All Forum Posts by: Ben Einspahr

Welcome to the forums @David Urena-Amaro, you are in the right place to ensure your success long-term through real estate investing.

Denver is a fantastic place to invest (especially with it being in your own backyard) We have had amazing appreciation these last few years, so it is more challenging to cash now than before. The most important thing is being open-minded to different type of investing strategies. It is still possible to cash flow here, you just need to approach it differently.

House hacking is a great option since there are lots of ways to accomplish that here too. I've successfully done it personally multiple times and I have clients that have done it as well.

First step would be to take to a lender to get pre-approved, that will determine what properties that you can look at and what price points. They will be able to determine that based on your income and reserves. You can find a few local lenders here in Denver, or if you need one, I'm more than happy to recommend a few.

Next step would be to determine which property type fits your goals. There aren't many multifamilies here in Denver that cash flow due to the high purchase relative to rents, and most of them need work and have trouble qualifying for a FHA Loan.

The two best strategies for house hacking with todays market conditions in Denver:

1) Rent By Room - buy a large house (5+ bedrooms/3+ Bathrooms) in the Denver metro area (Thornton, Northglenn, Westminster, Lakewood and west Denver work great) and live in the master room and rent out all the other bedrooms. This strategy works great because there is a huge need for affordable housing here in Denver and paying 800-900 for a bedroom is a good deal for people that want to live here but can't afford a one bedroom apartment. With this strategy, you can expect to live for free and make $500-$1000 per month cash flow. It is a little more work in the front end (ie. furnishings, finding 5 tenants, signing leases), but it is worth it! It also come with first hand experience being a landlord

2) Traditional house hacking through Airbnb - similar to the above strategy, Airbnb is a fantastic one as well since Denver gets a lot of tourists. I've seen clients live upstairs and rent out the basement on Airbnb, so you get the best of both worlds, privacy and your own space while the lucrativeness of Airbnb. You may not be living for free but paying $1000/ month to own a home is much better than paying $2000 in rent.

You are in a great position, and Denver is a fantastic place to live and invest. Looking forward to reading your future success stories!

@AJ Stanis Welcome to the forums, you are in the right place to build long term wealth through real estate.

Denver is a fantastic place to invest. The most important thing is being open-minded to other creative strategies beyond just 2-4 unit properties. I am still seeing successful house hacks being purchased in todays current market conditions, you just need to approach it differently and be able to view it as a long term investment.

I have personally found success through the first strategy @Chris Lopez mentioned which was purchasing a single family home with monther-in-law suite/ ADU/ basement with its own separate entrance and rent it out as a short term rental (less than 30 day stays) or medium term rental (30 days or longer stays) on platforms such as Airbnb.

First step would be to take to a lender to get pre-approved. That will determine your buying power and what properties that you can look at and what price points. You can find a few local lenders here in Denver, or if you need one, I'm more than happy to recommend a few I would closely with. Lending can be a very important piece to the puzzle that ofter gets overlooked.

Last thing to keep in mind. Just because a property does not cash flow on paper right after you move out does not mean it is a bad investment. Cash flow is just a very small piece of it. You still have appreciation, depreciation, and principle pay-down. Through my years of house hacking, my wealth did not come from cashflow. It came from the other 3 components.

I will follow up with some other great educational resources to help point you in the right direction.

Best of luck!

@Reid Sealby, Yes Denver is an expensive market to buy in but regardless of the price and current market conditions. Denver is still a great city to invest when looking long term b/c of the shear volume of business and people move here... plus its in your own backyard. 

@John Elerick, Big congrats launching your airbnb!

1.When you look at the additional $50' ish you can make by doing the cleaning yourself, I personally do not think the "juice is worth the squeeze". After my wife and I did our own cleaning for a month or so, she put a hard stop to it and we found a great cleaner that we have used for 3+years. For STR's, your cleaner can make or break your business. Take care of them

You have a couple different options.

A. Cheapest option- Have your cleaner manage the cleaning and turnover. They will give you the dirty laundry and you will inventory it, wash it, and fold yourself. (I have become a master at folding fitted sheets) 

B. Have the cleaner manage the cleaning, turnover and laundry. Essentially they will either wash the laundry for you if you have laundry in the unit or they will take it home , inventory, wash, and fold it for you.

For each one of our Airbnb's we have a minimum of 2 full sets of turnover supplies (linens, towels, etc). 2 sets for MTR, 3 sets for STR.

2. To add to what others have recommended, to make this work you will need:

A. Auto messaging- effective auto-messaging can eliminate 90% of your communication.

B. Cleaner and additional turnover supplies (if you do not have a washer in unit)

C. Like clockwork, the minute you go out of town, something breaks. For this I have used task rabbit. 

3. Yes, you should find yourself an investor friendly CPA that can help you maximize your returns while still doing everything by the book. I will send you mine via messenger.

4. Task Rabbit

Thanks!

@Jared Vaughn, for a few years now I have been juggling between renting a similar space I have up in Arvada out on both Airbnb (30 day min stay) and Furnished Finder (agree @James Carlson, craigslist has a better site than FF). I prefer Airbnb purely b/c more rental income and easier turn over. Every time there is a turnover, I do not have so set up a new lease agreement, background check, security deposit, and a form of rent collection every time I have a turnover. All personal preference.

On the other hand, traveling nurses make excellent tenants (very responsible, keep to themself, and have a reliable source of income)

Best of luck!

Thank you @Andre Galaviz. I am glad you enjoyed this post. You and Amanda Meyer have a really creative strategy put together to get your foot in the competitive Denver real estate market. I am excited to see it executed and we will definitely need to write a success story highlighting your real estate journey. 

I want to highlight the success story of a fellow house hacker Jeff White and I go way back with. Irina Barnett found a beautiful 3 bed/ 2 bath SFH in Aurora that she absolutely loved but the numbers did not pan out as a stabilized rental after she would move out. When we went to walk the property, we noticed a very large bedroom in the basement that could be turned into 2 rooms with minimal work. Doing this turned the 3 bed/ 2 bath into a 4 bed/ 2 bath which made a great house hack and an excellent rent by the room rental after she moves out of it and onto house hack #2. Excellent work Irina.

Investment Info:

Single Family Home in Aurora, CO. Initial layout 3 bed/ 2 bath. Goal was to live in one of the rooms and rent to medical professionals near the medical aurora campus. Turned the largest bedroom in the basement into 2 separate bedrooms with a shared bathroom. Having 2 egress windows in the basement made this update very easy.

Purchase Price:

$429,000

Cash Invested:

$20,617 ($11,278 Down payment + $9,339 for construction and renovation to add 1 bedroom and furniture).

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

The possibility of owning a property with a low cost entry especially in a market like Denver Metro Area. Also was a great opportunity to get my first real estate investment property under my belt.

How did we find the deal?

I found the property right off the MLS. There were multiple offers on the house. With Stacy Rozansky’s help, we were about to negotiate my offer being accepted. Also, was able to negotiate sellers paying for new water heater installed.

How did we finance the deal?

I had the opportunity to use the Bank of America First Time Buyers program that gifted me $10,000 for the down payment and $7,500 towards closing costs.

Did we add value?

I divided the lower level living space into 2 rooms doubling the rental income. Also, I installed additional cabinet storage in the kitchen since I was renting by the room. Also, updated the kitchen by painting the existing cabinets, removing the existing countertop and installing butcher's block countertop; in addition installing backsplash tile. Also, added insulation and drywall to the garage walls.

What was the outcome?

Successful house hacking experience as I rented the available rooms within 3 weeks of room posting. 

Lessons learned?

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

Challenges?

I was very afraid of posting my rooms for rent as I didn't know how to screen tenants. It wasn't until Jeff explained his system to me that it gave me the confidence to screen tenants to high standards.

Excellent job to everyone involved in the process and thank you for reading!

Wow! I am very impressed with all of the great feedback in this post. Lots of great resources out there. Before looking to invest, take one step back and look to see how well your RE portfolio is operating. As others have mentioned, HELOC's and cash out refi's are a great options but are any of those 3 properties worth selling and reinvesting into another investment property?

There are 3 key metrics I look at when making this decision:

Cap Rate greater than 4%

Return on Equity (ROE) greater than 10%

And Loan to Value greater than 50%

If you are below any of these metrics, may be worth considering selling. We just designed a free new software that helps optimize your portfolio and can easily spit out these metrics for you. I'll send you the link via messenger. 

Regarding other markets to invest in, as @Jeff White mentioned, consider looking into the Springs and even Pueblo. Yes, thats right Pueblo :) Great opportunity in both those areas. Reason I am not mentioning any cities out side of Colorado (greater that a 3 hour drive) is b/c I have out of state rentals and I am not a fan of them.

Best of luck @David Trujillo. Keep on crushing it!

@Kylie Tollios, Just reading through the comments, you have received a lot of great feedback that it is not worth "building a business on quicksand". Great analogy @John Underwood. 

One thing I would like to encourage is look into operating a MTR on a platform such as Airbnb. There is still a very high demand with the large amount of digital nomads and traveling nurses. Plus you do not need to deal with the city and getting a license. I have a MTR in Arvada. Yes, the city allows STR's but since I still self manage my portfolio, it is nice to not have that consistent turnover.

Hi @Tony SanFilippo, Westminster does allow non-owner-occupied STR's. However that is due to a lack of regulation. So investing in that area with a long term business plan to operate as STR is risky. MTR's is a great plan B.