Category Archives: From the inbox

From the inbox, Rentals

From the inbox: what’s up with these application fees?

Good question!  Short answer: property managers generally charge an application fee for the work they do in screening tenants for the properties under their management.

Longer answer: Often, companies will charge an application fee only once. If you don’t get accepted to a given property, they may apply that fee to any property in their inventory.  ALWAYS ask them before paying the fee.

Consider, too, that Company X’s fee doesn’t cover Company Y’s fee, even if you don’t get accepted into X’s properties.

You’re best covered by asking about the fees involved in the application with each management company.

Questions, please don’t hesitate to ask!

– Rob

**NOT LEGAL OR FINANCIAL ADVICE**

From the inbox, Landlording

From the inbox: How do I rent my house out?

Good question! For a variety of reasons, you may want to rent your house rather than sell…give me a ring and we can run the numbers to make sure you are informed of all the options. Investment property can be a good source of income but it’s not without risk. If renting is the way to go, check out, “How to Rent Your House: The Definitive Step by Step Guide” from Bigger Pockets!

Looking to buy, sell or rent in Colorado Springs, give Rob a call at 719-440-6626!

From the inbox

From the inbox: what is earnest money? Is it a downpayment?

Short answer: it’s not a downpayment (but can be used as part of it). It’s “skin in the game.”

Longer answer: earnest money is also known as “good faith money.” It’s money you as a buyer provide with an accepted offer that shows a seller you are serious about purchasing the property. You generally get this money back at closing. In Colorado, there are a number of protections for you as a buyer that enable you to get this money back if you choose to exit the contract. The seller only generally gets this money if all of your contractual protections have passed and you choose not to execute the purchase and/or something happens that affects the sale. Your buyer’s agent should keep you posted of these dates and what they mean for you and your earnest money.

Looking to buy, sell or rent a home in Colorado Springs? Call Rob at 719-440-6626 or email me at rob@rtrcolorado.com!

For Sale, From the inbox

From the inbox: why is rent so high!

Good question! Short answer: property and mortgage values and cash flow.

Longer answer: it’s a function of the dymanics of the city. As someone looking to buy rental property myself, here’s the analysis I use in looking at this. If you want to buy a $150,000 home, as an investment, you need 20% down. Let’s assume $1000 a year in insurance and another in taxes.

For investment purposes then, this home is going to cost a $30,000 down payment and at a 4.5% APR, cost a landlord $777 a month to pay principal, interest, taxes and insurance.

A landlord is going to need cash flow, too, to be prepared for emergencies and have a return on their investment. In this case, that $150,000 3 Bed, 2 bath home may rent for $1000 or $1050. This isn’t profit for the landlord, necessarily, as there are taxes and maintenance of the home involved, too.

It scales from there…a $175K home requires a 35K down payment (as an investment property) and costs $878 a month to carry in this scenario.

LARGE CAVEAT: This is for a 20% conventional loan, investment property. An owner occupied home will require much less down but have a higher overall mortgage as a result.

Looking to buy or sell a home in Colorado Springs? Please call Rob at 719-440-6626 or email me at rob@rtrcolorado.com.

*Reprinted with the permission of the party whom asked.