All Forum Posts by: Ben Einspahr

@Eric W. You have started your search in the right place and have some excellent advice from some knowledgeable people. The Springs is an excellent place to invest, even from OOS. As you are well aware by now, if you are looking for your most lucrative investment, STR is the way to go. But yes, between down payment and furnishings your investment could easily exceed $125k depending on the size and location.

Depending on your timeline you next steps should be connecting with an investment friendly lender to get an idea what your buying power looks like. After that, I would find an investment friendly agent that is familiar with your desired location. BP is a great place to start. 

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. I'll shoot you a DM so you can take a look.

Best of luck!

Jumping in late to the party @Warren O. Nice work with the STR HH. Arvada is a excellent location for that as I have a former HH-turned stabilized rental there. The sooner you can get your STR licensing all set up the better! The process is pretty simple.

Starting a new listing in the slower season can be challenging but with great photos and aggressive pricing, staying booked should be a breeze.  

Keep us all update and the listing starts coming together and review come in!

Cheers

@Clayton Hepler Looks like you already have some great advice from @Ryan Williams and @Jay Voorhees in regard to options moving forward. Your next actionable step would be connecting with an investment friendly lender to help put together a business plan and see what your options are- even if you still are 12+ months out from being able to purchase. Feel free to reach out if you are looking for some local recommendations.

Best of luck!

@Luke Stewart. Congrats it is a great business model to implement.  Yes, investing in a similar property in Denver County can be chalenging with the ever changing laws and Denver's (very) strict enforcement. The property mentioned in this post is located in Northglenn, CO. A few miles north of Denver. 

All of that is why I personally choose to invest in similar properties outside of Denver County (lakewood, wheat ridge, arvada, etc.). Will shoot you a PM to connect and chat everything house hacking and your goals.

@Michael K Gallagher thank you for the shoutout! Yes, Jon is a pretty busy W2 and wanted as much hands off as possible. However, with just a few systems set up, self managing a STR is not overly too much work.

@Clinton J. Andersen. You have picked an excellent place to start! Tower and 64th will be a great location. That seems to be where the path of progress is going (from Denver out to the airport). The only challenge I see with the business plan is renting property as a STR if it is not your primary residence. You can find more information about Denver's STR rules and regs using this link. But, that location is excellent for long term rentals as well. DIA employs a lot of people and those people need a place to live.

So my strategy is very similar to @Kayla Givens. My wife and I buy SFH's with some form of separate income suite/ mother-in-law/ ADU that gives us the privacy we are looking for. We live in the main area of the house and rent out the mother-in-law as a STR. After moving out we will either rent the entire home as STR (if city rules and regs allow) or rent as a LTR. Then.. rinse and repeat.

Best of Luck!

I want to highlight the success story of Jon Patterson most recent House Hack purchase. Excellent work with the full basement remodel and adding kitchenette! Keep on crushing it!

Investment Info:

Granny Suite / STR Build-out in Basement perfect for House Hack

This is my first short term house rental. I have a long term condo rental in Chicago and I also do short term rentals for our camper.

Real estate investor since 2018 when I bought the condo. This is only our second house after a 3 year hiatus.

Purchase Price:

$453,000

Cash Invested:

5%

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

Our goal was to eliminate our own housing expense (i.e. rent/mortgage) by living in a house hack to determine how sustainable the house hack approach would be for us as a couple in the longer term. We know house hacks can have the highest financial benefits of all the strategies, but unsure how well it would work for us as a couple.

How did we find the deal?

After interviewing a few realtors focused on the Investor side and FIRE movement, I chose The Envision Advisors. Their expertise, tools, and resources were a critical determining factor for me. Positive attitude and hustle sealed the deal

How did we finance the deal?

Through my investor friendly lender recommended through Stacy Rozansky,  but only after getting pre-approvals from other financial lenders and comparing fees.

Did you add value?

We remodeled the basement from only a 1-non-legal bedroom to a full 2-bedroom granny suite with laundry and a separate entrance. I interviewed and compared 3 different general contractors before making a decision based on quality, timing, and costs

What was the outcome?

The project was successfully completed with a 1.5 month delay. The short term rental was listed 1 month ago and has been rented for the majority of that first month as we build up reviews.

I hired a short term property manager knowing I could do the management myself as I live in the upstairs portion (house hack). However, I wanted to be completely hands-off. For me the goal of real estate investing is to build wealth now so I can get my time and freedom back. Similarly, I interviewed about 8 property managers before deciding on one that is very specific about how operations work so it’s cut and dry for my first short term rental and no surprises. They also operate in other Colorado areas that I am interested in purchasing next.

The property managers' forecasted revenue will be oddly very consistent, likely all using the same software, and forecasted the revenue would cover all the financing expenses alone including principal, interest, PMI, and taxes and a significant portion of utilities. Thus, I would essentially need to still pay for remaining utilities, maintenance, landscaping, etc.

I am currently in the process of getting the house reassessed to see if post renovations, we have 20% equity in the house and can drop PMI. This is a hefty target and I am unsure if we will hit it.

Lessons learned? Challenges?

Learned to screen tenants based on Jeff Whites screening standard procedures. This made the process easier and minimized potential errors with future tenants.

While living in the house being renovated was stressful, it was very exciting and inspiring. My partner and I really enjoyed fixing up the house together and debating functionality vs design. We would absolutely do another large renovation together, but likely not live in the house during renovations.

Next, I foresee us purchasing more short term rental properties across Colorado and the USA so we can also take advantage of the homes for smaller vacations. Our goal was never to optimize our profit. Our goal is to buy a portfolio of properties that fits our vision of where we may want to travel and live throughout our lives while acquiring them for “free” and/or make a smaller profit on them.

@Matthew Araujo Congrats on almost crossing the finish line and graduating college. In short, I agree with everyone on this post. Ask parents to be a co-signer and buy a 4+ house and rent out all the rooms and you take the master. All depending on your market you will be living for very cheap, if not free, and acquire your first real estate asset. 

When I was a junior in college, my dad brought this idea up to me (he would help me purchase a SRH and I would rent out all the rooms and live in the master). The biggest mistake I made was letting that advise go in one ear and out the other. I had my mind set on where I was going to get my next beer!

Last bit of advise, the best time to buy real estate was yesterday :)

Best of luck!

@Andrew Low, I love your ambition. When I first heard about REI, I was the same way- wanting to go big and acquire as many doors as possible. I just though how cool it would be to say I own 10+ doors/units. ITS SEXY! Then reality hit. When it comes to REI, I like to choose the path of least resistance. That is why I am a cereal house hacker. Cheapest way to acquire real estate and you get first hand experience whether land lording is for you or not.

So... like everyone has already mentioned, start with house hacking (the path of least resistance). And you do not need to purchase a multiunit to house hack. You can also look for single family homes with some form of ADU or mother-in-law suite to rent out. You will have your privacy plus some extra income to help offset that mortgage and give you a great foundation for long-term wealth through REI.

My recommended next steps:

1). Read Set for Life by Scott Trench. That is my "rich dad poor dad" for Real Estate/ money management/ financial planning. 

2). Talk to a Real Estate Friendly Lender. It is never too early to connect with a lender, even if you are 12+months out, to create a business plan. Bigger Pockets is a great place to start.

Excited to read your future success story!

I would have to agree with @Paul Sandhu. But, great job reaching out to the BP community for advise.  

@Jalpan Jangiani, None. From a pier cash on cash prospective, SFH house hacks will give you a much better return, whether that is renting by the room or SFH with separate mother-in-law.

But most importantly, the biggest speed bump is lending. Google the FHA self sufficiency test. This applies to 3 and 4 units properties you are wanting to purchase as a primary residence. It states 75% of the rental income must exceed your PITI. And those rental comps come from your lender, not you. So STR income will not apply. To offset that ratio you will need to put more down. by the time you ahve put more down, you might as well purchase it as an investment property.

In the years I have been doing this, only  10-12% of HH'ers are duplex's. 0% are 3-4 units. These states are coming for the Denver Metro Area.

Last thing is lending first, analyze second. Connect with an investor friendly lender to put together a business plan. Once you know your buying power, then start analyzing .