bond and sell it to the public. They get to keep the 1st $1,200 and the rest goes to the city. What a scam. !'m going to start my own city.

Here's the building

They bailed

There's nothing like having tenants bail on you in the middle of the lease. Rose & Amy decided 7 months was long enough so they loaded up a truck and off they went into the night. !'ve heard nothing from them since. They had the old guy (Lamont) next door help them load the truck. They had promised Lamont a ride to WI for Christmas so he gave them $150 for expenses. When he went into his apartment for a bit they took off. Poor Lamont is on social security and barely has enough money to get by. ! guess they needed his money more than he did. Once ! got into the apartment ! saw the crappy job they had done painting. Every room was a different, hard to hide color. Chris sprayed on 5 gallons of Kilz and several gallons of white just to hide the green, purple, red, brown and orange. Then another 6 gallons of Navajo White. This was after ! spent 6 hours masking everything. The stove and 'fridge were filthy. ! made all the tenants a 6-pack of Honey Lager and delivered it to them the day before. Just 5 days 'til Christmas. ! would love some advice on how to put this on their credit score.

The work begins

The building inspector said everything was in fair condition for a building built in 1925. There were some problems of course. The old owner didn't do any work unless it would fall apart and then just did a half-assed hack job. The radiators drip a bit from the blowoff valves as radiators are wont to do. This had been going on long enough that the hardwood floors underneath had rotted out and the radiators were tipped down the wrong way. Not only was it ugly, but they couldn't drain properly so they banged and rattled. Chris (my contractor) and ! spent several weeks cutting out the rotted wood and replacing it w/ durarock covered w/ tile. Now they are level and impervious to water. ! got to paint every one of the radiators. Some were black. Some were white. One was gold. Then the leases started expiring. Tenants would move. ! guess they didn't like having the holes in their floors fixed and a manager who they could actually get in touch w/. As vacancies came up it was obvious that painting hadn't been done for nearly 10 years. ! wanted to do something special so no off-white. Yellow, blue, green. Alas, ! bought just as vacancies in one of the best rental 'hoods in Denver exploded. Low interest rates were drawing renters to ownership and thousands of new apartments were coming on the market as the recession hit. Rents were beginning to plunge. Must hang on.

A little about me.

My name is Doug!!. ! bought the Emma Parham Apartment building on June, 7 2002. Emma Parham is my niece. She is totally adorable. A lot has happened in 2 1/2 years. ! want to talk about some of these events and share solutions here.
! live in Denver, CO. Why did ! buy an apartment building? !'ve been a tax preparer for many years. As you may know there are some tax advantages to rental property. ! wanted to get in on some of them and also capture a bit more of the increase in property values around here. In mid 2001 ! left on a 4 1/2 month bike tour around the country and decided to rent out my house to defray some of the costs. ! hired a manager and was off. ! had expected to have to rent an apartment when ! returned to wait out their lease, but then hit upon a plan to buy a duplex. ! would live in one side and rent the other. Then when ! moved home ! could rent the other side too. After much searching ! finally found a suitable place. We were 2 weeks from closing when the owner backed out of the deal. Back into the market ! went. It had become apparent that duplex prices were outrageously high. Gene, my realtor, and ! started running numbers on small apartment buildings and found the returns would be much better than on duplexes. ! really liked the idea of not losing 1/2 the rent if 1 tenant moved out. Finally we found this building and decided it was the place. A lot of work and a lot of money are tied up in it. One day !'ll find out if it was all worth it.