Here's my situation, what would you do?

San Diego, California
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Here's my situation, what would you do?

Faraz K.
New to Real Estate · Member since 2022 · 9 posts · 4 votes

Hello Bigger Pockets Community!

I’m new here and new to Real Estate in general, however I am very enthusiastic and determined to learn and invest wisely. Here’s a bit about myself and my goals:

Me:

  • - Early 30’s, single, no kids
  • - Compensation = ~$200k/yr (most of this is still W2)
  • - I’ve set aside between $75 - $100k in cash to invest in RE
  • - Current rent = $2100/mo.
  • - Credit score is high 700’s
  • - I do not own any property
  • - Split time between Phoenix, San Diego, and Denver

Goals:

  • - I’m a business owner, and still have a full-time job for a bit longer, so those will take my time priority for the foreseeable future
  • - My time is critical to my business, so I’m hoping to avoid the more time-consuming options
  • - I'm looking for the best way to achieve high ROI and monthly passive income
  • - I have friends who are more versed in RE than I am, who I can partner with if needed

I am still in the education phase; however, I am trying to decide what’s the best strategy for me. I am not afraid of putting in the work, but my business will take priority for now. My initial thoughts were single family homes, but I am realizing there may be better ways to scale and reach my goals.

What strategy would you implement if you were in my situation?

Thank you all for the help! This community has been so helpful.

3Reply
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Most Popular Reply

Joe VilleneuvePro Member
Plymouth, MI · Member since 2013 · 13k+ posts · 19k+ votes
3y

There is no "generic best strategy".  The strategy you choose is based on the market you are investing in, the potential cash flow and/or profit that can be made in the market matched up with the strategy that delivers the deal best.  You can't (shouldn't...ever) go in with the idea you have a strategy you like, and try to apply it to every property.  You will make money on some, but you can lose money just as easily if you should have used a different strategy.

Bottom line is this.  You need to learn as many strategies as you possibly can...which should be a never ending/limitless number, and apply these strategies to every property you are analyzing.  Then, choose the best one that works at that time.

5Reply
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  • Joe VilleneuvePro Member
    Plymouth, MI · Member since 2013 · 13k+ posts · 19k+ votes
    3y

    There is no "generic best strategy".  The strategy you choose is based on the market you are investing in, the potential cash flow and/or profit that can be made in the market matched up with the strategy that delivers the deal best.  You can't (shouldn't...ever) go in with the idea you have a strategy you like, and try to apply it to every property.  You will make money on some, but you can lose money just as easily if you should have used a different strategy.

    Bottom line is this.  You need to learn as many strategies as you possibly can...which should be a never ending/limitless number, and apply these strategies to every property you are analyzing.  Then, choose the best one that works at that time.

    5Reply
  • Bill Brown
    Rental Property Investor · Pittsburgh, PA · Member since 2018 · 40 posts · 16 votes
    3y

    Live-in flip!

    0Reply
  • James Wenzel
    Investor · TX · Member since 2020 · 57 posts · 60 votes
    3y

    There are a ton of ways to invest passively in real estate. First, attending conferences and meet ups will allow you to meet potential partners for future deals. Get the meetup app to search for those types of events. I have invested in single family short term and long term, passively invest in 20+ CRE deals as well as actively invest as a sponsor.

    With that being said, I would invest in the following:

    - Passively invest in commercial real estate syndications.  This will allow you to focus on your job and let your money work for you.  Typically you will double your money every 3 - 6yrs.  I typically like to focus on the sunbelt for these.  TX, AZ, FL, etc...  Make sure the deals are cash flowing, a lot of syndicators are currently trying to sell you snake oil with no yield.  LOL.  

    - Short term rentals with a partner.  High cash flowing

    - Residential Assisted Livings with a couple of partner.  Super high cash flowing.  

    Should be some good deals coming out with interest rates then refi when they trickle dow a little a couple of years down the road.  

    0Reply
  • Faraz K.
    OP
    New to Real Estate · Member since 2022 · 9 posts · 4 votes
    3y
    Quote from @Joe Villeneuve:

    There is no "generic best strategy".  The strategy you choose is based on the market you are investing in, the potential cash flow and/or profit that can be made in the market matched up with the strategy that delivers the deal best.  You can't (shouldn't...ever) go in with the idea you have a strategy you like, and try to apply it to every property.  You will make money on some, but you can lose money just as easily if you should have used a different strategy.

    Bottom line is this.  You need to learn as many strategies as you possibly can...which should be a never ending/limitless number, and apply these strategies to every property you are analyzing.  Then, choose the best one that works at that time.


    Hey Joe - thank you for the feedback! I was more so asking which type of REI you all would suggest I look into, given my circumstances. For example, house flipping would not work for me at this moment because of my time constraints.

    0Reply
  • Faraz K.
    OP
    New to Real Estate · Member since 2022 · 9 posts · 4 votes
    3y
    Quote from @Bill Brown:

    Live-in flip!


    I am highly considering this as part of my overall strategy! Perhaps adding an ADU to offset the mortgage payment. Although this wouldn't necessarily cash flow since I would still have a payment, so I would supplement this with something else.

    0Reply
  • Faraz K.
    OP
    New to Real Estate · Member since 2022 · 9 posts · 4 votes
    3y
    Quote from @James Wenzel:

    There are a ton of ways to invest passively in real estate. First, attending conferences and meet ups will allow you to meet potential partners for future deals. Get the meetup app to search for those types of events. I have invested in single family short term and long term, passively invest in 20+ CRE deals as well as actively invest as a sponsor.

    With that being said, I would invest in the following:

    - Passively invest in commercial real estate syndications.  This will allow you to focus on your job and let your money work for you.  Typically you will double your money every 3 - 6yrs.  I typically like to focus on the sunbelt for these.  TX, AZ, FL, etc...  Make sure the deals are cash flowing, a lot of syndicators are currently trying to sell you snake oil with no yield.  LOL.  

    - Short term rentals with a partner.  High cash flowing

    - Residential Assisted Livings with a couple of partner.  Super high cash flowing.  

    Should be some good deals coming out with interest rates then refi when they trickle dow a little a couple of years down the road.  


    Hello James - this is exactly what I was looking for, thank you very much! My goal here is to piece together a game plan given my current circumstances and future goals. I have some friends working with CRE syndications which I have been seriously considering, so thank you for that. Short term rentals I have also considered, but would definitely need a partner. I don't know anything about residential assisted living, so this is something I will have to dig into.

    0Reply
  • Joe VilleneuvePro Member
    Plymouth, MI · Member since 2013 · 13k+ posts · 19k+ votes
    3y
    Quote from @Faraz K.:
    Quote from @Joe Villeneuve:

    There is no "generic best strategy".  The strategy you choose is based on the market you are investing in, the potential cash flow and/or profit that can be made in the market matched up with the strategy that delivers the deal best.  You can't (shouldn't...ever) go in with the idea you have a strategy you like, and try to apply it to every property.  You will make money on some, but you can lose money just as easily if you should have used a different strategy.

    Bottom line is this.  You need to learn as many strategies as you possibly can...which should be a never ending/limitless number, and apply these strategies to every property you are analyzing.  Then, choose the best one that works at that time.


    Hey Joe - thank you for the feedback! I was more so asking which type of REI you all would suggest I look into, given my circumstances. For example, house flipping would not work for me at this moment because of my time constraints.

    The answer is the same.
    0Reply
  • Samantha Griffin
    Member since 2022 · 11 posts · 3 votes
    3y

    Hi! I am very similar to you. Live in SD have spent a lot of time living in Phoenix. Similar income, savings, credit score and rent payment here in downtown SD. I am also looking for high ROI. I have not done a deal but have some extensive research over the past 6 months on all investing strategies.
    I am a travel nurse and finding housing is the hardest part of the job as you sign a 3 month contract and have about 14 days or less to find furnished reliable housing so needless to say we’re generally desperate and need to find a mid term lease ASAP or we’re screwed. 
    San Diego and Phoenix are 2 of the most popular cities for travel nurses. 
    for example a 1 bedroom in Phoenix that would rent long term for maybe 800 you could rent for 1600 furnished to a nurse. We are forced to pay a premium because it’s a necessity. 
    just thought I’d share a creative way I’m looking at higher ROI than long term tenants but less work than managing a ST air bnb 

    Furnished finders is the main website nurses and other traveling professionals rely on. 

    Good Luck!!! 

    0Reply
  • James Wenzel
    Investor · TX · Member since 2020 · 57 posts · 60 votes
    3y
    Quote from @Faraz K.:
    Quote from @James Wenzel:

    There are a ton of ways to invest passively in real estate. First, attending conferences and meet ups will allow you to meet potential partners for future deals. Get the meetup app to search for those types of events. I have invested in single family short term and long term, passively invest in 20+ CRE deals as well as actively invest as a sponsor.

    With that being said, I would invest in the following:

    - Passively invest in commercial real estate syndications.  This will allow you to focus on your job and let your money work for you.  Typically you will double your money every 3 - 6yrs.  I typically like to focus on the sunbelt for these.  TX, AZ, FL, etc...  Make sure the deals are cash flowing, a lot of syndicators are currently trying to sell you snake oil with no yield.  LOL.  

    - Short term rentals with a partner.  High cash flowing

    - Residential Assisted Livings with a couple of partner.  Super high cash flowing.  

    Should be some good deals coming out with interest rates then refi when they trickle dow a little a couple of years down the road.  


    Hello James - this is exactly what I was looking for, thank you very much! My goal here is to piece together a game plan given my current circumstances and future goals. I have some friends working with CRE syndications which I have been seriously considering, so thank you for that. Short term rentals I have also considered, but would definitely need a partner. I don't know anything about residential assisted living, so this is something I will have to dig into.


    Sent you a PM.  Lets connect this week.  Just attended the RAL conf in PHX and got a ton of contacts and insight for a future purchase.

    1Reply
  • Faraz K.
    OP
    New to Real Estate · Member since 2022 · 9 posts · 4 votes
    3y
    Quote from @Samantha Griffin:

    Hi! I am very similar to you. Live in SD have spent a lot of time living in Phoenix. Similar income, savings, credit score and rent payment here in downtown SD. I am also looking for high ROI. I have not done a deal but have some extensive research over the past 6 months on all investing strategies.
    I am a travel nurse and finding housing is the hardest part of the job as you sign a 3 month contract and have about 14 days or less to find furnished reliable housing so needless to say we’re generally desperate and need to find a mid term lease ASAP or we’re screwed. 
    San Diego and Phoenix are 2 of the most popular cities for travel nurses. 
    for example a 1 bedroom in Phoenix that would rent long term for maybe 800 you could rent for 1600 furnished to a nurse. We are forced to pay a premium because it’s a necessity. 
    just thought I’d share a creative way I’m looking at higher ROI than long term tenants but less work than managing a ST air bnb 

    Furnished finders is the main website nurses and other traveling professionals rely on. 

    Good Luck!!! 


     Hey Samantha - thank you for this info! I actually know a lot of travel nurses in both cities, and this makes sense. They have complained about this in the past to me as well Lol! This feels like a midpoint between Air BnB and long term rentals as far as workload is concerned.

    0Reply
  • James CarlsonBusiness Member
    Real Estate Agent · Colorado | stan.store/JamesCarlson · Member since 2014 · 2k+ posts · 2k+ votes
    3y
    Quote from @Faraz K.:

    Hello Bigger Pockets Community!

    I’m new here and new to Real Estate in general, however I am very enthusiastic and determined to learn and invest wisely.....

    You're in a great position, and you've got time on your side. Yes, as others have said, there are many ways to skin this real estate cat. That said ... here's what I think, based on our investor clients in Denver.

    Buy in an city that allows short-term rentals as a non-owner. I know because of your business that you don't want a time-suck, but having Airbnb/STRs as an option for when you move out is just smart. In a metro like Denver, there are only a few cities that allow Airbnb in non-owner occupied rentals -- Arvada allows it. So does Wheat Ridge. Centennial does too, and Adams County will soon.

    Next, once you determine the city, I'd buy one of three things:

    1. A big SFH that you can do a rent-by-the-room house hack. In a place like Denver, you can get $800-$1,000/room. If you have a 5br house, you're renting 4 bedrooms at $3,600 to $4,000. If you don't want roommates ... 

    2. A duplex. If you've bought in one of the Denver-area cities that allow non-owner occupied STRs, then you can short-term rent the other side to maximize your revenue. Or hey, you can also just rent out the other side long-term. (If you have more than one bedroom on your side, you could also rent out the second bedroom.) Then when you move out, you can rent both sides, or short-term rent one and long-term rent the other, etc. 

    3. A SFH with a separate basement entrance. We find these all the time for our Denver and Colorado Springs house-hacking clients. You live up top, and rent the basement -- either as a LTR or as an Airbnb. (You can really only LTR it if you have a kitchen down there, so you need to know your zoning and whether that's allowed.)

    I'm thinking about both -- A) how do you maximize your revenues while you live there and B) how do you maximize your revenues if/when you move out.

    (Also, side not to all of this -- consider as an alternative to the above rental models a medium-term rental for traveling nurses or remote workers. It's a kind of in-between the STR and LTR. More money than LTR, less work than an STR.)

    Whatever you decide, I wish you the best!

    [email protected]720-460-1770
    James Carlson Real Estate
    WebsiteView Page
    1Reply
  • Account Closed
    Rental Property Investor · Brooke Park Drive · Member since 2018 · 1k+ posts · 2k+ votes
    3y
    Quote from @James Carlson:
    Quote from @Faraz K.:

    Hello Bigger Pockets Community!

    I’m new here and new to Real Estate in general, however I am very enthusiastic and determined to learn and invest wisely.....

    You're in a great position, and you've got time on your side. Yes, as others have said, there are many ways to skin this real estate cat. That said ... here's what I think, based on our investor clients in Denver.

    Buy in an city that allows short-term rentals as a non-owner. I know because of your business that you don't want a time-suck, but having Airbnb/STRs as an option for when you move out is just smart. In a metro like Denver, there are only a few cities that allow Airbnb in non-owner occupied rentals -- Arvada allows it. So does Wheat Ridge. Centennial does too, and Adams County will soon.

    Next, once you determine the city, I'd buy one of three things:

    1. A big SFH that you can do a rent-by-the-room house hack. In a place like Denver, you can get $800-$1,000/room. If you have a 5br house, you're renting 4 bedrooms at $3,600 to $4,000. If you don't want roommates ... 

    2. A duplex. If you've bought in one of the Denver-area cities that allow non-owner occupied STRs, then you can short-term rent the other side to maximize your revenue. Or hey, you can also just rent out the other side long-term. (If you have more than one bedroom on your side, you could also rent out the second bedroom.) Then when you move out, you can rent both sides, or short-term rent one and long-term rent the other, etc. 

    3. A SFH with a separate basement entrance. We find these all the time for our Denver and Colorado Springs house-hacking clients. You live up top, and rent the basement -- either as a LTR or as an Airbnb. (You can really only LTR it if you have a kitchen down there, so you need to know your zoning and whether that's allowed.)

    I'm thinking about both -- A) how do you maximize your revenues while you live there and B) how do you maximize your revenues if/when you move out.

    (Also, side not to all of this -- consider as an alternative to the above rental models a medium-term rental for traveling nurses or remote workers. It's a kind of in-between the STR and LTR. More money than LTR, less work than an STR.)

    Whatever you decide, I wish you the best!


     There was a podcast recently about lending money, which is very passive. I can’t find the link right now but I think if you search flynn family lending you can look into it more

    1Reply
  • Twana RasoulBusiness Member
    Real Estate Agent · San Diego, CA · Member since 2017 · 1k+ posts · 1k+ votes
    3y

    @Faraz K. I highly recommend house hacking a multifamily property with low money down (i.e. 3.5% down payment FHA loan) in the market you spend most of your time, whether its San Diego, Phoenix or Denver.

    Compass5122 Reviews
    WebsiteView Page
    0Reply
  • Nicholas L.Pro Member
    Flipper/Rehabber · Pittsburgh · Member since 2018 · 6k+ posts · 5k+ votes
    3y

    @Faraz K.

    wow, people are overcomplicating this.

    house hack.

    no need to partner at this point.

    2Reply
  • Nicky Venditti
    Member since 2020 · 3 posts · 0 votes
    3y

    @James Wenzel what is the meet up app you refer to? This is a great response to a great thread!

    0Reply
  • Mohammed Rahman
    Real Estate Broker · New York, NY · Member since 2020 · 2k+ posts · 1k+ votes
    3y

    Salaam @Faraz K.- I'm an investor & realtor and was in a similar situation as you. You know you want to be in real estate because it's a smart move, but your time constraints don't allow it.

    2 low hanging fruits that stick out: 

    1 - investing in a house hack scenario so you can immediately start building equity instead of renting 

    2 - investing through real estate funds and syndications. There are a lot of these out there, so look for the track record and reputation of each operator. You can use services like fundrise as a super passive way to get your foot in. 

    As other comments have said, there's no one way to get into real estate. You can keep reading and learning and networking, but at the end of the day you have to decide to pull the trigger. Since you're already a business owner, the learning curve will be less steep for you as you have the ability to be resourceful. 

    Shoot me a DM if you want to chat, happy to point you in the right direction or be a second voice to calm the information overload. 

    0Reply
  • Leo R.
    Investor · Member since 2021 · 591 posts · 695 votes
    3y

    @Faraz K. Congrats on getting to the position where you're ready to make some moves in RE!

    You said that you want to something that is not time intensive...as others have mentioned, the least time intensive option would probably be investing in some type of fund...though, that strategy has some disadvantages...as you probably know, the easiest strategy is rarely going to provide the best returns.

    If your goal is to actually own real estate, then the least time-intensive way (and probably the best way to start as a beginner) is to house hack. A good way to start is to house hack a single fam house, or a small multi fam (like a duplex/tri/quadplex)--these properties allow you to get the best mortgage terms, since they qualify for owner-occupant mortgages.   

    In my opinion, house hacking is the best way for RE investors to get started, because it comes with many of the advantages of other strategies (opportunity for cashflow, appreciation, opportunity to learn how to manage a property--which is extremely valuable experience), but it is typically much simpler, less time-consuming, and has far less risk than other strategies (such as flipping).

    As I've said many times on the forums: it's a good idea for beginning investors to start with a relatively straightforward strategy (and avoid the more advanced strategies). If you were a beginner skier, you'd start off on an easy slope where you have the highest chance of success (you wouldn't try to ski a double black diamond--because there'd be almost no chance of success; and there'd be a large chance of serious failure).  House hacking is analogous to that beginner ski slope--it gives you the opportunity to learn the lessons that are critical for success in RE investing, with far less risk than the more advanced strategies. It's also much less time-consuming than the more advanced strategies (like flipping).  Plus, it can be very lucrative--there are plenty of multi millionaires who built their wealth via consistent house hacking.

    As with the other strategies, there are many podcasts, books, forum posts, youtube videos, etc. on the topic of house hacking--checking out those resources would be a good place to start.

    Good luck out there!

    0Reply
  • Faraz K.
    OP
    New to Real Estate · Member since 2022 · 9 posts · 4 votes
    3y
    Quote from @Twana Rasoul:

    @Faraz K. I highly recommend house hacking a multifamily property with low money down (i.e. 3.5% down payment FHA loan) in the market you spend most of your time, whether its San Diego, Phoenix or Denver.


     Hello Twana, thank you for the advice! House Hacking seems to be a common recommendation here. I see you're in SD as well, sending you a DM.

    0Reply
  • Faraz K.
    OP
    New to Real Estate · Member since 2022 · 9 posts · 4 votes
    3y
    Quote from @Mohammed Rahman:

    Salaam @Faraz K.- I'm an investor & realtor and was in a similar situation as you. You know you want to be in real estate because it's a smart move, but your time constraints don't allow it.

    2 low hanging fruits that stick out: 

    1 - investing in a house hack scenario so you can immediately start building equity instead of renting 

    2 - investing through real estate funds and syndications. There are a lot of these out there, so look for the track record and reputation of each operator. You can use services like fundrise as a super passive way to get your foot in. 

    As other comments have said, there's no one way to get into real estate. You can keep reading and learning and networking, but at the end of the day you have to decide to pull the trigger. Since you're already a business owner, the learning curve will be less steep for you as you have the ability to be resourceful. 

    Shoot me a DM if you want to chat, happy to point you in the right direction or be a second voice to calm the information overload. 


     Thank you for the great advice, Mohammed! I figured there would be several others in the same boat. Shooting you a DM now 👌🏽

    0Reply
  • Chris McCormack
    Accountant · Edina, MN · Member since 2020 · 172 posts · 97 votes
    3y

    STR opens the door for special tax strategies that can be leveraged to write-off W2 income. Be sure to talk with a tax advisor before making any decisions.

    0Reply
  • Faraz K.
    OP
    New to Real Estate · Member since 2022 · 9 posts · 4 votes
    3y
    Quote from @Leo R.:

    @Faraz K. Congrats on getting to the position where you're ready to make some moves in RE!

    You said that you want to something that is not time intensive...as others have mentioned, the least time intensive option would probably be investing in some type of fund...though, that strategy has some disadvantages...as you probably know, the easiest strategy is rarely going to provide the best returns.

    If your goal is to actually own real estate, then the least time-intensive way (and probably the best way to start as a beginner) is to house hack. A good way to start is to house hack a single fam house, or a small multi fam (like a duplex/tri/quadplex)--these properties allow you to get the best mortgage terms, since they qualify for owner-occupant mortgages.   

    In my opinion, house hacking is the best way for RE investors to get started, because it comes with many of the advantages of other strategies (opportunity for cashflow, appreciation, opportunity to learn how to manage a property--which is extremely valuable experience), but it is typically much simpler, less time-consuming, and has far less risk than other strategies (such as flipping).

    As I've said many times on the forums: it's a good idea for beginning investors to start with a relatively straightforward strategy (and avoid the more advanced strategies). If you were a beginner skier, you'd start off on an easy slope where you have the highest chance of success (you wouldn't try to ski a double black diamond--because there'd be almost no chance of success; and there'd be a large chance of serious failure).  House hacking is analogous to that beginner ski slope--it gives you the opportunity to learn the lessons that are critical for success in RE investing, with far less risk than the more advanced strategies. It's also much less time-consuming than the more advanced strategies (like flipping).  Plus, it can be very lucrative--there are plenty of multi millionaires who built their wealth via consistent house hacking.

    As with the other strategies, there are many podcasts, books, forum posts, youtube videos, etc. on the topic of house hacking--checking out those resources would be a good place to start.

    Good luck out there!


     Thank you so much, Leo! Yes, unfortunately "hands off" usually means "less return" on all things business 😀

    You have some great info in your post - I have a question about house hacking as that seems to have come up a lot and I believe there's a ton of ways to do it. Do you recommend any specific method? I have a friend who bought a house, built an ADU, and lives in the house while renting the ADU. He obviously doesn't cash flow, but he built value into the house and is getting part of his mortgage paid...

    0Reply
  • Ben Biggs
    Real Estate Agent · San Diego, CA · Member since 2014 · 121 posts · 111 votes
    3y

    @Faraz K.

    Welcome to the adventure!

    Both high ROI & monthly passive income will be hard to find. Typically you will have one or the other. San Diego is a high appreciation market that is very hard to cash-flow. Of course the more you put down the lower your payment, the higher your cash flows. But that will hurt your Cash on Cash return.

    My advice is as follows:

    1. Start running numbers on as many deals as possible when you have time. Start to see what areas and what types of properties are going to get you closer your goals. Here in San Diego go East. El Cajon, Lakeside, Jamul, Rancho San Diego, Etc. The farther away from the coast the more the price goes down. However if it is still in San Diego county you should see high occupancy rates.

    2. Look at other areas you know well and run the numbers. Find an investor friendly agent (not a bunch, agents like loyalty and will work harder for you if they know they have a better shot of getting your business.)

    3. Stop thinking and start doing. Buy something. ASAP. Pick a direction and go full steam ahead. If you listen to the podcasts, all the big guys say the same thing. Beware of opportunity cost. Learn as you go. Doing your research is good, but Analysis Paralysis is not going to help. It took me about a year from when I first got bit by the real estate bug to when I purchased my first property. And I was active duty Navy at the time on deployment with almost zero downtown. Sneaking forum sessions and podcasts in while i was working.

    Hope this helps!

    1Reply
  • Faraz K.
    OP
    New to Real Estate · Member since 2022 · 9 posts · 4 votes
    3y
    Quote from @James Carlson:
    Quote from @Faraz K.:

    Hello Bigger Pockets Community!

    I’m new here and new to Real Estate in general, however I am very enthusiastic and determined to learn and invest wisely.....

    You're in a great position, and you've got time on your side. Yes, as others have said, there are many ways to skin this real estate cat. That said ... here's what I think, based on our investor clients in Denver.

    Buy in an city that allows short-term rentals as a non-owner. I know because of your business that you don't want a time-suck, but having Airbnb/STRs as an option for when you move out is just smart. In a metro like Denver, there are only a few cities that allow Airbnb in non-owner occupied rentals -- Arvada allows it. So does Wheat Ridge. Centennial does too, and Adams County will soon.

    Next, once you determine the city, I'd buy one of three things:

    1. A big SFH that you can do a rent-by-the-room house hack. In a place like Denver, you can get $800-$1,000/room. If you have a 5br house, you're renting 4 bedrooms at $3,600 to $4,000. If you don't want roommates ... 

    2. A duplex. If you've bought in one of the Denver-area cities that allow non-owner occupied STRs, then you can short-term rent the other side to maximize your revenue. Or hey, you can also just rent out the other side long-term. (If you have more than one bedroom on your side, you could also rent out the second bedroom.) Then when you move out, you can rent both sides, or short-term rent one and long-term rent the other, etc. 

    3. A SFH with a separate basement entrance. We find these all the time for our Denver and Colorado Springs house-hacking clients. You live up top, and rent the basement -- either as a LTR or as an Airbnb. (You can really only LTR it if you have a kitchen down there, so you need to know your zoning and whether that's allowed.)

    I'm thinking about both -- A) how do you maximize your revenues while you live there and B) how do you maximize your revenues if/when you move out.

    (Also, side not to all of this -- consider as an alternative to the above rental models a medium-term rental for traveling nurses or remote workers. It's a kind of in-between the STR and LTR. More money than LTR, less work than an STR.)

    Whatever you decide, I wish you the best!


    Hey James - wow, this is great advice, thank you! At this point in my life I don't want roommates, so options 2 and 3 are paths I am strongly considering. My buddy bought a house and built an ADU and just rents that out, and it offsets part his mortgage. Although this is not cash-flowing, you are obviously still building equity. SO maybe my approach is two-pronged: I can do a house hack, and then passively invest in syndications...

    1Reply
  • Leo R.
    Investor · Member since 2021 · 591 posts · 695 votes
    3y
    Quote from @Faraz K.:
    Quote from @Leo R.:

    @Faraz K. Congrats on getting to the position where you're ready to make some moves in RE!

    You said that you want to something that is not time intensive...as others have mentioned, the least time intensive option would probably be investing in some type of fund...though, that strategy has some disadvantages...as you probably know, the easiest strategy is rarely going to provide the best returns.

    If your goal is to actually own real estate, then the least time-intensive way (and probably the best way to start as a beginner) is to house hack. A good way to start is to house hack a single fam house, or a small multi fam (like a duplex/tri/quadplex)--these properties allow you to get the best mortgage terms, since they qualify for owner-occupant mortgages.   

    In my opinion, house hacking is the best way for RE investors to get started, because it comes with many of the advantages of other strategies (opportunity for cashflow, appreciation, opportunity to learn how to manage a property--which is extremely valuable experience), but it is typically much simpler, less time-consuming, and has far less risk than other strategies (such as flipping).

    As I've said many times on the forums: it's a good idea for beginning investors to start with a relatively straightforward strategy (and avoid the more advanced strategies). If you were a beginner skier, you'd start off on an easy slope where you have the highest chance of success (you wouldn't try to ski a double black diamond--because there'd be almost no chance of success; and there'd be a large chance of serious failure).  House hacking is analogous to that beginner ski slope--it gives you the opportunity to learn the lessons that are critical for success in RE investing, with far less risk than the more advanced strategies. It's also much less time-consuming than the more advanced strategies (like flipping).  Plus, it can be very lucrative--there are plenty of multi millionaires who built their wealth via consistent house hacking.

    As with the other strategies, there are many podcasts, books, forum posts, youtube videos, etc. on the topic of house hacking--checking out those resources would be a good place to start.

    Good luck out there!


     Thank you so much, Leo! Yes, unfortunately "hands off" usually means "less return" on all things business 😀

    You have some great info in your post - I have a question about house hacking as that seems to have come up a lot and I believe there's a ton of ways to do it. Do you recommend any specific method? I have a friend who bought a house, built an ADU, and lives in the house while renting the ADU. He obviously doesn't cash flow, but he built value into the house and is getting part of his mortgage paid...

    Hey @Faraz K. no problem; I've house hacked a lot of different types of properties, and it's a great method (especially when you're young and don't have a family). 

    As with anything, each house hacking method has its own pros and cons...  If you want to househack, and your biggest priority is to make the process as easy as possible, and minimize your time commitment, then a B or A grade duplex in a desirable neighborhood is probably your best bet...the reasons are:

    1. All other things being equal, a duplex is easier to find tenants for than renting individual rooms in your home, 

    2. if it's B or A grade in a desirable neighborhood, that will help you find top-quality tenants--which will save you a LOT of time and headache compared to renting to less qualified tenants. It will also lower your vacancy compared to lower grade properties.

    3. A duplex would obviously be less time to manage than a tri or quad, and it will often have fewer maintenance items (like AC condensers, fridges, etc.) than a tri or a quad.

    However, there are downsides. For instance, B or A-class duplexes will often have lower cashflow returns than a lower grade (like a C) property.  Also, a duplex will often have lower returns than renting individual rooms in a single family home--both in terms of cashflow, and in terms of appreciation (multifamily properties tend to appreciate less than a single family house).  Also, if you decide to sell, a duplex will usually be more difficult to sell than a single family home.

    ...Having said that, there are many factors to consider other than monetary returns. For instance, renting rooms in a single family house might get you much better cashflow, but it will consume a lot more of your time, it will produce a lot more challenges (e.g.; managing housemate disputes), and you'll have a lot more vacancy than a duplex--so, you'll want to estimate the monetary value of that extra hassle and vacancy... ...RE has a lot of different types of profits and losses other than the obvious ones like cashflow, appreciation, and mortgage payments...

    Good luck out there!

    0Reply
  • Melanie ThomasBusiness Member
    Real Estate Broker · San Antonio · Member since 2022 · 1k+ posts · 489 votes
    3y
    Get involved in your local REIA. This is an excellent way to chat with folks face to face in your market who are already in the game. Happy Investing!
    [email protected]
    RentWerx Property Management4.73296 Reviews
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