Denver House Hack Success Story |Walkout Basement Airbnb
Hello BP!
I want to share a success story of Erik Mehus' 2nd House Hack purchase located in Arvada, CO.
Investment Info:
4 bed/ 3 bath with a 1 bed 1 bath walk out basement that was set up perfect for an Airbnb. (pictures below). Purchased in February of 2022.
Purchase Price:
$62,500 down/closing costs, another ~$25,000 in work to the property/furnishing the unit.
What made you interested in investing in this type of deal and strategy?
We bought the property as a primary residence and moved in, which allows my wife and I to buy great real estate with 5% down, while significantly reducing our cost of living. The property will make a great full time rental as two units once we decide to move as well.
This is our second split level type home, so we have experience with the pros/cons for this type of setup.
There is flexibility for both furnished (monthly) and un-furnished rental strategies. We could rent the whole property as a true short term rental as well, since it’s in the city of Arvada.
How did you find the deal and did you or the agent need to do any negotiating?
While working with Preston Newberry, this was the 5th property we offered on. It was when things were pretty crazy in the market and we had to be aggressive out of the gates to get under contract. The property was listed at $675k, so we ended up being $65k over ask ($740K) after some back and forth, waived our appraisal contingency, covered Title Insurance, and did a 2 week close.
While it sounds wild out of context, having been looking for a few months and putting in several offers we felt confident that this place was a good fit, and that if we wanted to make a move on a property this was the way to do it.
We did actually get a $5k seller credit for the deck repairs since it needed some structural work, even though we didn’t have time to get a full quote. Preston (our agent) was able to get a ballpark cost (about $10k), and the sellers gave us half that amount which we felt comfortable with.
How did you finance the deal?
5% down conventional loan, with us bringing an additional $20k to closing to meet the conforming loan limit.
Did you add any value?
We have done a lot of work to the place, including a new electrical panel, replacing some questionable wiring, adding a second washer/dryer, some updated flooring, new interior paint, replacing several fixtures and updates to the exterior staircase and landscaping. We will also be repairing/re-staining the deck this summer. This was the first property where we have hired out a lot of the work since we didn’t have as much available time, which was a huge help to keep things moving.
What was the outcome?
While it took longer than expected (it always does), we just had our first mid-term renter move in (30+ nights furnished)! We found them through Airbnb.
We are getting about $2,000 a month starting out (excluding cleaning fee), which will increase as we begin to get good reviews on the property. This covers more than half of our mortgage.
Lessons learned?
Be ready to get aggressive when you need to be, as long as you are confident in the property and your strategy. The timeline from getting estimates on work needed to actually getting it scheduled and completed can be tricky, plan ahead as much as possible (which is tough with a 2 week close).
Keep on crushing it Erik!
One thing that came to mind was, "don't wait to do something, do something then wait!" This looks great. thank you for going over this, super helpful.
@Ben Einspahr this is great case study on house hacking in Denver. Thanks for sharing!
It's amazing with some creativity how these properties can be turned into cash cows.