BRRRR AND HOUSE HACKING IN COLORADO SPRINGS

Investor · Colorado Springs, CO · Member since 2016 · 64 posts · 17 votes

Hello! I'm getting closer to purchasing a potential single family that I would like to house hack and BRRRR. I still have alot to learn, and would like to connect with investors in town who are doing this. Looking to get a feel for this process, and to see how you guys do it!

Regards,

Jeremy

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Daniel Haberkost

Rental Property Investor · Colorado Springs, CO · Member since 2018 · 682 posts · 729 votes

Originally posted by @Jane S.:

After making really good offers on about 10 nice SFR properties and losing all of them (offered $20K over list on one, lost it), I have decided this market is a waste of time. Here in Colorado Springs the inventory is nonexistent and no matter the location or condition, houses get dozens of offers as soon as they hit the MLS. I have my suspicions, since I think the houses are already sold to friends or family before they even get listed, the seller is making sure they get the best price. My goal was to house hack, move in & use my VA loan for low down payment, but there seems to be a lot of cash out there and I cant compete with that. (Although my broker says cash buyers offer less.) Local wholesalers have nothing to offer. Sellers dont need to respond to any direct mail asking to buy their house. All they need is a Craigslist post & they will be buried in responses. Brokers are also posting fake FSBO ads on Zillow to snare buyers, pretty fraudulent. Lots of sneaky game playing. Glad I grabbed a couple rentals last year. Curious what some others think.

The fact that inventory is extremely low and the the market is so desirable is as much as a positive as it is a negative (referring to your goal of house hacking). Sure it's hard to get in but once you do you'll be able to rent rooms for $700+ a month and have no vacancy. As with everything, it's a matter of how you look at it.

If it were easy to get in and there wasn't competition for everything that comes on the market then keeping individual rooms rented would be much harder and rates would be lower.

Additionally, we bought a great deal from a wholesaler early this year and there have been several others we made offers on and were barely beat out (i.e. they still went for prices that allowed for profit).

Plenty of people are regularly getting deals via direct mail (yes, it takes significant volume and follow up).

As far as your comments about fraudulent listings and nepotism (I'm sure that goes on as it does in any market) that is the exception, not the rule.

Investing in a hot market is not easy. But if the market wasn't hot we'd have people complaining about low rents and too much vacancy.

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Will FraserPro Member
Real Estate Broker · Salt Lake City & Oklahoma City · Member since 2018 · 3k+ posts · 2k+ votes
6y
Hi @Jeremy Babin, you're pretty close to the motherland of the good sir @Craig Curelop, and I'd recommend his book highly on thinking through the perks of each different approach to house hacking that you might be able to employ.
2 Reply
Jeremy Babin
OP
Investor · Colorado Springs, CO · Member since 2016 · 64 posts · 17 votes
6y
Thanks @Will Fraser! I've read that one, easy read and informative! Appreciate the reference, may try to connect with him and other house hackers close to my town if I can.
1 Reply
Colin SmithBusiness Member
Realtor · Colorado Springs, CO · Member since 2013 · 987 posts · 447 votes
6y
Hey @Jeremy Babin - Finding a home to do the BRRRR method too is tough in this market. I would recommend connecting with wholesalers like @Brent Bowers, @Darren Smith, and others. The other option would be to do a small marketing campaign of your home to secure something off market. That certainly adds more to learn. My biggest recommendation would be pull the trigger on something and don't wait around for that one perfect deal to come around.
4 Reply
Daniel Haberkost
Rental Property Investor · Colorado Springs, CO · Member since 2018 · 682 posts · 729 votes
6y
Originally posted by @Jeremy Babin:
Hello! I'm getting closer to purchasing a potential single family that I would like to house hack and BRRRR. I still have alot to learn, and would like to connect with investors in town who are doing this. Looking to get a feel for this process, and to see how you guys do it!

Regards,

Jeremy

I've been house hacking here for several years and it's extremely easy to find reliable tenants who stick around in this market, all three of mine will have been with me for over a year within the next couple of months and two of them intend to stay 2 years minimum. Many of the split level houses here have basements that function a lot like their own unit and make house hacking very easy.

If you go with a BRRRR for your first project I second @Colin Smith that you're going to need to look off market. I would start with those wholesalers but often times even wholesale deals are getting bid up to near market value..... Going direct to seller yourself is your best bet. I also want to emphasize that doing SOMETHING is most important, especially the way this town in progressing. Reach out anytime if you have questions.
-Dan
3 Reply
Jeremy Babin
OP
Investor · Colorado Springs, CO · Member since 2016 · 64 posts · 17 votes
6y
Appreciate the input Dan!
0 Reply
James CarlsonBusiness Member
Real Estate Agent · Colorado | stan.store/JamesCarlson · Member since 2014 · 2k+ posts · 2k+ votes
6y
@Jeremy Babin
Not to pile on, but again in Colorado Springs cash-flowing a property is tough (unless you're house-hacking with a rent-by-the-room model, and even that is pretty tough model to scale.) BRRRing isn't any easier. Wholesale "deals" don't seem to be much of a deal at all, and so finding homes sufficiently under market to be able to add value are hard.
If you are dedicated, you can find an off-market deal but you've got to be diligent and persistent. People do it, and you can too if you want it.
Reiterating again what others have said, I say take some action over nothing. We bought our first place five years ago in Denver, at a time when everyone was saying the market would correct soon (hmm, how long have we heard that?). We didn't cash flow initially, but rents have caught up and we're doing fine. Plus, it's appreciated nearly $100k in that time. As they say, don't wait to buy real estate, buy real estate and wait.
Good luck with everything. Cheers!
[email protected]720-460-1770
James Carlson Real Estate
Website View Page
4 Reply
Jeremy Babin
OP
Investor · Colorado Springs, CO · Member since 2016 · 64 posts · 17 votes
6y
Thanks James! I'll jump in either way at some point! Thanks for the insight!
0 Reply
Darren Smith
Rental Property Investor · York, PA · Member since 2013 · 101 posts · 30 votes
6y
I agree that split levels are the cheapest way to get into house hacking. We've wholesaled several that even had a second kitchen downstairs, but you could install a kitchenette pretty cheaply. Duplexes are great, but they are priced so high right now that it would defeat the purpose of house hacking.
3 Reply
Craig CurelopBusiness Member
Real Estate Agent · Post Falls, ID · Member since 2016 · 1k+ posts · 1k+ votes
6y
@Jeremy Babin - Congrats on getting close! BiggerPockets is definitely the place to learn. I have done a handful of house hacks and BRRRRs in the Denver market.
Happy to chat - just shoot me a direct message on BiggerPockets and we can set up a time if you're interested.
[email protected]Podcast Guest on Show #350
2 Reply
Jeremy Babin
OP
Investor · Colorado Springs, CO · Member since 2016 · 64 posts · 17 votes
6y
thanks @Craig Curelop! I finished the house hacking book by the way, excellent read! I will hit you up here soon and hopefully we can set something up! thanks again!
1 Reply
Jane S.
Flipper/Rehabber · Colorado Springs, CO · Member since 2016 · 499 posts · 167 votes
6y
After making really good offers on about 10 nice SFR properties and losing all of them (offered $20K over list on one, lost it), I have decided this market is a waste of time. Here in Colorado Springs the inventory is nonexistent and no matter the location or condition, houses get dozens of offers as soon as they hit the MLS. I have my suspicions, since I think the houses are already sold to friends or family before they even get listed, the seller is making sure they get the best price. My goal was to house hack, move in & use my VA loan for low down payment, but there seems to be a lot of cash out there and I cant compete with that. (Although my broker says cash buyers offer less.) Local wholesalers have nothing to offer. Sellers dont need to respond to any direct mail asking to buy their house. All they need is a Craigslist post & they will be buried in responses. Brokers are also posting fake FSBO ads on Zillow to snare buyers, pretty fraudulent. Lots of sneaky game playing. Glad I grabbed a couple rentals last year. Curious what some others think.
2 Reply
Colin SmithBusiness Member
Realtor · Colorado Springs, CO · Member since 2013 · 987 posts · 447 votes
6y
@Jane S. - I would disagree with almost everything said. Yes - Colorado Springs is a super competitive market and you have to come ready to play. Even $20k over asking may not be high enough in some cases. So far in the last 30 days we've put Buyers under contract or sold for as high as $32k over asking to $50k UNDER asking. There is no one set rule for every listing and you have to do your homework on any property you're offering on and know how to play the game. Working with an experienced agent can make a world of difference.
I would recommend getting more aggressive and not giving up. Just like all the podcasts guests say, the different between getting started and giving up is taking massive action.
4 Reply
James CarlsonBusiness Member
Real Estate Agent · Colorado | stan.store/JamesCarlson · Member since 2014 · 2k+ posts · 2k+ votes
6y
@Jane S.
It is super tough here in Colorado Springs. House-hacking is a great way to go, but it doesn't make the acquisition process any easier.
I'd say in order to get our clients under contract in this crazy market the last few months we have relied on a few tactics (And these are by no means a sure-fire way to win):
- Price. Duh, higher price equals a better chance, but what I mean is trying to know what price others are at. We stay in close contact with the listing agent throughout the offer period. You'd be surprised what they'll tell you about other offers if you're willing to ask the blunt question. Having a good idea what others are offering certainly helps our buyers decide what price to come in at.
- Escalation clauses. You offer X base amount but also say you'll pay Y amount above the highest up to a maximum of Z. (Ex. Base offer of $320,000, willing to pay $2,000 above highest to a maximum of $340,000.) It allows you the chance to beat higher offers without having to bid against yourself if there don't happen to be other higher offers. Just be sure to include a clause making this contingent upon receipt of the higher offer.
- Get in early. It doesn't always work, but on two of the deals I closed in the last month, we got in the first day and made a strong offer by that evening. If you want it, the comps support it, and your numbers work, don't be afraid to come in at or over asking right away and put a quicker acceptance deadline to try to force their hand.
- Know the seller's motivation. Again, back to that ongoing conversation you have with the listing agent. One of our offers was the same as two others, but we offered a rent-back at no cost. I knew the rent back was a big deal to the sellers. If the agent says the sellers really don't want to have a difficult inspection, maybe include some sort of "only health and safety items" clause for the inspection.
Don't lose hope! Keep at it. You'll nab something good.
[email protected]720-460-1770
James Carlson Real Estate
Website View Page
1 Reply
Daniel Haberkost
Rental Property Investor · Colorado Springs, CO · Member since 2018 · 682 posts · 729 votes
6y
Originally posted by @Jane S.:
After making really good offers on about 10 nice SFR properties and losing all of them (offered $20K over list on one, lost it), I have decided this market is a waste of time. Here in Colorado Springs the inventory is nonexistent and no matter the location or condition, houses get dozens of offers as soon as they hit the MLS. I have my suspicions, since I think the houses are already sold to friends or family before they even get listed, the seller is making sure they get the best price. My goal was to house hack, move in & use my VA loan for low down payment, but there seems to be a lot of cash out there and I cant compete with that. (Although my broker says cash buyers offer less.) Local wholesalers have nothing to offer. Sellers dont need to respond to any direct mail asking to buy their house. All they need is a Craigslist post & they will be buried in responses. Brokers are also posting fake FSBO ads on Zillow to snare buyers, pretty fraudulent. Lots of sneaky game playing. Glad I grabbed a couple rentals last year. Curious what some others think.

The fact that inventory is extremely low and the the market is so desirable is as much as a positive as it is a negative (referring to your goal of house hacking). Sure it's hard to get in but once you do you'll be able to rent rooms for $700+ a month and have no vacancy. As with everything, it's a matter of how you look at it.
If it were easy to get in and there wasn't competition for everything that comes on the market then keeping individual rooms rented would be much harder and rates would be lower.
Additionally, we bought a great deal from a wholesaler early this year and there have been several others we made offers on and were barely beat out (i.e. they still went for prices that allowed for profit).
Plenty of people are regularly getting deals via direct mail (yes, it takes significant volume and follow up).
As far as your comments about fraudulent listings and nepotism (I'm sure that goes on as it does in any market) that is the exception, not the rule.
Investing in a hot market is not easy. But if the market wasn't hot we'd have people complaining about low rents and too much vacancy.
4 Reply
Daniel Haberkost
Rental Property Investor · Colorado Springs, CO · Member since 2018 · 682 posts · 729 votes
6y
Originally posted by @Jane S.:
After making really good offers on about 10 nice SFR properties and losing all of them (offered $20K over list on one, lost it), I have decided this market is a waste of time. Here in Colorado Springs the inventory is nonexistent and no matter the location or condition, houses get dozens of offers as soon as they hit the MLS. I have my suspicions, since I think the houses are already sold to friends or family before they even get listed, the seller is making sure they get the best price. My goal was to house hack, move in & use my VA loan for low down payment, but there seems to be a lot of cash out there and I cant compete with that. (Although my broker says cash buyers offer less.) Local wholesalers have nothing to offer. Sellers dont need to respond to any direct mail asking to buy their house. All they need is a Craigslist post & they will be buried in responses. Brokers are also posting fake FSBO ads on Zillow to snare buyers, pretty fraudulent. Lots of sneaky game playing. Glad I grabbed a couple rentals last year. Curious what some others think.

The fact that inventory is extremely low and the the market is so desirable is as much as a positive as it is a negative (referring to your goal of house hacking). Sure it's hard to get in but once you do you'll be able to rent rooms for $700+ a month and have no vacancy. As with everything, it's a matter of how you look at it.
If it were easy to get in and there wasn't competition for everything that comes on the market then keeping individual rooms rented would be much harder and rates would be lower.
Additionally, we bought a great deal from a wholesaler early this year and there have been several others we made offers on and were barely beat out (i.e. they still went for prices that allowed for profit).
Plenty of people are regularly getting deals via direct mail (yes, it takes significant volume and follow up).
As far as your comments about fraudulent listings and nepotism (I'm sure that goes on as it does in any market) that is the exception, not the rule.
Investing in a hot market is not easy. But if the market wasn't hot we'd have people complaining about low rents and too much vacancy.
1 Reply
Jeremy Babin
OP
Investor · Colorado Springs, CO · Member since 2016 · 64 posts · 17 votes
6y
i'll be jumping into this chaos in close to a year or so, this may be premature but i'm glad it's a hot market. i feel like i'll learn faster. 700 a room!? I feel like the average around here is around 500. i'll take 700!
0 Reply
Jeremy Babin
OP
Investor · Colorado Springs, CO · Member since 2016 · 64 posts · 17 votes
6y
@Jane S. what's the next move for you? will you keep trying? considering moving?
0 Reply
Jonah Torres
Rental Property Investor · Poquoson, VA · Member since 2014 · 13 posts · 8 votes
6y
What neighborhoods are everyone looking in?
1 Reply
Jeremy Babin
OP
Investor · Colorado Springs, CO · Member since 2016 · 64 posts · 17 votes
6y
@Jonah Torres for me fairly certain I want to house a single family house in a B or C neighborhood, I've been here about four years but I'm not super picky about where in town. If I can 1% rule and keep good tenants, at this point I'll be happy. Would like to hear everyone else's view on it though
0 Reply
Jonah Torres
Rental Property Investor · Poquoson, VA · Member since 2014 · 13 posts · 8 votes
6y
@Jeremy Babin If you are house hacking, you have a ton of options and flexibility with exit strategies. Although it's not ideal, you can even buy property at market rates because the Springs will continue to grow. The house hacking mitigates some of the risk you take in an appreciation market and getting owner occupied financing can get you a really high IRR.
I'm trying to acquire a property to househack in the Springs, and I consider it a good deal if it breaks even in cashflow because my IRR will likely be around 40% after 5 years. It's an additional risk, but you'll be living there to help mitigate. Also, self manage to learn the business side of it. Lots of benefits to house hacking.
1 Reply
Jeremy Babin
OP
Investor · Colorado Springs, CO · Member since 2016 · 64 posts · 17 votes
6y
So, you're in VA and trying to make your way over here?
0 Reply
Jane S.
Flipper/Rehabber · Colorado Springs, CO · Member since 2016 · 499 posts · 167 votes
6y
So one of the respondents "disagrees" with the actual facts I have learned in this competitive market. That's like disagreeing that the sun rises in the east. Anyone who dismisses the facts of an offer is not thinking realistically or pragmatically. I would agree with those who point out that a wait and see approach might make sense. Unless willing to consider extremely distressed properties that no one else would touch. My familiarity with the current ceiling on rents, leads me to beware the difficulty of positive cash flow, which is the most important factor in any buy and hold deal. I have heard too many people parrot "buy it for the appreciation" when cash flow melts away.
2 Reply
James CarlsonBusiness Member
Real Estate Agent · Colorado | stan.store/JamesCarlson · Member since 2014 · 2k+ posts · 2k+ votes
6y
@Jonah Torres
I think there a number of interesting neighborhoods for investment in Colorado Springs and it depends on what you want to do. Some people -- despite the rule against making a heart-driven decision -- can only buy an investment property that they would personally want to live in. Others truly want that C-class neighborhood.
Ivy Wild/New South End
There's a lot going on in the south end of downtown Colorado Springs. (They've dubbed it the New South End, a mirror to the Old North End.) Dos Santos, Fat Sully's, Streetcar 520 all in that new strip. You've got the new lacrosse stadium going in near there. There's a few higher-end looking apartment buildings and a nice newer hotel there. Just on the other side of I-25, you have the Ivy Wild development and the Creek alk coming in by Cheyenne Boulevard. So while the used-car lots on south Nevada in this area turn people off, it's got big upside potential long-term.
Anywhere on the west side
Anywhere? Yes, just about anywhere. Old Colorado City. Some of the neighborhoods off of King Street and just off 30th Street as well, and on up into the neighborhoods around Ute Valley park. While the city can pack in new build houses forever out east, the west side has a natural barrier to building -- the mountains -- so those will always be desirable areas.
C neighborhoods
You can still find some 3/2 homes for under $300k in the southeast and eastern neighborhoods. Like, south of US-24 and east of I-25; and also east of Circle (especially south of Platte).
[email protected]720-460-1770
James Carlson Real Estate
Website View Page
3 Reply
Vee Vu
Real Estate Agent · Denver, CO · Member since 2017 · 91 posts · 20 votes
6y
@Jeremy Babin I think you should calculate based on $500/room. $700 maybe for furnished rooms
1 Reply
Jeremy Babin
OP
Investor · Colorado Springs, CO · Member since 2016 · 64 posts · 17 votes
6y
@James Carlson very helpful James! @Jane S. I will consider your advice when I start hunkering down for sure. Crossing fingers
1 Reply

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