All Forum Posts by: James Carlson

@Sam Hicken

We love the SFH with a basement apartment idea, like others have said, but I did want to throw in one word of caution. I don't know what the laws are where you're at, but in Denver and Colorado Springs where we work with investors/house hacking types to do this, we know that in a home zoned single-unit you can rent that separate space while you live there, but that technically when you move out, you can only rent the whole space to one party. 

Do people get away with renting the upstairs and downstairs separately? For sure. But it's good to know the risks involved. For this reason, we really like trying to find for clients SFHs that happen to also be zoned for multi-unit. (Ex: "R2" in Colorado Springs or "TU" -- two unit -- in Denver). That way you can convert the space, rent it out while you live there and then have a much better claim to creating a true duplex out of it when you move as well.

Good luck!

@Nick Gerli

Like @Jeremy Gaal, I like Colorado Springs a lot. Yes, I'm biased as we live here, invest here, and work with investor clients here, but the numbers also look good. It's not a huge cash-flow market, but if you're investing for the long-term (where the other ways of making money off real estate will make a bigger impact on your wealth building), then Colorado Springs is a great market for investing. 

Our economy is growing in diversification. The quality of life is above anywhere, I'd venture to say. And the incredibly low supply compared to the high demand appears ready to keep prices increasing for the foreseeable future. Long-term, with industries like the Amazon plant moving in, more tech companies finding home here, spillover from the high-cost primary market of Denver, the Springs looks good.

@Account Closed

Knowing nothing about your particular market, that sounds like a decent find. I've worked with a number of people in Denver and Colorado Springs doing the rent-by-the-room or house hacking strategy. (Here's one example of a live-in house hack and another example of a rent-by-the-room investment property.)

A few things you need to be aware of:

• What are the occupancy rules for unrelated adults in Scranton? They vary widely here in Colorado from only allowing 2 unrelated adults to live together up to allowing 5 unrelated adults to live together. (Then there's the distinction between what's allowed and what you're willing to risk getting away with.)
• Do your due diligence when selecting tenants. Do a little extra work up front to ensure you get good people in there who won't cause headaches with the other rooommates.
• Get the right lease. A house-hack or rent-by-the-room lease will have all the standard lease language but with two big differences:
  • It will have additional language around where the liability lies for the other roommates. If you as landlord are selecting the roommates and then one of them causes damage to another roommate's property or assaults another roommate,  you want to be sure that you're not liable for having chosen that roommate.
  • Also, you'll have language that addresses common elements. How is damage to shared spaces handled? How is cleaning handled? How is payment for shared costs (toilet paper, dish soap, etc.) handled?

I wish you luck!

@Aaron T.

If you like the Airbnb model, have you looked at Arvada? Just northwest of Denver proper, they passed a law in August that allow for Airbnb investment properties. We've been following that and talking to the planning department. Seems like they may readdress the law in a year or so kind of like Colorado Springs, which I think creates an interesting window for those that get in before any changes. 

@Lee Ripma

The cash-flow Kool-Aid! Love it, and I'm going to steal that. Much love for the BP community here and the great resources they provide, but we see so many new investors coming to us from BP looking for places in Denver and Colorado Springs who "won't buy anything unless it cash flows X amount." As you said, that's such a small portion of your total ROI. And it's a metric that -- if followed in hot markets like where we work -- would prevent most anyone from buying unless you're doing a rent-by-the-room house hack thing, but that's only so scalable. (Read: Not scalable at all past a few properties.)

@Krista Lance

Congrats. Yeah, I'd hold on to everything I can in Denver. We have two condos in Capitol Hill. Both are medium-term furnished rentals. We've seen about $160k in appreciation between the two over the last five years. Good luck!

@Dashiel C Neimark

It's a common question, but I laugh when people offer proclamations that "Denver's too hot!" or "Colorado Springs is too hot!" What does that mean? That it will never go up again? That's ridiculous. We have lived in both cities, invest in both cities and work with clients in both. The economies of both cities are well diversified, have a great quality of life and continue to see incredible demand. 

Now, no one can guarantee that you won't see price dips in the near future. You never know. But long term? They're a good buy. 

As a kind of sidenote: I love to reference this post from five years ago asking if Denver was too hot. That's when we bought our first condo there and tons of people thought we were crazy. Five years later, the market has made us look brilliant. Just be sure you're buying for the long-term, and you'll be good. 

@Carrie Brauninger

Like others have said -- there's positives and negatives to investing in condos in Denver. You are seeing price and rent drops in condos right now. (Boo!) But that means you can get a relative deal on a condo now as well. (Yeah!) We have two condos in the Cap Hill area. We furnished them and rent them as medium-term rentals to traveling nurses and business types. (You can see one of them in a deal diary I wrote here, but that one's getting $1,900 consistently this year, a bit more than I wrote in there.)

Looking just outside of the urban areas is not a bad idea either. Aurora has some nice places, as does Lakewood. Relatively cheap and they rent well. 

I know people love to hate on the HOAs, but if you have a good one, those dues also go toward repairs and capital expenditures that you would otherwise need to account for when buying a SFH, so in my mind it's close to a wash.

Good luck!

@Account Closed

We have medium-term furnished rentals in Denver and Colorado Springs, and we find three sites work best for us here in this market:

1. Airbnb. Just set the minimum number of nights stay to 30 days.
2. Furnished Finders. They charge a $99/year fee, but they send good qualified leads
3. Facebook Marketplace. 

We've found -- and our buyer clients who do this have found -- that these sites give us all the leads we need to fill our spot. Not sure about Austin, but it feels like a similar market to Denver, so I'd guess they'd work there too. Good luck!

@Taylor Thompson

You've hit on the conundrum for a lot of first-time investors who live in the Denver or Colorado Springs areas (or really anywhere in the state that's not off in the boonies). That conundrum is that I think the first purchase should be in your own backyard so that you can get hands-on experience. But when your backyard is an expensive market like in Colorado, then you're not going to cash flow much. So what do you do?

Like @Bill S. said, no one can make this decision for you. What's your priority here? Either way, my biggest advice is to no lose your mind overthinking it. There is no one right answer, and no matter what you do, you're going to make mistakes with your first purchase. I think diving in -- taking action -- is the best step. There aren't many mistakes you can't recover from, but you'll never grow your portfolio if you don't take that first step.

If I were you, I'd buy a big SFH and rent by the room. You basically live for free plus some cash flow, and you get experience with leases and management and repairs. If you don't like humans enough to take roommates -- I hear you! -- then buy a home with a basement apartment or carriage house and rent that out.

Good luck!