To BRRRR or Not To BRRRR?

Question

I am a real estate rookie moving to Colorado with my girlfriend. We are looking at multi-family properties in Colorado Springs because they're cheaper than Denver. However, the prices are still a little more than we'd like to pay. So, we are wondering should we try to find a deal we can BRRRR and house hack? We aren't too handy but we want to learn how to be. Appreciate any feedback.

Katie Greenman · Answer

Hey Adam, I am a real estate advisor in the greater San Antonio region for PMI Birdy Properties.  From what it sounds like, you guys are eager and ready to learn; that's half the battle in my eyes.  I believe it would be in the best interest of both of you to find a Real Estate advisor in Colorado Springs that can provide market insight.  Being able to see comparable rental values for the area you have in mind will be very insightful in creating a more detailed plan.  Feel free to reach out if you'd like to talk more. -cheers

Colin Smith · Answer

Thank you for the recommendation @Daniel Haberkost!

Daniel Haberkost · Answer

@Adam Vasquez hey Adam, house hacking here works very well and I’ve been doing it for years.

BRRRRing is going to be a serious challenge as finding a deal (especially multifamily) that you can get low enough to pull all of your money out at the end is not easy. If you’re skilled at marketing direct to seller than it’s possible but still not easy because of the competition here.

As the others said, a knowledgeable realtor is key! I would highly recommend @Colin Smith, he knows the area extremely well.

Good luck!

-Dan

Adam Vasquez · Answer

Thanks for the replies I’ll take all of this into consideration. @Daniel Haberkost thanks for bringing up Colin I’ve actually been in contact with him recently and will definitely contact him for some more advice thanks again guys.

Mark Hirleman · Answer

Colorado Springs zoning has a clear loophole to create an additional dwelling space in a single family residence.  I have been involved in the permitting process for a handful of these projects.  As long as there is no second kitchen, then it is considered a mother-in-law suite not a second unit.  The definition of a kitchen is a 220v or gas range.  So as long as you are doing just a kitchenette with no oven, and call it a "wet bar", you can create what amounts to a second unit that is completely separate.

Estrella Carolina Mckinney · Answer

@Mark Hirleman you are so correct. This is something I had to learn by mistake. My Alamo Heights Investment, due to covid and other issues. We decided to keep it and sell later for better profits. This property came with a living space structure that was underutilized so in order to make my investment strong, we decided to add some minor touches and rent the back unit. Due to this strategy my headache went away and now its cash flow positive.

During this process I learn a lot about zoning etc. Check with your county/city to make sure you educate yourself before you pull the trigger in something like that. Make sure that if you go this route you understand zoning and additional buildings in your property.

Mark Hirleman · Answer

Hey Adam.  One thing you might consider instead of a traditional multi-family is a house and cottage or mother-in-law suite house hack. For example, I live in a 2200 sqft house with a 300 sqft in-law suite.  The rental furnished month-to-month brings in consistently around $1,200 a month, far more than half the mortgage paid for by less than 15% of the square footage.

Estrella Carolina Mckinney · Answer

Katie is correct. Find someone local.  With luck they will educate you and inspire to to make the least amount of mistakes.

BRRRR is definitely the way to go. My only advice, I have plenty, But for the sake of this reply is have more than one exist strategy.  Always plan for worst case scenario And ensure ensure ensure you have a way to refinance, get that relationship going and get all of your Tax and paperwork ready to go. Good luck and you got this.

To BRRRR or Not To BRRRR?

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