All Forum Posts by: Ben Rhodin

Hey @Roman Puzey!

I agree with all of the points above, it's easiest to simply run the analysis as if you are not living there and just know in your head "I am paying the rent on unit 1" or whatever. Keep the House Hack aspect out of it from the beginning, and save yourself time in analyzing. 

Looking at the report as well, I am not seeing a PMI payment, which if you are house hacking you will have unless you are using a VA Loan, or other loan product that doesn't have it. And if you are in a Multifamily, you are using an FHA loan which is having very high PMI payments currently. Along the same line, your interest rate seems pretty conservative for today's market. Is that a current quote from your Lender?

Secondly, your utility costs seem very low as well. 25$ a month for both water and trash? Your trash will be at least $35 a month, and more if you are using a collective one for both sides. and water will be about $100 a side, depending on the size of the units.

I'm also not sure what strategy you are using but if you are getting $5K a month in rental income I am assuming probably STR or MTR? Unless this is a very large or high-end unit. Either way, if it is an MTR or STR you'll need to also factor in other expenses, such as cleaning fees, management software, booking fees, furnishings, utilities, supplies, etc...

Overall, it's a solid report! Just need to tighten some stuff up, and posting it here is the best way to get that input on what you may be missing! The other thing I will say is after you have inputted all your numbers (expenses, reserves, income, etc...), then you want to mess with the only thing you can control, which is how am I renting it, and what price can I get it at. You can keep lowering the price until you have a working deal, and that gives you your offer price. Remember that the asking price is just that. 

One last thing I will say, if you are planning on doing an STR on the other side, be aware of the city you are in. Denver and a few other municipalities do not recognize the other half of a duplex as your primary residence, and hence you can't STR that side.

Hey @Dustin Le! Welcome to the Colorado market, coming from Oregon, and the west coast, you will find a lot of similarities to your neck of the woods out here. Let me ask you first, what draws you to specifically NoCo, Fort Collins, and Greeley? There is nothing wrong with those markets, but if you are looking at the Colorado market in general you may want to toss a wider net and come down towards the Denver Metro as well. Now without much info in your post regarding your goals, or investment criteria, it is hard to paint a full picture for you, but in short, both Greeley and Fort Collins are great markets but depends on what you are looking for. They are both smaller markets than the Denver Metro, which comes with pros and cons. I do quite a bit of business up in NoCo and the Denver metro, and typically people look towards NoCo if they are priced out of Denver Metro, the same goes for Colorado Springs. They are smaller markets with a less diverse employment market. 

Personally, I am looking in Greeley, and have had 3-4 investors close up there in recent months. There are quite a few larger multifamilies up there but unless you can be close to downtown or the university you'll be looking at more C-class buildings and tenants. Cash flow and COC can all be adjusted depending on how much you are able to put down, or if you look at a value add. Cash flow can be created depending on your personal investing strategy. Yes, Colorado has been more on the appreciation side, but if you are creative then cash flow can be made. I have clients that are creating 10%+ COC returns on properties here in Colorado.

Personally, the investors that do the best in these markets and Colorado alone are the ones that do a hybrid model on these properties. Part LTRs for the stability and recurring income, and then part MTR/STR for the increased cash flow. MTRs are very solid in today's market, and Greeley does also have a decent-sized medical campus and a highly regarded nursing school, and very little competition in the MTR space.

Let me know if you want to sit down and chat some more when you get into town, personally I've moved all my out-of-state investments back into Colorado.

Hey @Samuel Bower! Welcome to the forums and welcome to the world of REI. Don't worry too much about the fear and unknowns, everyone has been there and it doesn't go away. It just means you are going in the right direction.

I would definitely follow all the advice here so far and learn as much as you can. But in the end, nothing replaces experience. Find yourself an agent that focuses on house hackers and follow their guidance, then speak to a lender and see what you are qualified for. You could house hack with a rent-by-the-room strategy, or a small multifamily, or a single-family and just Airbnb it while you are away. These are all great strategies and will depend on what you qualify for, and what your goals are. Don't worry about having to be gone half the year, it will still be your "Personal Residence" it's like being on a travel contract. 

 Overall MTRs have been successful in Denver, but it does depend on the property, in terms of location, condition, amenities, and so forth. I've got clients and friends with everything ranging from condos, to a six-unit building. We typically factor for 10% Vacancy when analyzing deals, but some of my best-positioned clients didn't have a vacancy in 2022. But their units are very well positioned in terms of location and are an A+ product. 

If you are further out in the Denver Metro or have a less desirable unit you'll definitely be higher in Vacancy. We see the best units are the 1-2 bedroom units in either a condo building or in a multifamily unit. We tend to also look to be within 1 mile of two of our major hospital campuses. However, I also have clients in Boulder, that have had similar success with digital nomads over travel nurses/professionals.

Hey @Roman Puzey! Love all your questions regarding MTRs here on the forums, if you want any more specific Denver-minded advice or guidance, please reach out as it is one of our primary investment strategies here in the market currently. 

In general, our criteria is within 5 miles of two major hospitals. That is about the bare minimum, especially here in Denver, as there is a large concentration of hospitals, and a large concentration of housing opportunities. The closer the better, and if you can hit one of the hospital clusters, even better. There are a couple of pockets that I personally lean towards in the area, and am happy to share those with you to target your search a bit more. The second criteria will be the property itself. You want to make sure it is a quality unit, and typically a 1-2 bedroom (preferably a 2 bedroom). These rent the best and are what most traveling professionals are looking for. Then what I do, is go onto furnished finder and Airbnb, and other sites and vet the neighbor's properties. First to see what they are charging, but also to see what their unit looks like, most are not professional hosts and have terrible pictures or furnishings, and are charging under market. You also want to take note of the availability, if it says "available now" on all of the nearby ones, you may be in trouble, but if all of them are available a few months out, that usually means they are booked.

Just some quick thoughts, but the best advice is to have someone in your court that has done this before and is currently doing it, as your biggest hurdle to overcome is the mental block of being worried that it's not going to work. And that is never going away, but if you have someone that can guide you and assist you even past closing then you'll feel that much better! Reach out if you need anything else!

Hey @Noah Thompson! Welcome to the forums and I love you honing in and really finding a Niche that you want to pursue. I can't speak too much to shortages of housing for college students, but I definitely shortage of quality housing. As @Ryan Lesley mentioned above, Boulder, Co is a huge college town and does have a housing shortage in general due to the inability to expand. However, prices here are high, so if you are looking to house hack it, you will have a hard time finding cashflow in the short term, or in general. Unless maybe you do an all-inclusive RBTR type of strategy and command much greater than normal rent. I will say that if you do have a quality product, you will never have an issue with vacancy, I have 4 properties in Boulder, and they are pre-rented year after year, and have never seen a vacancy.

Denver also has quite a few Universities, and so does FoCo, but FoCo has frustrating regulations and doesn't really have the market you are looking for, and the same with Denver, it doesn't have a constrained supply. One other market here in Colorado that may be worth looking at is Greeley, it usually gets forgotten but has a large university campus, and a large medical campus. The university is growing, and so is the town itself, and the price point is much more attractive than the rest of the Northern Colorado markets. I have had quite a few clients close up there in the past few years, and are doing well with university rentals as is, and there is plenty of inventory right by the campus, and you can switch between student rentals, and MTRs if desired.

Let me know if you want to chat further, and see if there may be an opportunity there! It will depend on your goals and lending opportunity of course!

Hey @Christina V.! Welcome to the Forums and just to start off good luck on your investing journey! 

There are a few different trains of thought on this topic, and I have worked with numerous first-time and seasoned out-of-state investors. There is nothing wrong with starting out of state, the main reason against it is that if you aren't an investor, and know how to analyze deals, what to look for in inspections, have never managed a property, etc... you are putting your faith in the hands of people who are states over, and you can't easily get to if something goes wrong. This is why it is usually recommended to get your feet wet and learn with something closer to you, as it can be less risky, and then you will know what to look for, and how things are meant to be run when you invest out state and employ others.

And the best thing about investing is where you are in the appreciation, and the desirability, which is what builds wealth in real estate vs the cash flow. Now of course there are other markets that will achieve that mark as well, and still be more achievable than San Diego, Denver, and Colorado for example. One way you could get into a property in San Diego is if you chose to move. You could rent out your current place (as long as it makes sense as an investment) and then move into a new owner-occupied home. You'll be able to use a low downpayment loan, and you are minimizing your risk as you know your previous home, and you've owned it for some years, so it should be safe as a rental. You are also able to manage and learn on it yourself, and build up your confidence, and worst case scenario you probably have a good amount of equity in it, and can sell if need be without any worries. Then you can look out of state when you have gotten your feet wet, but now you have two properties in San Diego that are appreciating, and depending on your situation, maybe the new purchase is a multi-unit or some other type of house hack.

Now if that isn't going to happen, and you do really want to go out of state, I would recommend finding the Realtor first, finding one that works with numerous out-of-state investors, and investing themselves in the market you are looking for. Then make sure they are leading with knowledge and strategizing with you on your goals, and not just working towards the commission. Once you find a Realtor that you Jive with, and feel comfortable with, they should have every vendor and person you could need to build out a solid team. Personally, that is how I found my out-of-state market (which I am exiting to move back to Colorado) and then didn't think about the market too much.

If you want to chat about the opportunities in Colorado, my team and I serve as a one-stop shop solution for investors, and stive to provide a high level of mentorship and guidance.

Hey @Don Kick! The BRRRR is definitely coming back into fashion now that you can actually find solid deals out there. It's just about being confident in your numbers and having a team you can trust. I'm out of the Denver Metro area and have helped quite a few clients complete successful BRRRRs here in the area, and do a few flips myself. Colorado can be a tougher market for the BRRRR strategy due to the higher prices, but if you manage your expectations and are happy leaving maybe 10% or less in the deal then there are numerous deals to be done. Perfect BRRRRs aren't impossible, just tougher to complete.

Would love to chat further if you think Denver may be an option for you, coming from California, you'll get a lot of the same benefits as the Californian market but at better rates.

Hey @Alexander Ignatenko! I know we have spoken about this off the forums as well. And I think @Bill B. and @Phillip Austin both have valid points. In no way is this the wrong way to approach it, but it does add quite a few variables and further people involved in the property. and If I know one thing is that getting into business with friends and family can get sticky if everything isn't laid out. 

This may not be the most exciting way for you, but it may be easier to get them on board by removing yourself from the "ownership" of the property. If they simply cosign with their daughter, and you enjoy the benefits of the house hack, but don't have the ownership stake in it. Perhaps you take a management fee instead. You need to look at it from their perspective as to where their concern lies and how you can mitigate that. Or do as Bill Brandt said, and have them purchase the house, and do a lease option from them, so they maintain the control and the ownership until your option is executed.

Seller financing is also a great deal, and I have had quite a few clients have had success buying their landlord's house. It is just approaching it the right way, and just blindly reaching out with the seller financing won't get much luck. First establish that they are interested in selling, and then bring up the seller financing. You could also bring up lease options, which is a great way to get into properties with no money down. 

In all, if you can get the parents on board, then great, but if not, find other ways of doing it, and get the experience. Maybe it's not a house hack, but maybe you hustle and find a great deal, partner with someone who has the capital and you manage and rehab the place. In any partnership, you have to solidify and figure out what each person is bringing to the table, and how to fairly compensate each party.

Hey @Bob Foglia! I have a few connections with rent by the room PMC but I will say most of them aren't that great. Rent by the room isn't covered by a lot of companies due to the additional headache and tenant relations problem with them. But I do have one company that specializes in it, but they of course charge a higher fee. I would ask what is your reasoning behind wanting a PMC company. and are you stuck on the RBTR style? Depending on the property and the location, you may do just fine with a traditional MTR, and could put the systems and resources in place to manage it by yourself. I have plenty of out-of-state investors that we have assisted in getting this set up, and they average 2 hours a week on a bad week in terms of management. and this way you can save yourself the 15%+ fee for a PM, and you know that the property is managed properly.