All Forum Posts by: Ben Einspahr

 @Ryan Williams Oh wow! Those are excellent numbers. Thank you for sharing. Strangely, where I typically hear people wanting to do this is further up north (Westminster, Thornton, Broomfield). I will definitely let you know as I find out more!

@David Urena-Amaro great questions! Love the concept of "Thursday Three's"!

-How do taxes work on tenants rent money?- All of the rental money you receive is pre-taxed. So that means at the end of the year you will need to pay taxes on that rent received at your taxable income rate. However you typically have expenses that can offset the amount you are taxed at the end of the year. (mortgage interest, property tax, operating expenses, repairs, and depreciation). These expenses can offset they amount you are taxed if done correctly and you are working with an investment friendly CPA. I typically try to show all of my properties having a loss to minimize the amount I am taxed. However, that will not be the case if you are wanting to use rental income to help qualify for another investment property. 

-What is "buy and hold" property?- A buy and hold property is an investment property that you purchase and intend to hold for an extended period of time. Real Estate is an excellent forgiving asset to hold long term and a hedge against inflation (we are seeing that with todays market conditions).

-What is a "note"?- A note is a written promise to repay a specified sum of money plus interest at a specified rate for the full length of the promise. Basically a mortgage. However, there is much more to this answer that I am not covering, for example note investing, because that is not my area of expertise.

Hope this helps.

Hello BP Community,

Looking for some feedback. For you MTR owners that have an entire furnished homes that can host 5+ guests, what type of demand are you seeing for 30+ day stays? I have a little 1 bed 1 bath MTR in Arvada that does great but curious about entire homes.

Reason I ask is because STR are excellent business plans. However, we all know the STR laws in the DMA are not the most friendly. So after moving out, it only makes since to keep your STR on Airbnb and set your min stay length to 30 days to comply with local city rules and regs.

Thank you in advance for the feedback. 

@Megan Blythe, Just filled this out. Thank you for sharing. Yeah, watch out for those party animals coming in town with kids staying the weekend for a soccer tourney :)

@James Carlson, interesting that you can not live in ADU and rent out primary as STR. Denvers seems to have the most strict STR laws out of all the Denver Metro Cities- almost as if they have one person dedicated to making sure all Denver STR's are following code and have licenses. One of the main reasons I avoid Denver County.

@Scott Trench, yes living in the primary and renting out the ADU as STR is an excellent model while living there. However, what is your business plan after moving out? If you live in the home for 1-2 years but have it as a stabilized rental for 8-10 years, that 8-10 years is much more important from a wealth building prospective than the short one to two years.

When I look at HH's I first look to see if it passes the sniff test of being a stabilized rental. If yes then great, now how does it look as a HH?

@Jenny Picot, these are great problems to have. HELOC and cash out refi's and both great options and each have their pro's and cons.

HELOC's are great because they do not change the interest rate on your current loan. However, the interest rate changes daily with the market and the fed are expected to hike the rate up 2 more times this year. Just think of it as a giant credit card. After you close on your HELOC, you do not start paying interest until you start using the money. At that point you are paying interest only. The question is, how do you plan on paying off the principal? Do you expect to have a large sum on money come in that will allow you to pay off that principal? Would you put the downpayment of a property on your credit card?

Now cash out refi's are great because they interest rate never changes and you are locked in for 30 years. However, now you do not have that low interest rate and your loan balance will increase to the current valuation of the house. If you do a cash out refi on your primary, that will reset your 12 month min occupancy limit for your primary.

So, all of that I mentioned above is what my lender told me when I had this same conversation with him last week.  

You best next step would be to do the same thing I did, talk with an investment friendly lender to help you put together a business plan just like I did for you next move. I have a couple of great lenders I use. I will DM you their info.

Hope you find value in this message

@Andre Galaviz, Thank you for the shout out. Sounds like you are making excellent progress with your primary residence. Very excited to hear how it turns out. You have an excellent 4+ bed that will make a great house hack and even better stabilized rental. Will be a great foundation for long-term wealth through REI.

@Danielle Daly, thank you for the kind words. Excited to hear the success story what you land on for your first house hack! We will be in touch. Keep on crushing it :)

@Jameson Waltz, Welcome to BP and congrats getting your first rental property. Before making your next business move, you need to define what your goals are over the next 2, 5 and 10 years. Is that total NOI (net operating income), total equity, or total cashflow? I leave cashflow for last. Wealth is not built through cashflow. It is built through the other 3 pillars to REI (Appreciation, depreciation, and debt. pay down).

When it comes to if I should keep or sell a rental, I look at 3 key metrics:

1. Cap Rate. >4%

2. Return on Equity. >10%

3. Loan to Value. >50%

Hello @Caroline Kennedy. If Denver is too expensive, look into Colorado Springs and Pueblo (Yes, that right. Pueblo!) 

Why I like those markets is because you are diversifying your portfolio by investing in different markets while at the same time, keeping a centralized portfolio all in the same state. 

I will send you a few case studies we just published using recent investment properties purchased in todays market conditions. There is some excellent data in there!

Best of luck!

Hi @Danielle Daly, Congrats on your first post and that much closer to your first HH. If I could go back, I would have started RBR HH'ing back in college. I call it recession proof investing! 

So a few tips and tricks on what to look for when looking for RBR HH:

1). Stating the obvious one but 4+ bed house. Anything less does not see to do well after moving out in the Denver metro market.

2). Egress widows. For basement rooms do not rent out any room that do not have proper egress. Others may disagree but my opinion, not worth the risk.

3). No more than two tenants sharing one bathroom. For example, if you have a 4bed/2bath and one of the bathrooms is connected to the master bed. That means the other 3 rooms are sharing a bathroom. May not be the best option at 6:30AM when everyone is wanting to shower before work :)

4). Look for larger basement bedrooms that can legally be converted into 2 bedrooms. Notice how I said legally. (egress, electrical, air in and out). This can be done for less than $2k. Here is an example of a client Jeff White and I helped turn a 3/2 into a 4/2.

For more rent by the room furnishing tips and tricks, check out this ride along video where where we tour a very cool rent by the room in Lakewood, CO. I call it the ultimate house hack (Click here to view it). Would not expect anything less from Jeff White.