All Forum Posts by: Ben Einspahr

Hi @Jossalyn Wallace.

First and foremost, I think Colorado is a excellent area to invest. Regarding which style, that depends on the investor and their strengths. With out knowing your skill set and experience, i'd say LTR (K.I.S.S.). Yes BRRRR and STR's are sexy but would not recommend for first out of state investment.

I like Denver, Colorado Springs, and Pueblo. Mainly Colorado Springs b/c of price point, growth. Cashflow will not be the best but you will see amazing returns on your initial investment. If you are wanting more cashflow, you will need to put closer to 30% down.

The only time I would recommend self-managing is if you already own the asset and have a team in place before moving OOS. For example, I lived in Nebraska and owned a rental there. Moved to CO and continue to self manage.

Last point of advice, find your self a investor friendly agent that has a great team already in place you can piggyback off of (lender, PM, tax, handyman, etc).

I have a trends report that gives a deep dive into Colorado market (mainly Denver and Springs) you might find interest in if you are consider investing long term here. Ill DM you.

Best of luck!

@V.G Jason All great points. Property taxes look to be about 1400 annually so he is a little bit high on the analysis. Just did not update the 2018 to 2022. And insurance is spot on. Actually should go down after moving out b/c he is only insure property, not things inside. Things inside will be covered under tenants renters insurance.

After he moves out, Jordan is receiving a +90% return on his initial investment. Stock market will not give you that type of return + decrease living expenses? Being HH#2, healthy savings will will cover for those oh crap moments that always come up

@Luke Stewart all great points. Plan is continue to RBR after moving out. 

Why I ask is that the investor is still making a 97% return on initial 5% down investment (all based on conservative assumptions). I don't know where else you can get that type of return? But that is the beauty of REI. There is a art vs. science. Art= what works for the investors personal goals and situation. Science= the numbers.

In current market conditions, i would agree any cash flow is good cashflow. 

Yes, if something happens, he could be in the negative temporarily. But with a combination of healthy savings and decreased living expenses, all of that can be recouped very quickly. By year 3 with 4% rent growth, investor will be at +$3000/month cash flow.

@Jordan Lindsay can you clarify what your goal is down the road? Keep? 1031? etc.

Thank you again for your input. Excited to hear more from others.

Seeing cashflow of $633/year after moving out, would you still buy this house hack? Why or why not?

Below is the story of Jordan Lindsays investment details of his 2nd HH purchase. Closed in November of 2022. Way to crush it Jordan!

Investment Info:

Single Family Home with 5 bedrooms and 3.5 baths and 2,700 sq ft in Southwest Aurora CO. This is my second House Hack (HH#1 purchased 13 months ago) with a great layout in a popular area. Closed November 2022.

Purchase Price:

Originally listed for $549,000 and falling out of contract a couple of times, we closed at $529,900

Cash Invested:

DP - $26,495

Seller Credits - -$8,000

Total Cash at Close - $31,600

Furnishings and Appliances - $5,000

What made you interested in investing in this type of deal and strategy?

We bought our first HH in August of 2021, which was also 5 bedrooms and we were able to rent out the basement while living there. That allowed us to save money quickly to buy this second HH, which has a much better layout for my wife and I. The basement is about 800 sq ft with everything we need and separates us from the main floor (kitchen and living rooms) and 4 bedrooms upstairs. We were also able to rent out all 4 bedrooms within just a couple of weeks, because the area is very popular.

Once we save up enough to buy a third house, we should be able to rent out this basement for at least $1,200/mo which will then make the overall property profitable.

How did you find the deal and did you or the agent need to do any negotiating?

This was on the MLS (big shock) and we worked with Stacy Rozansky with the Envision Advisors. This was only our second offer put in during our search, and it was an unexpected find on our part. Stacy did a phenomenal job negotiating as well as discussing her opinions and recommendations. We initially offered $15k in concessions, which was decreased to $8k, but then we got nearly 100% items on the inspection report resolved before closing.

How did you finance the deal?

We put 5% down on a conventional loan with monthly PMI. We bought points down using the seller concessions, which brought us below a 7% interest rate... We plan to watch the market and refinance when it makes sense.

Did you add any value?

We chose this property because it was recently renovated and move-in ready, which is unlike our last property. We needed to furnish the shared spaces, and prepare the bedrooms with curtains, but otherwise didn't have to put in as many projects as before. We did, however, have people moving in within the first two-weeks of living there, which made it far more difficult to get everything setup as quickly as we would have liked. We're still in the process of smaller stuff, but we found tenants that have been super understanding.

We're currently paying around $1,100/mo to live here because we offered lower rents in order to get the rooms filled more quickly in this down-market of a winter. We expect to raise rents to market value within a year, to offset some of the cost. That being said, we're super happy and excited about this deal because it offers a better living situation for my wife and I and our first property will be making $1,700/mo before utilities. This will hopefully lean into us getting a third property in under 18 months.

Tenant Screening Challenges:

Here are details of Jordan experienced screening tenants for rent by the room

Below are the details of the underwriting, both while living there are after moving out

Hello BP,

Wanted to share the success story of Brad Dubis most recent rent by the room House Hack (HH#2) purchase in Colorado Springs.

Investment Info

5 bdrm/3 bth SFH in Colorado Springs, CO. Purchased September 2022

Purchase Price

$450,000

Total Cash Invested

$27,000

What made you interested in investing in this type of deal and strategy?

I was approved to work full time remotely with my Chicago company in June 2022, therefore allowing me to take advantage of a more affordable market in Southern CO, and create higher margins on house hacking. I had a budget, and 5 bdrm/3 bth was the "secret sauce" to increase my margins. I hope to continue this path and possibly increase the number of rooms for my next property.

How did you find the deal and did you do any negotiating?

We found it working with our Envision Advisors Agent Leah Keeling. Property was right off the MLS. Had to pay $10k over listing but Leah was able to negotiate $6k in seller concessions which helped decrease the downpayment amount.

How did you finance the deal?

I used my existing savings, and took out another $15,000 401k loan (currently paying this one back)

What was the outcome?

Since I purchased the property in late Aug 22 the value has increased. The property was basically turnkey minus some small DIY projects. More importantly I'm renting out 4 bedrooms and one garage spot while I live in the Master bdrm/ensuite. The rental cashflow is covering my entire mortgage and my utilities. I'm living for FREE. When I move out I'll profit about $900/month

Lessons learned? Challenges?

I've found something to my advantage that's enabled me to keep investing year over year. As I continue to keep building my 401k it's become my own bank. Some people probably wouldn't even think about doing this, but with great discipline and being focused on the task at hand it's an advantage for me. The interest rate is much lower than an equity loan, and I'm paying myself back. Eventually I hope to get to a point where the extra rental cashflow will suffice for savings and I won't have to take out anymore 401k loans.

Keep on crushing it Brad!

@Alex Rocco My short answer is it depends... Are you looking for immediate cashflow or less cashflow but long term wealth? Obviously the immediate cashflow option is airbnb'ing the bus route that you could eventually sell at a premium as a "business" to someone looking to do the same then invest in REI. Or sell now and invest now with the market at a discount.

Selling now and investing in REI will give you less cashflow out of the gate but much greater wealth building potential due to the multiple wealth building avenues that REI provides (debt paydown, appreciation, depreciation, and.... cashflow)

All depends on what strategy aligns with your goals. I would If it was up to me, personally like the REI route even though the van idea is much more "sexy"

What does your total debt look like invested into the van? (purchase, furnish, ect)

@Christopher Young, I just finished a case study of a few different house hacker that closed in the Denver Metro in October of this year. Most of them are rent by the room strategies with 5+ bed homes and using various types of grant programs to pay down interest rate and decrease closing costs. I'll DM you the details.

What are your HH'ing goals?

@Ann Mclean, short answer is no. For more detailed information about this topic.

@Melissa Block, I agree with @Matt M. this is a very difficult strategy to start with for your first investment property purchase. 95% of the successful investment properties I have seen are purchased directly off the MLS. With todays current market conditions, buyers are getting a lot more negotiation power.

I just finished a rough draft report with 6 different REI case studies for Denver, Springs, and Pueblo with the new higher interest rate environment at 6 different investment price points. 50k, 100k, 115k,150k, and 250k . I'll shoot you a DM so you can take a look.

Hope you find value in it.