All Forum Posts by: Chris Freeburg

@Joe Wang

I have been in your shoes. I house hack in NW Denver and love it! I live in a great neighborhood with good access to to downtown and the mountains, and shaving $$$ off my mortgage while also investing in RE!

Most clients I work with find house hunting in Denver proper to be too expensive for their goals (it cuts % off your ROI), and instead look toward the outer lying neighborhoods. The more developed neighborhoods (Cherry Creek, Washington Park, Highlands, RINO/5 Points) are cool but also more expensive. There are still lots of areas a little further out (Edgewater, Arvada, Lakewood; all on the Mountain/West side of Denver), where the numbers run a little better.

A lot of good advice so far on this thread. I also recommend working with an agent and lender who have experience with investors!

@Dan Baran

Hey Dan, I think what you’re considering is an awesome setup! I house hack myself and consider it a great way to invest in real estate and slowly accrue property over time. The beauty of the house hack model is that you’re able to get such low interest rates and put little down as opposed to investment properties. And, I think Denver is a great place to invest long term. Especially, given the setup you’ve described (3/2), I think you would be in a good position to rent long term and cover the mortgage, if not cash flow. Condos are cheaper, but they are also the first to drop in price and rentability in a downturn.

I think there's value to being cautious and educating yourself on all the risks (I.e. the challenge of STR in Denver if you're not living in the home), but the value is in time IN the market. Interested rates are historically low right now. If you can buy and hold, you would be in a great position!

There are properties in your price point, especially with the flexibility you describe. The fellow house hackers I know that are cash flowing are those that are willing to do the extra hustle and rent room by room.

Let me know if I can help out in any way!

@Richard Libutti @Jason M. Lots of conversation here about what the market will do. I don't have a crystal ball, but I think it's a really interesting question on a lot of people's minds. Mine included! I just read this article "Defedning Denver's Appreciation..." and thought I would share:

https://theruethteam.com/blog/21375/Defending-Denver-s-Appreciation?fbclid=IwAR0ullpXPFh3iHE4_1eBDtG3sOlaxSGV2ZzEYZc55Eahw3x-JpcCZ_fc_zY

As you both mentioned, it's a good idea to be in the market!

I love @Chris Lopez's approach. He is such a wealth of information, ideas and great connector! Another thought: find a home with a separate unit for airbnb/short-term rental. More unconventional, but not uncommon in Denver: convert garage into ADU if zoning allows (or apply for zoning variance!)

To be honest though, it sounds like you're on the right track and I'd be curious to hear about journey. Post updates!

@Daniel Lao Glad you're reaching out! There is such a wealth of information on BP. I have found it really helpful in achieving my own real estate investment goals.

I actively house hack in Denver and think it's a great strategy. There are lots of ways to do it to fit your goals and personal preferences for a living situation. Cash flow in Denver is tough due to the expensive market, but not impossible depending on how creative you're willing to be. The most common cash flow properties I have seen are those who are actively renting individual rooms, which is time intensive and sacrifices privacy. Cash flow with a duplex may be harder, as most properties where the math makes sense have been purchased by flippers/developers. It's pretty common to "pop the top" in Denver: tear down the house and add a second or third floor where zoning allows.

Appreciation is a much more common strategy in Denver: Colorado has a diverse economy that is resilient in the face of economic downturn and continues to draw newcomers attracted to the great quality of living!

Do you have a sense of what part of Denver you want to live in? The neighborhood will certainly dictate purchase price. I got my real estate license to help other achieve their goals and would love to help you. I really recommend finding both an agent and lender who have experience working with investors and can better help you find something that aligns with your goals. Let me know if I can help out in any way!

@Casey Helmick Glad you're putting your goals out there and seeking feedback! It was really helpful for me to take the time to identify my personal goals and what I REALLY wanted out of life. I want to be able to pursue an active lifestyle. I'm a full-time high school science teacher, so I house hack to lower my mortgage (the biggest expense I have). This way, I can more fully enjoy living in Denver and all Colorado has to offer, while still actively investing in an expensive city!

The timing of your investment will be important if you're considering moving in the near future. One of the main advantages of house hacking is the access to the lower interest rates and lower down payment requirements offered to primary homeowners. (This is also why house hacking is such a great strategy in areas of the country with more expensive real estate markets.) However, you have to commit to the lender to live in the house for at least a year. For more traditional forms real estate investment (buying a rental property), lenders require a much larger downpayment and higher interest rates because it is considered more risky than lending to those planning to live in the home as their primary residence.

I read that you're considering flipping. Finding properties where the math makes sense can be pretty tough in a market like Denver that also already seen so much explosive growth. Something interesting I just learned: nationwide, the home-flipping rates increased to a 14-year high in the first quarter of 2020 but returns dropped to a nine-year low. The median gross (not net) profit was $62,300, which is a 36.7% median return on investment (ROI) compared to the original purchase price. (From the Denver Metro Association of Realtors)

I decided to get my real estate license so I can help other individuals achieve their goals. When the time comes to purchase a house, I really recommend finding both an agent and lender who have experience working with investors. If you want to talk about the details of house hacking more or if I can help in any way, let me know!

@Justin Bourn Welcome to the Bigger Pockets! Great idea to get active on here. It's been a wealth of information for me in my own journey house hacking and investing in real estate! You'll find lots of individuals willing to share their wisdom and experience in real estate. 

I house hack in NW Denver. As @Ben Einspahr mentioned, setting the key parameters for your search is really helpful. Houses do not last long on the Denver market. The more creative and flexible you are, the more houses there are that will fit your criteria. It's all about identifying the trade-offs to meet your goals (i.e. distance from work/ideal location vs. purchase price, short-term airbnb & cleaning vs. long term tenants & management).

I'll echo the advice to find an agent AND lender who have experience working with investors who want to house hack. Every investor's goals are a little different and it's important to identify your personal 2-3 non-negotiables so you can confidently place a competitive offer when the right property comes on the market. Let me know if I can help in any way and good luck!

@Michael Fortier Think of it like a funnel. Advertise to recruit a lot of prospective tenants and then narrow down the ideal candidate through the vetting process. Use simplest, cheapest means to filter first followed by more in-depth and costly processes (emails, then phone calls, then in-person meeting if possible, then background check)

Basic guidelines I followed: 

Got applicants on a phone call before I sent an application. First, I asked general open-ended questions about themselves and what they were looking for to begin with. I found tenants to be pretty divulging of their situation and it made my follow-up questioning a lot easier. I was also very up front about income and credit requirements, which helped tenants self-select. In my situation, leasing in CO where marijuana is legal, this is another consideration.

Suggestion: Get to know the legal guidelines around discrimination and protected classes. Renting out the home where you personally live gives you significantly more legal rights, but things quickly change as you own more homes or get a real estate license.

I got some good CO state information from an experienced property manager, who shared basic management tips as well as the latest up to date legal info. I scheduled a few phone calls with her. First, to explore the management services and see if it was worth it (she offered various packages including taking care of just the advertising/vetting process). Even though I decided to property manage myself, she was still very helpful! 

Some of her resources here (some CO state specific, but other helpful generic info): https://www.legacypmco.com/education-resources/

Also, I used a standard Zillow lease (they have different leases for each state) that also allows for some general modification and customization. It's a great template and free! And, I wonder tenants feel better about it coming from Zillow??

@Michael Fortier I think house hacking is a great way to go! I have been house hacking since moving to Denver last summer and loving it! I actively manage the property. It's not a ton of work-some basic repairs here and there (which you could hire someone to do). So far, most of the work was in the advertising, and tenant selection process. Definitely worth it to wait for the right tenant! Advertise everywhere and comprehensively vet your applicants. I recommend learning as much about your local market as possible by reaching out to experts in your area. I got the advice to do an 18 month lease so I would be on the busier Spring rental cycle. Happy to answer more detailed questions as you go through the process!

@David Jones Just wanted to reach out and see where you are in the RE investing journey! Are you still looking to buy a house? Are you actively house hacking? I house hack in Denver and am always looking to connect with and learn from other investors!

@Mateo Steele I'll echo the idea of house hacking. I purchased a single family home in Denver last Fall and rent the upstairs, which pays the majority, but not all, of my mortgage. It has a separate entrance through a back porch (common space). I'm a high school teacher full time and my income didn't qualify for me to purchase the home on my own. I had my parents co-sign and then recently re-financed to get them off the loan (using the now established rental income). As @Craig Curelop and @Ben Einspahr said, it's important to be creative, AND plan ahead! Stay focused on and working towards that goal and it will eventually become realized! Let me know if you ever want to talk details!