[Calc Review] Help me analyze this deal - Denver, CO

5 Replies

I’m relocating to the Denvet area and looking to take the relocation as an opportunity to start my real estate investing career.

Looking to house hack a small multi family with a low money down payment.

Are my assumptions correct on the analysis of this property? 

I’m finding a lot of similar properties in the Denver area. 

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*This link comes directly from our calculators, based on information input by the member who posted.

@Patrick Costello , I'm going to guess the $3900 rental income is if you had both sides rented out? If it is, then you wouldn't cash flow at all even by renting both sides out. If that's $3900 per unit, do other rentals in the area go for that high?

Hi Patrick, 

Welcome to BP and Denver. It seems like this would be a very risky endeavor. There are some other opportunities that might work for you. Many people will house hack their current house by renting rooms instead of buying a legal duplex.  

There are some areas where this will work and also some areas with a smaller purchase price to get you started. 

I would not recommend going negative. It is hard to judge appreciation in a duplex. 

Originally posted by @Quoc Tran :
@Patrick Costello, I'm going to guess the $3900 rental income is if you had both sides rented out? If it is, then you wouldn't cash flow at all even by renting both sides out. If that's $3900 per unit, do other rentals in the area go for that high?

That’s correct - the $3900 is with both sides rented. And I also noticed that it would have a negative cash flow. No bueno.

I’ve analyzed a lot of properties like this going for sale. 

Why would someone buy a deal like this if the numbers don’t work? 

Originally posted by @Kevin Grinstead :

Hi Patrick, 

Welcome to BP and Denver. It seems like this would be a very risky endeavor. There are some other opportunities that might work for you. Many people will house hack their current house by renting rooms instead of buying a legal duplex.  

There are some areas where this will work and also some areas with a smaller purchase price to get you started. 

I would not recommend going negative. It is hard to judge appreciation in a duplex. 

 100% agree on this not being a good opportunity. I’m noticing a lot of duplexes going for this in the area. Are people buying and betting on appreciation? I’m trying to understand why someone would buy this type of duplex if it doesn’t cash flow. 

@Patrick Costello I'd say there are a few reasons why someone would buy a such a high price. They believe the market will keep going up, or plan to stay in for a long term. They plan to live in the duplex and rent one side out to help with the mortgage, which means they don't mind paying more than half of the mortgage. Perhaps the area really suits their needs and wants. To them, they are still saving money by renting out the other side. Not everyone who purchases a duplex is an investor who concentrates on making money, much less cash flow.. It's a shame; if more people understood the basics of building wealth the world would be in a better place. Anyway, soap box over. Patrick, try not to rush yourself into a bad deal. Be patient and seek for a deal that pencils.