All Forum Posts by: Ben Rhodin

Hey @Aimee Piacentino! I don't want to reiterate what has already been said here, but you are definitely in a good spot to complete your first flip with being in the wholesale and construction business. You will never be fully protected from losing money, especially on your first deal, it just comes down to minimizing risk as much as you can. And it seems you already have the rehab budget estimating in line, so your biggest item will be estimating ARV, and as some people said, just adjust for a 10-15% decrease just in case. ARV is the number one killer of flips, as you may buy right, renovate on a budget, and be within your timeline, but if your ARV is off there is nothing you can do. Even on a refinance. Personally, I am still flipping and helping numerous other clients flip as well, just tightening up our UW.

One thing I would ask yourself, and it's something I deal with clients all the time. If you are already wholesaling, and working in the construction industry, is it the best use of your time and energy to also add flipping onto the plate, as well as compare the whole sale fee you could get on the property, vs the profit on the flip? You may find the additional profit isn't worth the extra 3-4 months of time and effort, especially if you are working it. I would make a very tight buy box for your self and what you would flip, and if something isn't in that box, then just wholesale it.

Welcome, @Paul Luna! I think you are making the right choice starting to think about buying vs renting. Buying will almost always put you ahead in the long term over renting, even if it's more expensive in the short term. As you just mentioned, rent rates increase, and your mortgage never changes. Also, glad you are coming into our neck of the woods. I have a few clients that have come here from Michigan.

As for your question, the best way to get your answers is not to seek them out by yourself. I would speak to a lender ASAP and see what is possible. I would first find yourself a great agent (one that is an investor themselves if you want to house hack or otherwise) and they will be able to walk you through the whole process and get you connected to a lender that will help you learn about your situation and what you may be able to afford.

As for the timeline, it depends on your situation and what you want to do. I'm going to disagree with some of the others in here, and say purchasing in the short time frame even if you plan on moving can be a good thing.  If you are planning on moving at the end of the year, you could pick up a property in the Grand Rapids Area that would become a great rental, and once you move keep it instead of selling it and have it cash flow for you each month. The only reason I would stay away from purchasing in the short term is if you didn't have the capital reserves for purchasing now, and again when you move. If that's the case then I would stick to renting for the short term, save as much as you can and make sure you are in as good of a spot as you can be when you move out here. Get the process started early on out here and get connected to an agent (I am happy to jump on a call if you want), get introduced to a lender, and understand what it will take.

As for the BRRR strategy, that is a whole other item, but in short, you use short-term financing to purchase and repair the home to increase its value enough that you can refinance into long-term financing and pull out your invested capital. If you were selling in a short period you would more be in line with a live-in flip. But for your first properties, I would usually stick to something more straight forward.

Hey @Roman Puzey! Seems I'm trailing all your posts this morning :)

There are a few pockets in and around Denver that would be perfect for this sort of house hack, and I have one property in mind that would be perfect, and even if you had to switch to LTR you could probably be in a comfortable spot. Let me know if you want to look at it. I have a few clients that have had 0% Vacancy in their MTRs in 2022 so demand is definitely there if you have the right product. You are complicating the "cash flow" scenario as you are adding a HELOC payment on top of it as well, so you'll need to take that into account. and you may want to think about something with value add potential so you can hopefully refinance and pay off that HELOC in the next year or two, as well as refinancing out of the FHA loan to remove PMI.

But I would also make sure you are comfortable with the property as an LTR as if something happens you want a fall back plan.

Hey @Roman Puzey! You are already on the right track with house hacking here in Denver. Personally, and in my experience as a broker here in Denver, going above 650k for a house hack usually produces diminishing returns as they won't rent much better than the sub 650k category. Of course, it all depends on your own personal requirements as well. But the best bet would be looking in STR-friendly areas around Denver (Arvada, Wheat Ridge, Centennial, and unincorporated Adams county) and finding a single family that can operate as two units. That is the best way to get as close to covering your whole mortgage as possible. However, I also recommend approaching it from a standpoint of "how much are we comfortable covering each month" and working backward from there. Also, I tend to run numbers both on the STR and also as an LTR rental to make sure that if something changes, or it's not booking you can comfortably switch gears and still not break your financial position. You never want to have only one exit strategy for a property, as that is how you get into trouble and have to sell a property. I would also see about doing a conventional loan instead of the FHA if you can qualify, as it will be cheaper overall. The FHA is great is if you either can't qualify or you are going after Multifamily properties. This could be another way for you to go, however, most municipalities won't let you STR the other side of a duplex.

Hey @Roman Puzey! Glad to see you entering the MTR Space here in Denver, Zeona and Sarah's book is fantastic, and they are both very knowledgeable, I work with Zeona quite a bit here in Denver. I have quite a few clients in this space currently and are doing very well. You are on the right track with most of your thinking. If you are going fully into the MTR space being closer to a hospital or large source of traveling professionals is key, as providing a space that is accommodating for them (dedicated workspace, black-out blinds, high-quality beds, quiet etc...). There are a few hot spots in and around Denver that we look at for these types of properties, and happy to walk you through it. The other way you can approach it is to be in an STR-friendly area, so that you can fill any MTR vacancies with STR clients, or have the option to flip it if it's not booking. It will be less attractive to both MTR and STR but you are spreading your exit strategies further.
As for finding and booking Tenants FurnishedFinder is the big one, but Airbnb is also a great source, and you just make a 30-day minimum. If you want to get more involved, you can get in with the agencies that place these professionals and get on their lists. Or go direct to the hospital. After a while, it also becomes a lot of word of mouth and providing referral fees to past guests if they bring someone to your property. Just remember that MTR and STR are a business and unlike normal rentals. It also requires a different property type than a normal rental.

Happy to connect and chat more to get you comfortable with the whole market!

@Luz N Taveras, I think everyone received the same email, and personally, this is why I have never put all my stock into STRs. In the end, it's about having numerous exit strategies and contingency plans for your properties so as to not put yourself into a hole. I believe that around the BP community and investing in general there is always a "hot new investing strategy" and before STRs it was the BRRR Strategy. STRs skyrocketed in the last year or so, and now that we are seeing a bit of a dip lots of investors are jumping ship. It will begin to stabilize and lots of investors and nonprofessional owners will probably exit the space. It is simply the way investing goes, and it follows the "get rich quick" mentality. The ones that succeed in either space are the ones that run these properties like a business and provide a product above the rest.

I have numerous clients here in the Denver metro with numerous MTRs that didn't have a single vacancy all of 2022. And I have numerous clients with STRs that are still going strong. Yes, the ones that have bad furniture, bad pictures, and don't communicate will sit vacant, because they aren't putting in the effort, and also they may not be in a solid location for the MTR space.

As for your questions, we are currently in a weird time, between being the dead of winter, right around the holidays, and in a recession (or at least in the loom of a recession) it is too early to tell what will happen to these spaces. Typically MTR is a better space during nontourist seasons. The same thing happened in the Real Estate market when rates started ticking up, it's simply consumer fear.

Hey @Drew Leonard! This is a topic that I believe has been beaten into the ground numerous times, it is the same as "I am an investor, should I get my license to be able to save the commission on my purchases?" And at the end of the day, it comes down to you as a person. There is no right or wrong answer, but you have to ask yourself, is this the best use of my time? Is it worth me to take on these additional responsibilities? and can I do an as good or better job than my Realtor? 

Becoming the active agent on the sale side specifically is adding an entirely new job to your plate, and is it worth saving the 2-3% commission to market, negotiate, and facilitate that sale when maybe you could be actively pursuing and working on the next project that will make you 3x that? Along the same lines, would you be able to negotiate as good of a sales deal as your agent? Is that your skill set? You may find you leave an extra 10k on the table at the sale, as you didn't negotiate or get that other interested party to put in an offer. There is a lot more to the agent's role than just putting the property on the market. 

So not to say it's not worth it, but just lay out your skill set and where your time is best spent, and of course, it will depend on the volume and amount that you are doing! Leveraging is always the key to scaling!

Hey @Jossalyn Wallace! Colorado has tons of opportunity still, and we have so many other facets other than just cash flow (which I think people get caught up in a lot) to work with, and our market is notoriously stable as well. I still have clients buying here in the Denver Metro, Boulder County, and into the foothills and many are able to achieve 10%+ COC returns. At the end of the day, it all comes down to your goals and investing strategy. I'll give you my answers for your questions down below!

1. Would or wouldn't you invest here? And which investment style? ( ie BRRRR, flip, LTR, STR)
I am actively investing in the Denver market, and have numerous clients doing so as well. Long-term rentals are mostly out, as the price-to-rent ratio is not favorable here. So unless you want to just do appreciation play, I would go creative. Most of my investing are in the MTR (Medium Term Rental) space due to the large medical field in the Denver Area, and numerous expansion projects going on. This strategy is fantastic as you are not tied to STR regulations which are notorious in Colorado, and can be challenging to navigate. They are also easier to operate and produce solid returns. STRs do work around Denver, but you just need to navigate the regulations and find ways to differentiate your property as we do have high saturation. Luckily for either of these strategies, we have so many people that want to come to colorado that our demand for STRs and MTRs is very high year-round.

2. What are your favorite locations and why?

Personally, I stick with the Denver Metro and into some of the foothills just outside Denver. Denver continues to have massive growth, and diverse employment, and leisure activities that we rarely see dips here. and the foothills provide a solid STR base for investors as well.

2. Do you have a team you love (especially if you're doing things long distance) and do you self-manage/have a refined system?

I mean, Im a bit biased, but yes I do like my team (it's me by the way). and I have long-distance investments out of colorado, but I am currently 1031ing those back into Colorado, as I see a better opportunity here. I currently Self manage all my units (LTRs, MTRs, and STRs), and have all the systems in place to make it easy.

3. Any other info that you find helpful with respect to the area or long-distance investing?

I help numerous out of state clients each year close on properties in Colorado, and it really comes down to the team on the ground. Find someone that really knows the area, and will work with you to develop your goals and strategy. If that clicks and they are on the same page as you long distance can be as easy as having one down the street. The gripes with Long distance come when you don't know who to call for an issue that arose at your property, and you can't physically be there.

Hey @Michael Henry! Welcome to the forums and I love the creative thinking in leveraging your photo/video skills. I come from a similar background in the film and photography space, so always love connecting with like-minded creative people!

I'm going to disagree with most others on this forum, and say it would be a great way to start the process. However, I wouldn't see the photo/video business as a way to actively find deals, but more of an indirect way because you'll be networking and meeting people in the space. The properties you are photographing and videoing are probably already heading to listing so unless it's a good property it won't necessarily be a "Deal" but if you talk to the agent, the homeowner, and so forth and tell them what you are looking for and what you are hoping to do, you will start to build an insider track and a network that can help foster your investor career.

Not to mention all the other ways you can use it as well. Can offer to shoot meetups and events for other investors, and talk to people and meet them that way. This position wouldn't be a deal in finding a career, but it's a way to get yourself in the door with people in the space that you want to be in and get them to remember you. As you aren't just reaching out and asking to buy them a coffee, you are actively offering them a service and they will happily reciprocate with mentorship, information, or deals. I know in my business if someone came and offered to handle my video and photo I would take them up on it!