High-Income, Time-Strapped W2 Earner—First House Hack Strategy?

OP

Member since 2024 · 15 posts · 6 votes

1y

@Bill B. Unfortunately the company adjusts my income based on the state. I moved from California to be closer to my wife's family, and they adjusted my income down because Colorado is a (slightly) lower cost of living state. So moving would essentially be a wash as far as income/taxes go.

Being married and a little older than most people starting here, I think renting by the room is something we aren't willing to sacrifice for. We both also work from home often.

We are likely interested in house hacking a multi-family. Thanks for your insight.

OP

Member since 2024 · 15 posts · 6 votes

1y

@Eric DeNardo Thanks for the confirmation on STR in Denver. I wasn't aware of those areas close to Denver that can be non-owner-occupied. I assume those areas are not as desirable for short-term renters.

I have a spouse and we both often work from home. So I don't think the co-living strategy is a sacrifice that we are willing to make now.

Appreciate the insights. If we could get the systems you suggest in place, I'm sure together my wife and I could coordinate a couple hours a week.

[email protected]208-600-2814

Ryan SpathBusiness Member

Real Estate Agent · Boise, ID · Member since 2017 · 565 posts · 377 votes

1y

Benjamin - welcome to the club! If you are not married to Denver as previously mentioned you could move to a place that does not have state income tax and lower cost of living and really speed up your process. We can often achieve financial goals faster the more uncomfortable we can become. It's all about delayed gratification.

option 2 is my favorite. You are in a more expensive state and you make higher wages due to this. I would purchase as much real estate as possible FHA loan for the 1st 4plex or check to see if there are other state funded down payment programs for first time home buyers.

I would put my head down and try to buy a 4 plex every other year for 10 years. You are going to look up and have 5 of them and now things will really start to pay off.

real estate is like planting trees, it takes ~10 years to really get any shade. And when you have several trees giving you shade you no longer need air conditioning to stay cool.

best of luck! Let us know what you come up with.

3 Reply

OP

Member since 2024 · 15 posts · 6 votes

1y

@Ryan Spath Yes, the more I read, the more the consensus seems to be that it really starts rolling on its own after ~7 years. I do like the idea of purchasing a 4-plex as often as possible with the FHA/5% conventional.

Like I said previously though, my biggest concern is finding something that will at least break even cash flow when I go to move out after the first year or two. I also mentioned that my W2 may not be stable, there seems to be constant layoffs happening around me. So a negative cash flow property would add a lot of stress.

Eric DeNardoPro Member

Real Estate Agent · Denver · Member since 2020 · 364 posts · 151 votes

1y

@Benjamin Boyle,

Arvada and Westminster are desirable areas to Airbnb. And there are areas near Tennyson Street in unincorporated Adams county that are desirable. I would still consider an STR in those areas.

For RBTR/Co-living - I was suggesting that as your exit strategy to ensure it's paying off your mortgage or cash flowing.

[email protected]

Becca F.

Rental Property Investor · San Francisco Bay Area · Member since 2022 · 1k+ posts · 1k+ votes

1y

Without having any other information such as purchase price ranges, I like Option #2 buy multi-unit and house hack using FHA or 5% conventional.

Option #1 but you mentioned that you and your wife aren't too thrilled about having people renting out rooms in your house. Option #3 relocating if you don't mind moving away from wife's family.

With layoff concerns, is that for you or you and your wife? Would you be saving $100k each year beyond the $80k saved? Go through worst case scenario and how would you make the monthly payments especially if you move out of house hack #1 and have a second property along with other expenses, if laid off.

Eric Gerakos

Investor · Costa Mesa, CA · Member since 2016 · 1k+ posts · 1k+ votes

1y

Benjamin, you have the right idea buying fewer, but better quality properties.

Jeff WhiteBusiness Member

Realtor · Denver, CO · Member since 2016 · 278 posts · 371 votes

1y

@Benjamin Boyle

Congrats on recognizing the power of real estate investing and specifically house hacking.

I've done 8 house hacks in 7 years with my wife in Denver metro, and it has allowed both of us to leave our W2s, and that is the power of it, if you are willing to do it, it can allow you to expedite the financial independence goal in 5-10 years if you are willing to do the work.

That's also smart to shoot for a small portfolio, you don't need 100s of units to achieve your goals.

Regarding your strategies:

1) Single Family with ADU - this is the most ideal strategy for couples since it is like getting a detached duplex so best of both worlds with house hacking and privacy, but unfortunately, Denver metro doesn't have a lot of these types of properties, and the ones with new ADUs are way too expensive to make it work unless you are putting down 30-40% down.

2) 2-4 units - this is the much better strategy due to way more inventory in the Denver metro market that can work, and there are lots of properties that can definitely work for what you are looking for. The most important number is whether it cash flows the day after moving out, and there are lots of strategies to maximize cash flow. Most 2-4 units are located in B-C areas, so A areas aren't as common because those were designed just for single families with no 2-4 units present (think of Centennial, Highlands Ranch, Lone Tree), all of those places have only single family properties and no small multifamilies.

3) Relocate to a different market - if your job allows it, definitely a good idea too because you can go to a market where there might be more ADUs or better priced multis, but the long-term appreciation might not be as good as Denver.

I've done all the strategies from STR, rent by room/coliving, long-term market tenants, Section 8 and Sober living. All strategies work, and it depends on the property on what works best.

The best properties for house hacking with a low down-payment are 2-4 units and/or houses with ADUs/mother-in-law apartments because you can find ones that meet your need for privacy and your own unit, but you might have to sacrifice a little on location.

The best way to cash flow in a market today is to a use a strategy that pays better than average returns like Section 8, rent by room or STR/MTR depending on the property.

The next steps for you are definitely figure out your deal breakers, could you live in a 4plex in Arvada/Westminster? Do you want a fixer? Do you want rent ready? How much time do you have to devout to your real estate strategy? STR/MTRs require more work in general, so that might not be the best strategy.

2 Reply

Marcus R.

Real Estate Agent · Denver CO · Member since 2019 · 209 posts · 332 votes

1y

Adding two add'l options to consider...

1) Live-in flip. Find something that needs cosmetic updates. Update over 24 months for the cap gains exclusion.

2) Savings grow by $100K annually. Given this I'd move to a LCOL area and pay all cash. Realistically you could pay call cash in a few years which would super charge you towards FI. Fewer things move you closer to FI than a paid off primary.

It might be unstable but it seems like your greatest wealth building tool is your income. It will be hard to find investments that consistently produce $100K of after-tax disposable income unless you take on a massive amount of risk.

2 Reply

Greg WeikBusiness Member

Property Manager · Denver, CO · Member since 2020 · 263 posts · 327 votes

1y

Low barrier-to-entry properties suffer from three main issues:

1) They are far (FAR) less liquid. Buyers down the road are also going to be investors looking for a deal...

2) They won't appreciate as well as a standard single-family residence (SFR) in a desirable area.

3) Tenants will be a constant source of stress and, frankly, a PITA to deal with.

There are no free lunches. I'm not sure what "high income" means exactly, but if you can swing it, you should be buying SFRs in Centennial, Littleton, Englewood or nicer parts of Aurora. You will need to put a lot of cash down to make the numbers work, but that's life in 2025. It's worth it.

Every SFR I've purchased, I felt like I overpaid at the time. Now, with 5 SFR rentals under my belt (all bought in the last 10 years) I get to enjoy stability, nearly zero turnover, relatively low operating costs, steady appreciation.

FWIW, I see a lot of posts here from people advocating strategies I flat-out see fail on a daily basis. Most people here have their own andecdotes as their experience, and those anecdotes of course are going to be limited. The nice thing about owning a PMC for the last 20 years is that I've had a front-row seat to thousands of clients and their strategies, from house hack, to multi-family, to S8, to condos to SFRs. I see what works and what doesn't.

Unfortunately, what works the best also requires the most capital - by far.

Best of luck.

303-586-5560

Real Estate Solutions4.4387 Reviews

Website View Page

OP

Member since 2024 · 15 posts · 6 votes

1y

@Greg Weik That's an interesting perspective. When you say "Unfortunately, what works the best also requires the most capital", do you mean putting a large amount down on a SFR?

That is kind of why I had the idea of a downtown SF with ADU (and airbnb to get closer to not having a huge amount out of pocket). But as others have said, that type of property isn't common in Denver.

Greg WeikBusiness Member
Property Manager · Denver, CO · Member since 2020 · 263 posts · 327 votes
1y
Quote from @Benjamin Boyle:

@Greg Weik That's an interesting perspective. When you say "Unfortunately, what works the best also requires the most capital", do you mean putting a large amount down on a SFR?
That is kind of why I had the idea of a downtown SF with ADU (and airbnb to get closer to not having a huge amount out of pocket). But as others have said, that type of property isn't common in Denver.

We've managed a number of SFRs with ADUs and my takeaway is that landlords who want to either live in or rent out the ADU separately dramatically underestimate the level of deterrent it is to have a stranger living in the backyard. Particularly at the price point the landlord typically needs/wants/expects for the SFR; most tenants who qualify won't readily accept a stranger in the backyard.
Yes, I do mean the best rental properties require the most capital. SFRs are the best rental investment vehicle in my experience when evaluated in terms of appreciation (which is where wealth-building occurs), stability, and liquidity.
303-586-5560
Real Estate Solutions4.4387 Reviews
Website View Page
1 Reply
Benjamin Boyle
OP
Member since 2024 · 15 posts · 6 votes
1y
@Greg Weik I do wonder about underestimating the level of deterrent having stranger living in the backyard.
So you are basically saying that for longterm wealth $1M in equity in SFR is better than the equivalent in small multifamily (assuming similar leverage)? But I assume the multifamily has a better cash flow?
0 Reply
Greg WeikBusiness Member
Property Manager · Denver, CO · Member since 2020 · 263 posts · 327 votes
1y
Quote from @Benjamin Boyle:

@Greg Weik I do wonder about underestimating the level of deterrent having stranger living in the backyard.
So you are basically saying that for longterm wealth $1M in equity in SFR is better than the equivalent in small multifamily (assuming similar leverage)? But I assume the multifamily has a better cash flow?

100%. SFR is the gold standard of building wealth, especially if you value your time.
303-586-5560
Real Estate Solutions4.4387 Reviews
Website View Page
0 Reply

OP

Member since 2024 · 15 posts · 6 votes

1y

@Marcus R. All definitely true. I realize the income is my greatest wealth building tool now. I am trying not to squander the opportunity. Thanks for the suggestions, I am considering both.

OP

Member since 2024 · 15 posts · 6 votes

1y

@Jeff White 8 in 7 years?! That is incredible dedication.

I was thinking 2-4 units closer to downtown. Maybe south/west of Sloan's lake area. It is interesting to me when looking on Zillow how things seem to be selling for much less than what they are actually listed for lately.

I would be totally fine with a 4-plex in Arvada/Westminster. I am stil just learning all the areas, but I figure I can live almost anywhere especially if it is only temporary. As long as my wife feels safe there. But location isn't as big of a deal as the longer term strategy of fewer nicer places.

OP

Member since 2024 · 15 posts · 6 votes

1y

@Becca F. Still working on it but I think we may be targeting something in the $1M range. The layoff concerns are mine, just because they have been steadily happening around me over the last 2 years. Ideally we will be saving $100k additional per year beyond the $80k (assuming no layoffs). Thanks for the advice on planning for worst case, I imagine that would be to have the cashflow and a decent reserve.

[email protected]786-494-6766

Robert EllisBusiness Member

Developer · Miami, FL · Member since 2014 · 3k+ posts · 1k+ votes

1y

Quote from @Benjamin Boyle:

Hi everyone,

I’m currently renting in the Denver metro for $2,150/month and looking to buy my first property. I discovered BiggerPockets and FI about two years ago, and since then, I’ve been focused on improving my financial position and saving aggressively.

My Situation

• No real estate owned yet

• High-income but very time-intensive W2 job

• ~$80K cash saved, growing by ~$100K annually

• Limited time outside of work, so I think my best strategy is fewer, high-quality assets over volume

• End goal is optionality and freedom. I have concerns about stability of W2

Strategies I’m Considering

1️⃣ Single-Family + ADU (Downtown Area, ~$1M+)

• Live in the ADU and short-term rent the main house (from what I've read this is the only viable way to STR in Denver)

• Concerns: Managing STR with limited time, exit strategy when I move and STR is no longer legal

2️⃣ Duplex/Triplex/Fourplex (“A” Neighborhood)

• House hack for a year, then transition to property management and repeat

• Concerns: Cash flow after moving out, limited time for value-add opportunities

3️⃣ Relocate to a Different Market

• W2 allows location flexibility, and I don't have ties to Denver

• Same strategies, but in a market where entry costs and cash flow may be better

• Concerns: Long-term appreciation vs. Denver

What I’m Looking For:

• Feedback on these strategies—what am I missing or not considering?

• Advice from those who have done STR or small multifamily house hacks with a busy W2

• Thoughts on exit strategies for both options

Would love to hear from those with experience in similar situations! Thanks in advance.

build a triplex in a class A neighborhood or class B where the zoning allows you. talk to your city and seek out a zoning review for what zones allow for a triplex rezone and build ground up. no better way to build wealth. enter the market 25% below market. buy the land cash, build a three story stacked triplex. rent 2 out live in the other. house hack on steroids.

Section 8 Launch52 Reviews

Website View Page

OP

Member since 2024 · 15 posts · 6 votes

1y

@Robert Ellis Thanks for the reply. I think it would be amazing to go the development route, if I were to go all in. However with my lack of time and experience, it likely isn't the route for me at this time.

Lu Kang

Investor · Lafayette Hill, PA · Member since 2015 · 27 posts · 27 votes

1y

Hi @Benjamin Boyle congrats on the journey.

One thing is consider since you have limited time, would your wife be open to "professional real estate designation" for tax purposes.

As a new investor you will most likely incur losses (Active / passive) based on your first purchase, especially today's high cost environment. Option 2 seems to be the best situation.

Keep in mind usually you can writeoff 25K real estate losses (Usually due to first year fees, mortgage interest / and depreciation). But if your W2 is too high, there is also a phase out, meaning you won't qualify and still have to pay back depreciation at sale unless you 1031.

It's also one of those deals where you don't know your threshold of being a landlord, until you become a landlord. The next step really is just get a calculator and determine how much it would cost to buy a duplex / triplex and how much you the tenants pay down vs your present situation.

Depending on that it might make sense to buy or just keep the status quo and keep making 4% on your cash.

[email protected]832-776-9582 Podcast Guest on Show #469

Peter W.

Member since 2020 · 351 posts · 329 votes

1y

ADD thoughts:

I think your plan likely starts with a multifamily househack near where you currently live and see how it goes over the next year or two. I found that buying, turnover, prepping the place initially and learning the ropes (learning the local laws, figuring out how to advertise, coming up with a screening method and criteria, creating a lease etc.) was a lot more time consuming than I anticipated (especially with having small kids). As I became more experienced, it took less time, but there is a learning curve. With that said, I have very high confidence, that if you house hack a couple of times, you will be very grateful that you did. If you are local, you should be able to self manage a couple of multifamily properties without much issue, just learn which contractors you like.

A lot of folks here are gungho on real estate (and I am much more excited about it now that my properties have stabilized), but I consider it my defensive portfolio position--I have about 1/6 of my net worth in individual stocks, 1/2 in index funds (mostly in retirement accounts) and 1/3 in real estate. Diversification is nice.

I also think you should be maxing out your 401k and IRAs before jumping into real estate as they are even more advantageous from a tax, legal and time perspective. That is if you take the 100k you are saving and put half into retirement accounts and half into real estate, you won't be upset. You can always lend 50k to yourself (repeatedly) from your 401k to help purchase the next property. This game would look like this, you have 100k in your 401k, you lend yourself 50k for a downpayment, then over the next two years, instead of putting 24k in your 401k you would put 50k (25k + interest). In two years you repeat. Each time taking the 100k you didn't put in the 401k as the second part of the downpayment.

If you are managing a single STR, once stabilized it shouldn't take a lot of time. The key is to figure out how to work things like responding to inquires and texting your cleaners/maintenace folks into your day. My brother in law manages his remotely while working as a middle manager and running his own business-I think he'll do a lot of his responses while on sales or work calls. Extra work in the beginning until you find the handymen and cleaners you want to work with.

2 Reply

Wale LawalBusiness Member

Real Estate Broker · Houston | Dallas | Austin, TX · Member since 2018 · 5k+ posts · 2k+ votes

1y

@Benjamin Boyle

Given your high-income but time-intensive W2 job, focusing on fewer, high-quality assets is a smart approach. The Single-Family + ADU strategy can work well for short-term rentals (STR) in Denver, but you'll need a backup plan if regulations change. A duplex/triplex/fourplex in an "A" neighborhood allows for a smoother transition to long-term renting, but post-move-out cash flow may be tight. If you're open to relocation, you might find better cash flow and affordability in other markets. Your biggest challenge is time, so outsourcing management and maintenance early on will be crucial.

Good luck!

NETWORTH BUILDERS5236 Reviews

Website View Page

OP

Member since 2024 · 15 posts · 6 votes

1y

@Lu Kang Your quote "you don't know your threshold of being a landlord, until you become a landlord", is what I think about a lot. I think should I go straight for the 4-plex, or just try a duplex to start.

And yes, I consider "just another year" at 4%. But then will that turn in to 5 year :/

OP

Member since 2024 · 15 posts · 6 votes

1y

@Peter W. Thanks for emphasizing learning the ropes. I am thinking a duplex house hack well under my budget might be good idea. Simply to learn. Like you said, I am probably underestimating the learning curve.

I am a little older and already have a coast FI amount in a rollover IRA. So I am already weighted pretty heavily toward stock investment. Actually looking to diversify into real estate with this approach.

OP

Member since 2024 · 15 posts · 6 votes

1y

@Peter W. Thanks for emphasizing learning the ropes. I am thinking a duplex house hack well under my budget might be good idea. Simply to learn. Like you said, I am probably underestimating the learning curve.

I am a little older and already have a coast FI amount in a rollover IRA. So I am already weighted pretty heavily toward stock investment. Actually looking to diversify into real estate with this approach.

OP

Member since 2024 · 15 posts · 6 votes

1y

@Wale Lawal That is an excellent point about regulation. I guess it is a fairly big risk assuming it won't change from how it is now. I know they've already added a lot of regulations, but there could always be more.

Is management and maintenance something that can be established before hand? I guess that is just networking. Not sure how receptive they will be without anything in place yet.