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Industry Blog

Calculating Gain… Correctly

Scott Lukes - Monday, January 23, 2017
Even with advanced Real Estate investors, we often see incorrect gain calculations upon disposition of property. Visit our website below 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

Days on Market for Rental Properties

Scott Lukes - Saturday, January 14, 2017
Many people wonder  how the wintertime is affecting Denver rental rates. Even though we are entering the late fall period, the market remains strong for renting out properties…so traffic is still there. Instead of averaging 21 days on market in the summer, typically you will see around 32 days in the winter.

A few of the added days on market could be eliminated by a property manager being stricter with their 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.

Landlord Requirements for CO Detectors

Scott Lukes - Thursday, January 05, 2017
n case you have not heard, the governor just signed legislation that significantly impacts owner/landlord/property manager liability when it comes to Carbon Monoxide (CO) detectors.

The legislation is posted in its entirety on the Echo Summit website under owners forms.

A few things of SIGNIFICANT note:
  • Read this section carefully: 38-45-104. Carbon monoxide alarms in rental properties.
  • Battery-powered detectors have too 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 responsibilities 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. It is also critical that the landlord inform the tenant about their legal responsibility regarding CO detectors. We find that insert the verbiage fro the CO House Bill directly int their lease serves this end.

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