Why Don't More People House Hack in Colorado Springs?

[Erin Spradlin]

Colorado Springs is a good example of a secondary city that is currently inundated with construction cranes, university and college growth (UCCS is expanding fast) and a lot of out of state money (Colorado College parents, Texans and even Californians.) 

We have seen a ton of success with Colorado Springs house hacks (outlined below), but a lot of people in Denver remain resistant to this option while also lamenting that Colorado Springs is changing. 

If you are resistant to Colorado Springs, do you see yourself changing mind on that? Do any of the examples below help?

• Colorado Springs House Hack No. 1 | Full disclosure: I told someone else to buy this but they declined, so now I am buying this house.
• This is a 4/2, 1.1 miles east of downtown Colorado Springs. 2 of the bedrooms and 1 of the bathrooms are located in the basement and it has a separate/exterior entrance to the basement. 
• The cost of this house is $390K and the mortgage will be approximately $2000/month. 
• The average long-term rent for the entire place according to Rentometer is $1700/month, and if you only rented out the basement, the average rent would be $1200/month.  
• For short-term rents (Airbnb), AirDNA estimates you could get $3500/month on average through the year if you rented the entire home. If you lived upstairs and only Airbnb'ed the basement, you could expect to make $2600/month on average for the entire year. 
• To summarize, if you lived in this property and long-term rented the basement, your mortgage would likely be close to $800/month. If you lived in this property, and short-termed the basement, you would likely cash flow $600/month. 
• One other thing to note: I looked up similar properties in Denver (within 2 miles of downtown, a 4/2, 1700-2000 sq ft) and the cost range for houses sold under that criteria for the past 3 months range between $570K and $672K...so there is a though that in addition to cutting down your mortgage or cash flowing each month, you may also stand to gain a lot of appreciation in Colorado Springs.
  
  

Colorado Springs House Hack No. 2 | 

This is a 6/3 house located in Widefield. It cost $290K to buy. The mortgage is approx. $1700/month. On average, long-term rents are $1800/month in this neighborhood (data based on two properties in the past 12 months.. so yes, a smallish data set.) 

Rather than long-term rent or Airbnb this house though, our client is opting to rent by the room. He is repeating this model as he's done something similar within a mile of this property. He is furnishing the house and providing a queen bed and a tv set for each room. He also provides weekly cleaning and lawn services. He will live in the house and rent out each bedroom for $800 (he already has two bedrooms filled and hasn't even closed yet- so, yes, there is demand.) Assuming he rents the remaining 5 bedrooms at $800 each, he'll collect $4000 in rents each month... which is well worth it even when you consider paying for utilities/cleaning and lawn service.