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Finding the Right Contractors

Having the wrong contractor can become a significant source of frustration and financial loss. There are a plethora of stories recounting the horrors of having a contractor doing a simple job that resulted in a fiasco. For property owners in Colorado, it can be a tricky business of finding the right contractors.

Every state has different rules and regulations that dictate what contractors must have to conduct business. It is important to know what is required before commissioning someone to fix a property. Licensed, Bonded and Insured seem self-evident for hiring a contractor, but what exactly do they cover and how do they help the property owner?

Below is a brief overview of the three with links to websites with additional insight.

Bonded

When a contractor is bonded, this means they have purchased a surety bond. This is a type of insurance policy that protects a property owner. The bond provides a certain amount of liability protection. If the contractor fails to complete a job as required or contracted, the bond can provide compensation to a property owner.

Licensed

  • Colorado has no state license for general contractors. Licensing resides at the municipal level if required
  • Required to have a business license.
  • Electricians and plumbers require state-level licenses.
  • Licenses are needed in Denver and Arvada.

Insured

Commercial Liability Insurance is not mandatory for businesses operating in Colorado. Colorado is a fault state. However, as a rule, most small businesses should have coverage between $500,000 and $1 million.

Contractors are a significant component of ensuring that rental properties are maintained and in livable condition.

Trusted, experienced and reputable contractors that complete work on time and within budget aren’t challenging to find; but they are usually harder to schedule. General speaking, they are bonded, licensed and insured correctly and in high demand. Having a property management company can help in finding this type of quality contractor.

We’re here to make the investment and rental process more pleasant and less expensive. Contact us at Blue Mountain Real Estate & Property Management today. We’d love to tell you more.

Hassle Free Property Management

From rent payments to renters, from unoccupied property to repairs, every landlord will at one time or another face difficulties. These are just a few of the concerns that surround all investment properties. Yes, owning Real Estate is the best method for creating wealth, but it’s not without its headaches. Hassle free property management can be within reach!

Owning rental property comes with a certain level of risk and legal responsibilities. Some issues may be easy enough to fix under the ‘DIY’ category. Still, not all issues are ‘DIY’ jobs. Not often will you find the layman conducting collections evictions or legal proceedings on their own. In these situations, it’s best to seek competent counsel rather than to do it yourself. Having a property management company can help.

Property management is not a one type fits all situation. As with all business endeavors, it’s best to do your homework before engaging with any company. Property management services should be flexible enough to handle the needs of the property and the landlord under a reasonable agreement.

Here are seven things to evaluate before agreeing with a property management company:

  • Maintenance; What is their ability to address maintenance issues with reliable, insured, certified contractors?
  • Can they provide guidance on the right amount of insurance and protections?
  • How do they bring issues to light? Having the right information at the right time is key to reducing owner risk and loss.
  • Do they diligently work to keep a property occupied?
  • Tenant screening. How do they conduct tenant screening? See our tenant screening tips here.
  • Do they understand, and can they assist with Taxes?
  • How do they conduct evicting a bad tenant?

Knowledge can help address some of the issues. Seminars, webinars and other educational classes can help broaden your ability to be a landlord. Knowledge, however, has little effect on a broken furnace in an occupied property if the knowledge lacks the ability to repair it. Still, many times, only experience will calm the fears and concerns of a tenant with a broken appliance.

Having a completely hassle-free rental property is rarely the case as a landlord. Ownership requires a certain level of risk and responsibilities; however, it’s more manageable and enjoyable with the right help.

We’re here to help you with hassle free property management! We can make the investment and rental process more pleasant and less expensive. Contact us at Blue Mountain Real Estate & Property Management today. We’d love to tell you more.

Warranty of Habitability Law

State Requirements

Owning investment property can be fraught with horrors for both the tenant and the owner if habitability of the premises is less than state requirements. Not following and knowing the state laws regarding implied warranty of habitability can get the owner in hot water legally. Worse yet, names like slum lord can become a pseudonym. However this can be avoided if proper communications and maintenance of the property is done.

Every state has specific statutes that regulate the requirements for what is considered habitability and they change often. Before we go any further, let’s define the Implied Warranty of Habitability Law.

Legalmatch.com defines it as:

An implied warranty of habitability is a warranty implied by law in all residential leases that the premises are fit and habitable for human habitation and that the premises will remain fit and habitable throughout the duration of the lease.

Colorado recently updated its habitability law in 2019.

Changes in the law include:

  1. Allows the tenant to email the written notice to the Landlord of the problem that the tenant thinks makes the rental property unfit.
  2. Gives the landlord specific time frames within which to respond to the tenant’s notice.

The landlord now only has:

  1. 24 hours to respond if the condition is materially dangerous or hazardous to the tenant’s life, health or safety.
  2. 96 hours where the premises is only uninhabitable or otherwise unfit for human habitation.

The new law also adds two specific conditions that make a residential property uninhabitable:

  1. Lack of functioning appliances that conform to the applicable law and are maintained in good working order.
  2. Mold that is associated with dampness, or there is any other condition causing the premises to be damp, which if not fixed, would materially interfere with the health or safety of the tenant.

If the premises become legally uninhabitable based on the above criteria, the tenant may have several options:

  • Terminate lease
  • Injunctive relief (repairs required by court)
  • Defense to nonpayment of rent
  • Damages claim (rent reduction and other expenses)

For more information on the Residential Tenants Health And Safety Act Click Here.

Blue Mountain Real Estate and Property Management is here to help with understanding habitability law and to make the investment and rental process more pleasant and less expensive. Contact Blue Mountain Real Estate & Property Management today.

Is Your Rental Ready for Winter?

Old man winter is fast approaching and it’s time to make sure that your rental property is ready for winter and the onslaught of damage that he can cause. Exposed pipes, sprinkler systems, sidewalks, driveways, stairs, trees that are overhanging the property; those are just a few of the considerations for the exterior of the property.

There are several different considerations for the interior of the rental. Seals around the doors and windows, chimney’s and HVAC systems need attention to maximize efficiency.

Safety is also a concern for the Real Estate investor during the winter months. Smoke detectors, the use of space heaters, along with how to ensure that snow and ice are appropriately removed and mitigated is essential. It’s particularly crucial for renters moving from a warmer climate that don’t understand what the white fluffy stuff is that’s sticking on the ground.

Regardless of if the property is occupied or vacant, preventive measures will ensure that the property is not only safe but defeats what Old Man Winter can throw at your investment. Communicating is key to ensuring that your tenant understands what they are responsible for and how to prevent damage to components of the property that may inconvenience them due to repairs that could have been prevented.

Here are ten things to communicate to tenants and to ensure vacant properties remain in good repair during the winter months.

1. Leave the Heat on

Conduct periodic inspections of vacant properties throughout the winter. Ensure that your tenant understands that the temperature needs to be set at a minimum of 55 degrees if the property is vacant for any length of time, like when they go on vacation for the holidays.

2. Inspect Your HVAC Systems

Inspect heating and air-conditioning units to make sure they are running efficiently.

3. Watch Your Pipes

Ensure that tenants know not to leave garden hose’s connected to outdoor faucets during freezing temperatures. Have sprinkler systems blown out and winterize pipes and plumbing that may be exposed in outdoor structures like garden sheds.

4. Look for Cracks

It’s essential to inspect the edges of doors and windows and the exterior walls of your properties for gaps or cracks through which heat loss can occur. Replace caulking or sealant as needed.

5. Inspect the Roof

Ensure that there’s no existing damage to the roof or clogged drainage gutters. A qualified roofing contractor can do an inspection and make repairs that will save money in the long run.

6. Prepare for Snow and Ice Removal

If you have contracted snow and ice removal, confirm that your contract is current and valid.

7. Prevent Falling Branches

Check for any trees or branches that might collapse during heavy snow. It’s better to have them removed before they cause damage to the building or injure someone.

8. Clean Your Chimneys

Hire a professional chimney sweep to clean any fireplaces and inspect for damage and obstruction. A chimney fire is the last thing anyone needs.

9. Test Alarms and Detectors

Enough said.

10. Check Vacant Properties

Conduct periodic inspections of vacant properties throughout the winter.

The professionals at Blue Mountain Real Estate & Property Management are your rental property winterization experts. We can take care of these and other crucial seasonal maintenance tasks for you while you are free to enjoy the best of the season.

 

Dealing With Trouble Tenants: Part 2

In Part One of this two-part series, we briefly cover the screening process, initial interview, and background checks of a potential tenant. These initial measures are stepping stones to avoiding problems with your tenants down the road. In this blog, we will touch on the importance of contracts documentation and consistent operating procedures.

The simple truth is that even when the screening process is done correctly, troublesome tenants can lurk- becoming the bane of the Real Estate investors existence. Contracts and consistency are cornerstones in dealing with tenants, good and bad. What constitutes a bad tenant has many interpretations. What the landlord may consider egregious offenses may not be cause for immediate eviction. Including:

  • Noise and other disturbances
  • Parking
  • Unkempt yards

Reasons for eviction in Colorado, however, do include:

  • Failure to pay rent
  • Committing lease violations
  • Engaging in criminal activities

Besides a tenant not paying rent, damage to appliances and other components of the property are expensive; therefore, it’s essential to consider possible issues before during and after the term of the lease. A solid contract is vital in protecting against losses.

Contracts

The internet has many resources that can help with cookie-cutter lease agreements and may save you some money; however, it’s best to have a specific agreement legally drafted by a professional.

Some common mistakes in leases include:

Remember that every rental situation is unique from the owner to the property to the person renting, and advice for each requires individual review and consideration.

Documentation

Regardless of the offense committed, it doesn’t pay to get angry. Renters have rights also and if violated it can land the owner in trouble with the law.

It is essential to keep records of maintenance and repairs done to the property to avoid issues with requirements of “implied warranty of habitability.” If the property becomes uninhabitable, the tenant may have several options. In the State of Colorado, it includes:

  • Termination of the lease
  • Injunctive relief (repairs required by court)
  • Defense to nonpayment of rent
  • Damages claim (rent reduction and other expenses)

When problems arise with a tenant, it’s prudent to keep records of events with as much detail as possible. Doing so will help in the event of an eviction. Having a reliable property management company to assist in these matters reduces stress and can relieve an owner of these burdens.

Consistency

Operating in a consistent manner with collecting rent, late fees, and notifications to tenants and authorities keeps owners out of trouble and assist attorney’s when preparing to go to court. Again a good rental management company will assist owners in remaining consistent in these matters.

Regardless of how prudent an owner is, it’s an excellent idea to have an attorney when things fall apart. At Blue Mountain, we use knowledgeable experienced attorneys during the eviction process. We understand that time is money, and to have an eviction case tossed out because of simple mistakes is painful. Tenants will know their rights- how much time they have and will take advantage of it, which is another reason to have an attorney when dealing with an eviction.

We don’t have to evict tenants very often because of our strict screening process, but if you need help removing a tenant who isn’t paying rent, contact us at Blue Mountain Real Estate & Property Management. We’d be happy to assist you.

Dealing With Trouble Tenants: Part 1

Everyone at one time or another has had to deal with someone unpleasant. Teachers, coworkers, managers, and yes in-laws, can make one want to pull their hair out. However, it’s a different story when that someone is a tenant of your investment property.

Bad tenants can create more than hair loss. Loss of time and money can turn a good investment into one that has a break-even point somewhere in the distant future. Dealing with troublesome tenants is one of the biggest obstacles to owning Real Estate. But with a solid plan, losses can be stopped before going bald.

Screening Tenants

The process of screening tenants can be time-consuming, which can translate into lost revenue. It’s critical to have a method to filter out potential tenants that are a bad fit quickly. This will reduce stress and protect evenings spent at the property playing tour guide.

At first contact with a potential tenant, ask a few simple questions like:

  1. Why are you moving?
  2. Why did you choose this area?
  3. When do you plan to make the move?
  4. How long do you plan to rent the property?

It’s essential to make them feel comfortable and to get them talking about themselves and their family if they have one. The point of the questions is to gain insight and find a solution that fits for both the investor and the tenant. It’s best to address a bad fit straight away and offer alternate solutions. Schedule the tour at a time that allows the prospective tenant time to review the contents of the application.

Get To The Point

Once the understanding of the situation has a solid foundation, move to the qualifications. For Example:

  1. State monthly rent, cost of security deposit, and any fees like background and credit checks.
  2. Pet policy and any associated fees.
  3. Requirements of any maintenance like upkeep of the landscape.
  4. What is NOT included- like electricity and gas, waste, and snow removal.
  5. Clean criminal history.
  6. Clean eviction history.
  7. The minimum credit score.

Before the Tour

An application can be sent to the prospective tenant for their review before looking at the property. The application will reinforce the conversation about all qualifications. They may have it completed before the tour or have it in hand during the tour.

After The Tour

The process continues with ensuring that the application is thoroughly and carefully cross-checked with criminal credit and eviction histories. There are many different resources to assist with this process. Having a local property management company with experience in the area will help. At Blue Mountain, we do the screening ourselves. We conduct in-depth credit and background checks on each applicant, and we visit social media pages and look at online reputations.

The Contract

Rental contracts can be tricky and if not crafted correctly, and it will only add additional stress if you’re faced with a bad tenant. We will address issues concerning the contract in the next blog.

 

We’re here to make the investment and rental process more pleasant and less expensive.

Contact us at Blue Mountain Real Estate & Property Management today. We’d love to tell you more.

Avoid Anxiety at Tax Time

Tax time creates anxiety every year for a majority of Americans. A recent study by TaxAudit found that half of Americans feel anxious when they receive something from the IRS, and 77% find the new tax laws confusing. For the Real Estate investor, just thinking about taxes can cause anxiety.

Fear not- we are here to give some practical advice arming the reader with the courage to deal with the dreaded tax monster.

Professional help:

CPA

Like most any endeavor, it’s always good to seek competent counsel before venturing out into the unknown, even if it is somewhat familiar. Because you own property doesn’t mean you need to know everything about the Tax Code concerning rental properties. A good CPA with experience in Real Estate may cost a bit but will reduce stress in retaining the deductions available. Before seeking out an accountant, be sure that you do your homework and ask someone in the business for recommendations then follow up with your own check. The Better Business Bureau is a good starting point. Go to www.bbb.org to find accountants in your area. The BBB website is straightforward to navigate and intuitive. Type in what and where by zip code and voila- vetted results will appear.

IRS

One of the most overlooked aspects of the IRS is that one of their primary functions is to help the public in understanding the system. The IRS webpage has a plethora of information on every aspect of taxes for the Real Estate investor. The site is written in easy to understand language and has direct links to publications, schedules, recent developments, and is continuously updated. Click here to learn the facts about renting out residential property. It’s worth a look, and it is surprising what is considered a deduction. From ordinary and necessary expenses to improvements and depreciation it’s all listed with guidance on each.

Advantages

Taxes differ for any given location; however, there are common types of rental property tax deduction and benefits, including:

  • Depreciation
  • Mortgage Interest Payments
  • Licensing Fees
  • Occupancy Tax Deductions
  • Insurance
  • Utilities
  • Maintenance and Repair
  • Advertising and Marketing
  • Homeowner Association Fees
  • Auto and Travel
  • Supplies
  • Property Management
  • Legal and Professionals Fees

There are numerous resources a mere keystroke away, offering advice on taxes for the property investor. Confirm that articles are recent within a couple of months because tax code can change more often than tires on a race car. Remember that keeping a solid account of each expense is paramount to ensuring proper deductions are capitalized on at tax time.

We’re here to make the investment and rental process more pleasant and less expensive. Contact us at Blue Mountain Real Estate & Property Management today. We’d love to tell you more.

Raising Capital to Invest in Real Estate

Investing in Real Estate is a rewarding and profitable endeavor with many different motivating factors. Many times the catalyst is a product of a significant life change. The care of an elderly family member or job promotion- therefore requiring a relocation for example. Raising capital to invest in real estate may be a good financial move in this type of situation.

Beyond a significant life change, Real Estate is often used to balance other investments, for example, stocks and bonds. The recent volatility of the stock and bond market has led to many investors moving a portion of their assets or adding Real Estate to their strategy.

Whatever the factors are of becoming invested in hard assets like rental properties, Real Estate is one of the best ways to create wealth. Raising capital to address these opportunities has many pathways other than going to the bank.

OPM

Other Peoples Money (OPM) has been the starting point of most every venture into raising capital for all types of business, including Real Estate. OPM are private lenders who are not affiliated with any bank. Many times they are referred to as ‘Money Partners.’

Money Partners

Private lenders can be friends and family and are many times the first and easiest connections to raise capital. Beyond family and friends, there are those with capital looking for an excellent opportunity. Private lenders are similar to traditional lending. They too are looking for a good return for their investment. There are similarities and differences and pros and cons for each.

Pros and Cons

Private lenders operate much faster, usually with less paperwork than a traditional lender. However, time may be an essential aspect of closing a deal, while waiting for approval from a bank may hinder the process. On the flip side, obtaining a loan from a traditional lender like a bank will give the owner autonomy to operate. Regardless of the chosen method, a good understanding of the return on the investment (ROI) is a necessary step to raising capital.

ROI

Having realistic expectations and a detailed plan of how the secured funds will be paid back is the first step to raising capital. Remember, the fear of loss is a more significant motivator than the potential for gain. Create your pitch based on this fact, and the capital will be more natural too secure. For more information on how to obtain capital using a private lender or a money partner Click Here.

Raising capital to begin building your real estate portfolio has many avenues, and each has its pro and con. Building awareness of these avenues, having a realistic understanding of the ROI and overcoming the fear of loss are ingredients to a successful campaign to raising capital.

We’re here to make the investment and rental process more pleasant and less expensive.

Contact us at Blue Mountain Real Estate & Property Management today. We’d love to tell you more.

Profitability of Investing in Rental Property

Making money from a rental property is one of the best ways to become financially independent. An estimated 90% of the most wealthy people in the world make money through investing in and owning Real Estate. Like other forms of investing, owning rental property takes awareness and due diligence.

Getting Started with Real Estate Investment

One method to start investing in rental property is to purchase and live in a property for a time, then rent it out and buy another property and repeat the process. Starting while still young is a great advantage while implementing this method of owning rental properties, but not a requirement.

When to Start

However, being young is not a limiting factor in becoming a property investor. On average most Americans purchasing rental properties or investing in Real Estate are between the ages of 35 and 55.

How

There are multiple methods of making money in Real Estate. There are several categories to consider when making an investment decision. Options other than single-family or residential properties include:

  • Commercial
  • Industrial
  • Mixed-use
  • Retail
  • REIT (Real Estate Investment Trust)
  • Mortgage Lending
  • Sale/Leaseback

Click here for explanations of each and how they create income.

Passive Money Makers

Real Estate has income creating advantages beyond collecting rent that is often overlooked. Passive income that comes from rental properties are methods that create additional wealth other than cash flow from collecting rent. Increasing market value for the property amortization and tax advantages are all additional methods that increase profits.

For a business like a hotel, additional fees to play in-room movies and conference room usage along with parking fees, are all ways to add extra cash flow to a property operating as a business.

Increasing the value of a property is as simple as using other peoples money. As rent is collected, the profit is used to pay down the mortgage or in other words, amortization.

Along with amortization, appreciation is another method of passive value that the Real Estate owners enjoy. The simple fact that there is less land to build on and a steady increase in population growth will ultimately drive price up over the long run.

The advantages of owning Real Estate are numerous, and the ability to make money with a property are many.

We’re here to make the investment and rental process more pleasant and less expensive.

Contact us at Blue Mountain Real Estate & Property Management today. We’d love to tell you more.

Evictions: What Every Colorado Springs Rental Property Owner Should Know

No one likes to evict a tenant from a property because even if you’re successful at removing that renter, you’ve still lost money and time. One of the reasons that individualized and thorough tenant screening is so important is that you don’t want to find yourself in a situation where you have to evict a tenant who isn’t paying rent or following the terms of the lease.

We’re sharing our position on evictions and what we do when we’re faced with a tenant who is not paying rent on time or at all.
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