House Hacking in Denver: Do I need to buy a multi-family?

Question

Ok, so I've been listening to the BP podcast for about 6 months and I've read 3 BP books, and I've decided that house hacking is the best strategy for me to get started.

Whenever I read/hear about house hacking, everyone seems to talk about multi-family units. I can see the benefits of buying a duplex, but has anyone had success with this strategy after buying a single-family house?

I'm from NY, and in NYC it's no big deal to rent 1 bedroom in a 3-bedroom house or apartment and share the space with complete strangers. In fact, unless you're rich, that's how most people in their 20's and 30's survive in NYC. I was surprised to hear on a BP podcast that this concept is foreign to people in other parts of the country, and that many people wouldn't even consider the idea of sharing a house with complete strangers.

I recently moved to Lakewood, CO (near Denver), and I'm going to buy west of Denver. Are renters in the greater Denver area open to living like this?

James Carlson · Answer

@Jon Hand

Denver's a long way from becoming NYC, but it's certainly on an upward trajectory. And with that will come more people looking to cut costs by teaming up in a place. I've had a few clients who were living with roommates before they started a house hunt, so I know those renters exist.

I don't know how open you are to it, but if I were a single guy looking to house hack, I'd rent a room long-term and another room on Airbnb. If you wanted to go big, you could buy a home with an existing basement apartment, rent that short-term on Airbnb, and rent out rooms long-term on the main level.

Either way, it sounds like you're excited about using real estate wisely. That's awesome. Good luck!

Kevin Grinstead · Answer

Hi Jon, welcome to BP. It is all about the numbers. If you can get into a duplex or larger multi-family it is  better for rents and margins.

The approcach of renting rooms works for a lot of people. You wouls want to see what you would need to claim the rent on a mortgage or as future income.

Duplexes make it easier for lenders to see the rent as income and you are protected by the zoning to have multiple families living in your home.  Renting out 1 or more rooms can be a zoning violation.

Matt M. · Answer

I've got several clients doing this now and have been quite successful with 3+ bedroom houses. Some have even moved on to additional homes using this model. They can be picky with the tenants and are getting $650+ per room all day long. Here is a thread from one of them:

https://www.biggerpockets.com/blogs/7718/47964-successfully-purchased-2nd-house-using-rent-by-the-room-strategy

Bill S. · Answer

@Jon Hand list to the podcast from a few weeks ago with @Linda Weygant and she talks about renting by the room. There have been quite a few people here who have taken that approach as well. Some owner occupy and some are purely investing.

Chris Lopez · Answer

@Jon Hand Welcome to BP!

It's probably like anywhere, some renters are some aren't. When I was a young bachelor, I rented rooms before.

IF you want to get a feel for that market, hop on craigslist for the area you're looking at. A few minutes on there will provide a wealth of info to determine rents, quality of places, and supply and demand.

Also, consider Airbnbing some of rooms. Depending on your location, you could make a lot more money that way. I've rented out rooms on Airbnb for $30/night. It's a win-win. It's cheaper and nicer than a hotel and the landlord is typically making more money than a long term renter.