All Forum Posts by: Ben Einspahr

@Sean Beard, Nomad'ing is an excellent way to get your foot in the Denver REI market. You have multiple routes you can go after you move out. If you are nervous about cash flowing after moving out 12-18 months down the road, renting by the room is an excellent strategy to creatively increase cashflow. With diligent tenant screening process that Jeff White has dialed in, it is not the head ache everyone makes it out to be.

If you have synced up with Chris, you are in good hands.

Looking forward to hearing all about your future success story!

Ben

@Kyle Gagnon your numbers for both LTR and STR seem pretty accurate. I always like to lean towards the conservative side. One thing to keep in mind is the jumbo loan limits for Colorado. When analyzing your acquisition costs and monthly PITI keep in mind this will be considered a jumbo loan if its a triplex and loan ends up being over $1,058,850 in Denver County. Do you have lending set up? I can give you a few recommendations for some local investment friendly lender to reach out to.

Your mentioned concern about vacancy for STR's. I wouldn't worry about that. If you do a good job furnishing, great photos, and have competitive pricing, you should have no trouble maintaining high occupancy even during slow seasons (oct-feb) Airbnb is my jam.

Regarding diving deep into the numbers, I will message you a link to Chris Lopez' house hacking spreadsheet @Kevin Smith was mentioning along with some deal analysis videos on local house hacks. I am very familiar with this spreadsheet so I would be glad to walk you through it. If it is a good deal, act fast. Cheers

Type in the address in the link I provided and it should tell you. I am sorry.  I do not have any RE attorney recommendations. 

@Ian Jimeno, Thats a great question. I had to do something similar a few years ago when a college friend and I went in 50/50 to purchase multifamily. First my disclaimer. I am not a legal professional so always consult a lawyer before setting up any legal partnerships. 

Short and simple answer, we set up 3 LLC's. A LLC for myself, an LLC for my partner and an LLC for the property. The LLC for the property, lets call it 123 Fake St LLC, owned both our LLC's 50/50. Hope that makes since?

Also, it is worth your time looking into the Bank of America Grant Program. You can get your next HH very low down. Here are the details. $10,000 downpayment assistance. $7,500 towards closing cost (however, most closing costs to not total $7,500 so you can remainder of that $7,500 towards paying down interest). And here is the cherry on top, No PMI. Property must be in low to moderate income area. Here is link. and buyer must make less than $150,000 per year.

So, in conclusion. Why would you go through the trouble setting up creative financing for downpayment when you can get into a $500,000 home for under $10,000?

Hi @Account Closed, 

Glad you found value in the post. My only suggestion for that is when calling around and getting quotes, ask what their lead time is. If greater than 30 days, I would go another route. Also purchasing larger "big ticket" items from a local store vs online may help avoid some of those delays.

I want to highlight a local house hacker that is absolutely crushing it. Vince Arena closed on his first HH in March of 2021.

Investment Info:

Single Family Townhome with a 1st Floor walkout Mother In Law suite in Wheat Ridge

Purchase Price:

$499,000

Cash Invested: $29,850 (including furnishing STR)

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

Recently Denver has become one of the hottest and most expensive markets in the country. Given the housing prices in our market, Vince wanted a way to offset his monthly housing expenses. With his crazy work schedule as a Sales Manager at a medical device company that can require him to be on call 24 hours a day, having a roommate wasn’t going to work for him anymore so having a separate unit was a must.

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

The deal was on the MLS. It had been listed for about 30 days so his agent, Preston Newberry able to negotiate a $5000 seller credit.

Did you work with any real estate professionals?

Preston Newberry with Envision Advisors

How did you finance the deal?

Financed the deal with a conventional 30yr fixed mortgage with 5% down, 2.5% interest

Did you add any value?

Vince added value by furnishing the MIL suite and operating it as a STR on Airbnb. However, the real value was added by Preston who saw the rental potential on this stale listing that no one else saw at the time. Without his creativity and experience he wouldn't have looked twice at this property.

What was the outcome?

Vince is still living in the property and running an airbnb out of the separate MIL suite to offset living expenses and averaging $2000 a month in rental income before cleaning fees. Net mortgage payment after Airbnb revenue is around $500 a month. He is in the process of looking for House Hack #2 and will be transitioning this property to a stabilized rental.

Lessons learned? Challenges?

On the acquisition side, he was initially only looking for a small multifamily property to house hack but pivoted to this property when he was having trouble getting offers accepted. Eventually pivoted to single family and found a great house hack opportunity with great cash flow potential.

The second challenge faced was availability of materials. Vince had to fully furnish the unit and had his mind made up on a few specific pieces of furniture for it. The furniture ended up taking almost 4 months to arrive due to COVID delays which cost 4 months of lost rental income during the busy summer season. In hindsight, realizes he should have changed course and furnished the unit with things available in a more reasonable timeframe.

@Hossam Elaskalani, I love your intro to the post. Honest and to the point! haha

My advice would be option 1- Buy a SFH. Rent out a few rooms. (Jeff White has his systems dialed in for screening rent by the room tenants)

As your income increases with your new job and expenses decrease from your tenants paying your mortgage, you will be able to save up for that next SFH 12-24 months down the road. Stabilize property 1 and repeat for property 2. Repeat, repeat... Sounds boring, but boring is good in my opinion.

@Vince Arena great advises. You Airbnb HH is crushing it! Before you know it, your full time gig will be in the seat of that downhill mountain bike!

@Jenny Bayless  will be your go-to investor friendly resource for the Springs.

Cheers,

Hello @Hank Olken,

That is an excellent investment strategy to get your foot in the door in the competitive Denver REI Market and great hands-on experience being landlord! I have done this strategy a couple times now

@Steve K. did a great job highlighting the areas of the Denver Metro Area that allow owners to operate rentals under 30 days as non-owner-occupied property.

Out of 100 house hackers I have connected with, I would say 10-15% of them are multifamily for the same reason mentioned above. Single family with separate income suites are the way to go! It can be difficult to get your foot in the door in this competitive market but if you have a realtor that knows how to close deals, you should have no problem getting one under contract.

STR's will be your best source of income while living there but there is nothing wrong with transitioning to a MTR after moving out and stabilizing the property. Websites like Furnished Finder and Kopa.co market to young professionals and traveling nurses (they make excellent tenants).

What type of creative financing are you looking to utilize? 5% down convention would be my vote.

Best of Luck!

I love sharing success stories of Denver House Hacker’s crushing it! This post is to highlight Vasily Rossokhin first house hack purchased in September of 2020.

Investment Goals: Vasily had his mind set on building long term wealth. He was looking for a house hack with great long-term appreciation and cash flow. Less concerned about high cash flow while house hacking.

Investment Details: Capitol Hill attached Duplex.

Purchase Price: $740,000

Cash Invested: $177,000. (20% down to eliminate PMI and $20,000 in renovation cost)

Being a risk-averse investor, chose 20% down to eliminate PMI and increase long term cash flow. The $20,000 in upfront renovation costs consisted of new windows, kitchen refinishing, password-protected front gate for tenant security, and back entrance facelift.

What interested him in the property?

3 bed/ 1 bath on top + 3 bed/ 1 bath on bottom with shared front entrance. Plenty of space and easily “house hackable”. Great condition for the age of the property and excellent location.

How did you find the deal?

Like most of our house hacking clients, the property was found directly off the MLS. Our investor friendly agent was able to negotiate $10,000 off the asking price in a very hot market.

What was the outcome?

Vasily is currently living in the top unit and renting out the bottom unit as a long term rental for $2100/month. Average monthly expenses after the first year, $1000/month!

The top unit is estimated to rent for $2500/month after he moves into house hack #2 this summer.

Lessons Learned?

Schedule any rehab as soon as possible because many contractors are booked months in advance. When it comes to receiving quotes, everything is negotiable.

Challenges?

First floor tenants' ceilings leaked from the old plumbing. $1800 in unexpected repairs + $100 in DIY drywall repair.

Second floor furnace died a few months after closing. $2000 repair/ replacement costs.

Some issues with loitering+drugs in the front/back: password-protected front gate+installing Ring cameras with lights/sirens+more secure new back entrance mentioned above all helped a lot.

Keep on crushing it Vasily Rossokhin

Right on @Owen Dashner. Will do. Thank you so much for the guidance!