All Forum Posts by: Ben Einspahr

Hello BP Rockstars!

Out-of-state landlord located in Denver looking for some help for Omaha contractors. Does anyone have any waterproofing contractors they would recommend? Leaking window-well that just wont seem to go away. I know every landlord has that one thing that keeps them up at night. Unfortunately, this is mine believe it or not. It is located in a very tough location to access under a deck and have not had much luck with any contractors.

Thank you in advance for the help!

Ben

Hello @Trent Blackwill,

@Nick Cooley and @Ben Rhodin did a an excellent job explaining the the 2 most common areas of the Denver Metro Area that allow you to operate a STR (<30 day stays) as a non-owner occupied investment property. To be clear, actual Denver County does not. From what I have read, actual Denver County seems to be one of the more regulated areas to invest in STR's.

Even though Wheat Ridge and Arvada are pretty relaxed when it comes to their rules and regulations, you will want to be sure you are getting you STR and Business License. Very easy to do when going to city website. This will come with an additional lodging tax (10-11%) on gross monthly income received on all stays under 30 days. Just be sure that cost is accounted for when setting up your listing so it is passed onto to the guests. Can simply be done through the Airbnb website

One last thing to keep in mind, if all else fails and you are not wanting to restrict you search location to only STR friendly areas, you can still find success in Furnished MTR (>29 day stays). MTR's are my bread and butter after I move out of property as my primary residence and turn into a stabilized investment property (house hacking!).

MTR Pro's, less turnovers than STR's and you can market to young professions and traveling nurses that make excellent tenants. Check out Furnished Finder and Kopa for great MTR platforms. Airbnb can also be used when minimum stay is set to 30 days. With a few upfront systems put into practice, they are fairly easy to operation from out-of-state.

MTR Cons, you guessed it. Less income than STR's. Getting a good grasp on finding comps for MTR's can be challenging but a good conservative rule of thumb can be 30-40% more than traditional LTR. I have noticed MTR's seem to be more successful in the smaller 3 bed homes and even townhomes and condos that have lower price point. Just be sure to check any HOA bylaws. They can be a real buzzkill if not looked into.

Excited to hear your future success story on investment property you land on!

@Daniel Baran, Big congrats on your first post. I love your game plan!

As @Ben Rhodin already mentioned. You will be paying a large chunk of money (20% - 25% down payment) and much higher interest rate buying as investment property, then purchasing house as primary residence to then house hack. 

Personally, I would do it the other way around. Wait until you move to Denver and purchase as your primary residence with <5% down. That way you are not stuck at a max purchase price of $500,000. At $500,000 or less, you will be limited to SFH's that need a good amount of work or condos/ townhomes that can typically have HOA regulations that limit rentals <30 days.

How I see it:

Option 1- Buy a House Hack where you are currently living. With your decreased living expenses,  start aggressively saving for HH#2 in Denver +/- 2 years down the road. When you are ready to move to Denver, stabilize HH#1 and move into HH#2 in Denver. Or if you want you can always sell but real estate is a great forgiving investment in the long term.

Option 2- Continue saving as much as you can until you are ready to move to Denver. Then when you move here, find a kickass investor friendly realtor and buy HH as primary residence. Then start crushing it!

Hello @Ignacio Perez Losada,

Local HH'er here in the Arvada and Wheat Ridge area! @James Carlson made a great point about lending. Lending first! I hear so often that Denver's cost of living make it so challenging to become a home owner, or just a property owner. The Band of America Grant Program gets overlooked too often. Details:

-Offers $10,000 towards downpayment assistance.

-$7500n towards closing costs. Typically closing costs don't amount to $7500, so the remainder can be used to pay down interest rates.

-Property does need to be your primary residence but does not need to be your first property. Can not qualify if you have more than 2 loans under your belt.

-Must make under $150,000 per year

-Property must be located in "low" to "moderate" income area. ( you would be surprised how many good locations meet this requirement).

-And here is the cherry on top NO PMI!!!

This mean you can become a home owner in Denver for less than $10,000! Thats crazy! I am mad I did not utilize this program for my house hacks. I will definitely be using it for my next one :)

@Catie Lawrence, Thank you so much for your recommendation. I agree, finding a top notch CPA on your REI team is challenging. I will be sure and connect with them.

Just circling back to this post. Anyone have any recommendations for Local Denver Metro tax professionals familiar with rental investing principles?

Hi @Brandon Miquelon, Sounds like you have a very similar set up to my first HH that is a SFH with separate MIL unit above the garage. I keep utilities in my name and bill back to tenants based off SF.

66% in main level and 33% in MIL. I cover the 33% since it is STR/MTR and tenants cover the 66%. Never had push back. Quick tip- when creating your lease agreement make sure to add late fees to utility payments as well as rent. I only had late fees on rent. Lesson learned

Wow, I am very impressed with the excellent feed back you have received thus far!  

@Jay Gil, One thing that I consistently notice that is overlooked when considering building your team is lending. Lending can make or break you early on when trying to get your first investment property especially if there are multiple offers. Find a lender that understands what your are looking to do and could potentially give you the option to close quickly (less than 14 days). 

There is a lot of great advise on the Denver Metro market but I also think the Colorado Springs market is highly undervalued.  Lower barrier to entry and with its strong military presents, you can manage less turnovers and very reliable tenants. For $600,000 you can find yourself a great multifamily with little upfront maintenance needed.

With this being your first investment property, I am sure there will be some disagreement but Keep It Simple!!!!! No need to do something fancy and sexy like BRRRR. Find something turnkey ready to go. Make your first investment property as smooth as possible that way you do not get burnt out and set yourself up for being a successful longterm real estate investor.

Looking forward to hearing all about your success story!

@Frank Basile, I love where your head is at! Everything you mentioned in your post is definitely possible with the amount of cash you have available for downpayment for HH. Everything my good friend @Jeff White is spot on regarding the the income vs. comfortably scale. Rent by the room being the most profitable but least amount of privacy vs. SFH with separate income sweet (walk up/walk out basement, mother-in-law suite, ADU) being little less profitable but plenty of privacy if you have a family.

To answer your question regarding location- Since you are looking for easy access to mountains and a SFH with potential ADU, I would focus in Wheat Ridge and Arvada (just NW of Denver proper). Short drive to I-70 that will take you up to the mountains in +/- 60 minutes. Now if you are driving on a Friday afternoon, expect that time to be much longer :)

While Living There: While living there as a house hack, you will get the most bang for your buck renting out that ADU/ MIL through websites such as Airbnb and VRBO. Much higher income potential than if you were to go the LTR (>12 month lease) route. STR do require some more time to manage operationally, but with a few proactive systems set up on the front end (bnb friendly cleaner, automated messaging, multiple sets of turnover supplies so you are not stuck doing laundry during the busy workweek) will make life much more easier! If purchasing in area that has a HOA, be sure you read through the bylaws or talk with someone on board to be sure they allow STR's (rentals < 30 days). Even those city laws may allow STR's, the HOA may very well not.

After Moving Out: Real Estate is a long term investment, so when I am analyzing my next HH, I am more concerned what the numbers look like after I move out (investment property) and turn the property into a stabilized rental than when I am living there (primary residence). I will only be HH'ing the property for 1-2 years but it will be a stabilized rental property for 5-10 years. It is always nice to have the option to continue operating that ADU as an STR so that is the great thing about Wheat Ridge and Arvada having very friendly STR (rentals < 30 days) laws for "investment properties". For example, if buying in Denver proper, that county does not allow any rentals under 30 days if the property is non owner occupied.

However, like I mentioned above STR's can me much more work so, while it is nice to have that option to continue renting out bnb as STR, I typically turn that furnished BNB into a MTR (1-6 months) for traveling nurses and young professionals. They make great tenants, income is still favorable, and less work w/ few turnovers. The area of the SFH I was living in while it was a HH gets turned into a LTR. So it is almost like operating a duplex in the skin of a SFH.

Last thing- CHECK OUT THE BANK OF AMERICA GRANT PROGRAM!!! $10,000 towards down payment, $7,500 towards closing costs. No PMI!!!!. Must make below $150,000/year to qualify. Can not be for investment property. And property must be located in a low to moderate income areas. I was very surprised when I put my first HH in Arvada into the map to see that it would have qualified b/c it is in a very nice family friendly area! Program is expected to go until 2025.

Hope this helps!

Hi @Trever C Trader, Those are all great questions! Are you looking to operate a STR (<30days) while living in the property as a primary residence or as an investment property? If this is a primary residence, there are no restrictions to minimum day stays. For Denver, only recommendation I would give is make sure you get a STR license. They are super easy to get. Link can be found here. Yes, believe it our not, there are people checking Airbnb to make sure listings <30 days in Denver have STR license posted on their listing page.

If this will strictly be an investment property, I would look in the Arvada/Wheat Ridge Area. Their STR laws for investment properties are much more favorable than Denver. If you are looking for a lower price point than Arvada, Wheat Ridge, and Denver, check out Aurora! Friends of mine are killing it with their house hacks next to Anschutz Medical Campus.

So, to answer your question, yes, there is definitely a demand for MTR's in Denver Metro Area. My wife and I use platforms such as FurnishedFinder and Kopa to market to Traveling Nurses and young professionals. They make top notch tenants! I have also noticed an increase in demand for 30+ rentals through Airbnb with everyone now having the ability to work remotely.

Hope this helps head you in the right direction!