Real Estate investing newbie

[Luz Quinones]

Hello all,

I'm new to BP but have been curious about real estate investing for some time. I purchased my primary residence 3 years back in Phoenix AZ and have a good amount in equity. I have am considering an opportunity to invest in property in Denver with a friend. Ideally the home would have a finished basement so he would live in the home and do STR with the basement. I'm willing to refi my primary for money for down payment but I know I need more education on how it would all work as it would not be my primary residence. Any thoughts, feedback and ideas are welcome.

TIA

[James Carlson]

@Luz Quinones

First off, I love the idea. Denver's awesome, and the STR numbers are pretty dang good. Be sure to know the Airbnb laws in whatever city you're investing. If you're buying in Denver proper, then it has to be someone's primary residence in order to short-term rent the basement. (And even then, be aware that the city is cracking down on any kind of kitchen in the basement with these STRs.) It sounds like your friend will be there, so that's good. But if/when he moves out, you can't do STRs any more.

Now, if you buy in one of the cities touching Denver that allows for non-owner occupied Airbnb (investment STRs), then you can do the live-upstairs, Airbnb-downstairs thing while he lives on site and then also rent the whole house as a Denver-area vacation rental when/if he moves out. There are a few cities that allow this -- Arvada, Wheat Ridge, Northglenn, Centennial and (sometime soon) Adams County. 

Not sure how the partnership would work. That's a big hurdle to get over. You might chat with a lawyer about a partnership agreement. How much are each putting into the down payment? Will your friend manage the Airbnb/STR and if so does he get a greater share of the cash flow? How will you take ownership? (Tenants in Common or Joint Tenants ... this has implications should one of you die.)

Good luck!