Colorado Springs Unique House Hack Scenario

2 Replies

I have a unique scenario that I'm hoping some of the BP community either has experience with or can point me in the right direction. My friend is moving to Colorado Springs in January and would like to house hack a duplex or triplex (or possibly a SFR with roommates if the numbers make sense). However, the move and extenuating circumstances have/will put a strain on his liquidity. I'm an investor in the Sioux Falls area and would love to diversify into another state, so this seems like a prime opportunity to do so. However, we're hung up on exactly how to structure the partnership. I would provide the funds for closing, down payment, and an operating float, while he would occupy a unit and manage and maintain the property. Ideally, we would use a down payment assistance grant (or similar program i.e. first time home buyer) to purchase the property. The problem is, he would have to be the only person on the mortgage to qualify (due to income restrictions + the fact that I won't be occupying the property) so I won't have any actual ownership of the property. Additionally, I'm concerned about the tax implications if we would at some point transfer the property into an LLC we owned 50/50. Any suggestions on the following would be extremely helpful (or any comments on the scenario at large):

1) Structure of the partnership / securing my investment in the operation 

2) Best realtors in the area, particularly those well-versed in first time home buyers / RE investing

3) Mortgage officers in the area who are well-versed in grant programs

4) Best locations - leaning towards east side of town as that's the location of employer

5) If you're looking to sell your property (2-4 units), feel free to message me directly

Thanks!

@Brandon Ness

That's an interesting idea. I know just enough to get me in trouble, so I'll only address a few of your questions.

When you're talking down-payment assistance programs in Colorado, you're likely talking CHFA. (Colorado Housing and Financing Authority.) Basically, they put you in a 3.5% down-payment loan but then provide that downpayment. You have to cover at least $1,000 of the closing costs -- and often more than that. You need to talk to a lender who understands the CHFA program. They will be able to walk you through the issues. (I already foresee an issue with you providing funds for the downpayment. You can't accept downpayment gifts unless it's from immediate family.)

In general, though, the process ain't too hard. We have a lot of clients buying their first home in Colorado Springs, and we think it's a great buy. The city is getting so much overflow from Denver, and COS continues to show up on all these lists of best places to live. This is all to say that it's attracting more and more people and seems poised to be a good long-term investment. 

Your lender and your agent might come at the same time. If you find a good lender, they'll have an agent they can recommend. If you find a good agent, they'll have a few good lenders. And definitely ask your agent about their experience with investing. Hopefully, they do a lot of deals with investors and hopefully invest themselves.

Good luck!

Hey @Brandon Ness - can you define what you mean by "Best" location?  What are your criteria?  

As for the parternship structuring...you're going to want to have an attorney draft that up.  I say that as an attorney.  That can go bad really quickly.