My first property not sure if its a good deal
Hello all.
like I said, single family with the basement as another unit in Northern Colorado. Ill be house hacking it. All the utilities are billed as one household. As my first property kind of scary. (But I'm not scared off) The house is a 2bd 1ba and 1bd 1ba in the basement. The house needs some love and needs to be re-wired. The breakers and all. (they're all knobs) Other than that its in pretty good condition.
I asked for 5,000 at closing to put towards the re-wiring. If I don't get that it won't be a deal breaker. I will be paying 292k with a VA loan. I will also have 40k from the sell of my first home for reserves.
I guess what I'm asking dose this deal sound like a good deal or should I keep looing?
Thanks for your time.
What is the rent for the basement? Is it a legal 2-unit? Is there proper egress out of the basement? Is this type of home common to the area?
@Mark Gallagher
The top unit will rent for about 1,600 and the basement will rent for about 975-1000 and no they’re not egress windows, but that’s pretty common around Colorado.
#3 Managing Your Property Contributor
For the basement, check to see if you have to change out the windows. While it may be common, it doesn't mean it is legal for a suite. If a fire breaks out, they need at least two ways to get out of the unit.
Run the numbers looking at how much the taxes and insurance are, then add in the rent for the basement (assuming that is what you will be renting out). Does the rent include utilities or will those be split as the bills come in? The latter is better as they then think about how much water they use.
I wouldn't be able to sleep at night without proper egress. It's not that expensive (or cheap) to install the proper egress window(s).
@Mark Gallagher
Yeah for sure I’ll look into that thanks
@Theresa Harris
Sounds good I will. And I wasn’t sure how I was going to go about the utility bills. But that’s a good way to look at it.
#3 Managing Your Property Contributor
Originally posted by @Joseph D Chapman:@Theresa Harris
Sounds good I will. And I wasn’t sure how I was going to go about the utility bills. But that’s a good way to look at it.
I know someone who rents the top floor of their house and that is how they handle it. Everything is split 50:50 in their case.
If you're going to re-do the wiring, put in a separate electrical meter for the basement.
@Mark Gallagher
Yep! We found out today.
How did you come up with rent estimates? They sound a bit high to me, I’m in Denver and estimate 2/1 at $1500 and 1/1 at $1000 in a pricier market and not a basement. Usually you want a walk out basement to rent separately so it lives like a separate unit, gets some natural light and has it’s own entrance.
Up north Loveland to ft Collins I think it also matters what side of i25 you are on. West being much more desirable and higher price point.
Need more info but off the top of my head $5k for a rewire might be low, you also have to rip out drywall to replace the wire in the walls, egress windows are about $2,500 Each installed. Also how do you get to the basement unit? If you have to go through the main house that lowers both rents even more.
I'm with @Theresa Harris. Spend the money and get at least one egress window in the basement bedroom. You will be limited to who you can rent to if you don't. Depending on your situation, it should only be $3k - $5k. It makes it a legal unit.
Be wary of the electrical work. It can get expensive very quickly, as you'll have to bring it up to today's code. That includes adding the hardwired smoke alarms and more outlets than your property probably has. Don't skimp on that. When you go to sell it or get in refinanced, you could get killed by the lack of permit or not enough outlets, etc. Yes, doing it this way will be a little more expensive, but save you in the long run.
@Michael C.
I’m in Greeley and I got my rents off of rentometer. The basement unit has a separate entrance on the side. 
@Michael C.
And I was just asking for 5k to go towards the re-wiring and we would cover the rest.
@Michael C.
Thanks for all the input