All Forum Posts by: James Carlson

A side note here: To @Matt M.'s point about watching for the HOA rules around short-term rentals in Denver. We keep a list of HOAs that allow for them, and so far that list is all of four places. But I just saw some new build condos at 29th and Zuni that are geared toward people who want to Airbnb their place? So their HOA will allow them. They're pricey. Like nearly $500k for a 700sf 1br, but that's LoHi for you.

But I think there is a huge market for HOAs anywhere that would allow for Airbnb and STRs. We're trying to get our Cap Hill HOA to pass this. It'd be super attractive for resale. The HOA can take a cut of any STR income and shore up its reserves. And it's just forward thinking.

@Dan Baran

Congrats on taking a big step. I'm nearing 40, and my wife and I didn't buy our first place till we were well into our 30s. I always wish I'd started much earlier. Time is on your side.

So ... about house-hacking in Denver. Much has already been covered above, but from our experiences with house hacking clients (like John above) I'll just reiterate:

Think about your priorities. Is cash flow/mortgage reduction the most important? Or does some amount of privacy matter to you? If it's the first, then the rent-by-the-room model will kill it. (You can see some examples of deal diaries from our clients here and here.) If privacy matters a little, then you can find a place with a basement apartment that you can rent out separately. Or combine the two models -- I have a client who closed earlier this year in Westminster on a remodeled home around $375k. It has two bedrooms downstairs, with a separate entrance, that they rent out.

How much does area matter to you? I like the edges of the city's core. Think Westminster, Barnum/Athmar Park, East Colfax, Lakewood. You're more likely to find a big enough house with enough bedrooms to crush it with house hacking. If location near all the hot spots like RiNo or LoDo matters more, then find a small little 2br condo or townhome in the city and take a roommate. You can get $1,100 or more for a bedroom in a cool spot. 

I'd reach out to a lender now to get a sense of your financing. That could dictate where you look and for what type of properties. Good luck!

@Kieler Stubbs

Couple different ways to look at it. I think getting started earlier rather than later is always smart because it's like pulling off the band-aid. Get going! That's true no matter the market, even in Denver where cash-flowing is tough.

That said -- and at the risk of sounding like a real estate that just wants to sell -- I still think buying and house hacking in Denver for those two years is smart. Some rough back of the napkin numbers:

Find a SFH, 4br+ for $380k or less. If you put 5% down, you've got an all-in payment of around $2,100. If you live in one bedroom and rent the other three for $750 each, that covers your entire mortgage, plus a little. Let's say you were paying the average 1br rent in Denver of roughly $1500, that's $36,000 you'd pay in rent for the next two years. Not only are you not paying that, you're also gaining equity in a home paid by someone else, and any appreciation that comes along with it. When you move out, you rent the final room and you're cash-flowing well then. 

Here's a few deal diaries of rent-by-the-room house hacks in Denver -- this one in Aurora, this one in the Barnum neighborhood.

We've also had a few clients do a modified version with a basement apartment or a basement space that has a separated entrance. You rent the basement to one or two people. It's a little less revenue but you get more privacy. When you move out, you still rent out by the room to juice the rents.

Anyway, my two cents. Good luck!

@Steven Karkenny

You should be good long-term with a property next to Colorado College. Eventually, colleges will open back up. 

In the short-term, we're seeing decent success with medium-term furnished rentals in Colorado Springs. We've got a few ourselves and my brother-in-law has a few, and we've had no problem filling vacancies. There's more up-front cost in furnishing, but you're also getting slightly more rent.

@Charles D.

Awesome to hear you're buying your first property. That's great. And you're taking the right steps to find a good agent.

We work with a lot of investors and house hacking people in Denver and Colorado Springs, and that comes with its own knowledge set. Finding homes with a basement apartment or mother-in-law suite comes with another set. If you go that route, be sure to ask them about their understanding of the zoning laws. Some carriage houses might not technically be allowed under current codes, and even if tolerance for legal risk is higher than others', you want to know what's what so you have the right expectations.

Good luck!

@Sean Conroy

I'm sure there's some area where the 1% rule still works in Colorado, but anywhere interesting -- say, Denver or Colorado Springs -- it's going to be nearly impossible to find such deals.

But as others have said -- and at the risk of sounding like a real estate agent selling the city he works in -- that doesn't take into account a lot of of factors that still make Denver  and Colorado Springs super attractive. 

@Matthew Ruderman

I agree with @Daniel Haberkost that the best place to start your empire is in the city that you live. (I happen to also agree that Colorado Springs ain't a bad place to land -- for both your quality of life and your future real estate returns.) You're never going to know another market like you know your own. And you have to live somewhere, so the first place you buy is your primary residence. 

If you want to go out of state after a few, I get it, but those first buys -- where you're getting most of your experience -- I think should be right at home.

Good luck!

@David Andrew Dorsett

Welcome to BP. There are some great resources on here and a healthy Denver contingent of people doing basically everything you could think of -- house hacking, buy-and-hold, flipping, wholesaling. 

I wish you luck!

@Jason M.

Welcome to BP, Jason. And great to hear you're making some strides toward getting into REI full time. I assume from your post that you're looking to buy in the Denver area? Sounds like you need to save capital for the downpayment. Will this be a pure investment or are you looking to buy a primary residence? If the latter, are you going to have an investment component of your primary residence? (Say, a basement apartment or other form of house hacking?) Either way, good luck.

@Jonah Torres

Happy to share details on property #2, though circumstances have changed, so it's kind of a unique situation.

It's a 4br/2ba a mile east of downtown Colorado Springs. We bought it in December. We liked it for a few reasons. 

1. It is zoned R-2, has a finished basement and has a back entrance that we could close off from the main floor so that could turn the downstairs into another unit and do a house-hacking type thing while we lived there for a year. The plan was to move back to our Denver condo after that and rent Colorado Springs place's upstairs and downstairs separately. And because we slid in under the old short-term rental laws in Colorado Springs, we are able to rent both units on Airbnb, which would pull in $2000-$2500/mo for each unit. (Then ... Covid hit, and we've found having our own space quite nice, so those plans might be on hold. And we're getting good rent on our Denver condo, so that unit is now the rental. We can always change that in the future, as we have the STR license.)
2. Also, we tend to buy in downtown areas. It's what we like personally, and we believe in buying what you know. The area is not fully transitioned by any means, but you can see more young professionals moving in, and as the city grows and the downtown continues to develop -- I could talk for awhile about the things going on down there -- we think value increases will radiate out from the core of those new developments.