All Forum Posts by: James Carlson

@Sean Krause

You're running into the issue I see with a lot of our buyers in Colorado Springs. To A/C or not to A/C? I don't even think it's a question anymore. 

The mean temperatures in Colorado Springs have risen in the last 50 years, and the number of unusually hot days has also increased, so while homes didn't used to need AC, I think it's a must now.

For that reason, I'd agree with @Aaron K. Get the central AC. It's a good investment long-term and will increase resale value. We actually just installed central A/C in a home we bought late last year. Godsend! 

The price seems crazy low, though. Do you have a quote from someone? We had forced air heating, as well, so the duct work was already in place. Still the unit, install, and a few other parts came to just over $4,000. 

Well, I like what @Zac Newell said about him liking what I said. ;) Nothing better than a little Tuesday morning ego boost. 

@James Baker's right about the FHA 3.5% down loan program being a great way to get in to a home, especially in a hot market like Denver. (It's practically step one in the house-hacking playbook.) Your monthly payments are going to be higher with that little amount down, but if a good option for getting into a place if the alternative is waiting another year or two to buy.

@Patty Nisbet

First off, congrats on posting on here and taking a step toward your first purchase. That's awesome. As others have said, it is tough to be self-employed, especially in a hot market like Denver. House hacking can certainly be a way to get into a place and pay a lot less per month than you probably are with your rent. 

But did I read right, that you have a family? Partner and kids? If so, the traditional rent-by-the-room model probably ain't your cup of tea. I'd look at a home with a basement apartment in one of the lesser-know-but-up-and-coming neighborhoods/areas in Denver. (I'm thinking along US-36 around Westminister, or in Denver in Barnum, Athmar Park or East Colfax.) You can still get into a SFH for $400-$450 there.

All that said, do not push too hard to "get creative" with your lending. If you don't qualify under normal guidelines, it's for a reason. It's because traditional ways of assessing your risk say that you are pushing the limits. I'm okay with clients pushing a little, but you've got to have some common sense too and know what you can afford and what you can't per month.

Don't take that as discouragement. Just know what you're getting into. Also, have you looked into down payment assistance programs, like CHFA's? They basically give you up to 3% of a down payment, but then charge a little more on the interest rate. It sounds like your biggest hurdle will be qualifying without a W2 and whether your debt-to-income is alright, but in case it's simply a lack of funds up front, this is a good option.

I wish you luck!

@Michael McClearn

Congrats on taking a big step! That's awesome. Ain't a lot of ways to cash flow in Denver, but house hacking is one of them. Are you thinking of renting out rooms? Or finding a place with a basement apartment/ADU to rent out separately?

Your question about lenders is a good one but maybe the wrong one. Every lender will work with people who want to owner-occupy their house. What you want to know is what their rates are and how they operate. Do they communicate clearly and often with you? Will they take that call on Saturday evening when your deal is on the line? That's what differentiates the good ones from the lazy ones. 

The lenders I recommend to buyers are ones who probably work a bit too much but in this competitive market, having everyone working their butt off for you is key to winning deals. 

I wish you luck!

@Elisabeth Ihler

You're totally right! I have some clients who moved to Denver from Chicago a few years ago and bought a house nestled in that neighborhood. They're converting the basement into a little mother-in-law suite as a sort of house hack. They love it. And I've had a lot of condo buyers as well in those high-rises right there. I think the $/sf value you get being in that neighborhood, next to Snooze and Trader Joe's and a straight shot down 8th to downtown Denver is hugely attractive. I agree that the 9th & Colorado development could use a little more local flavor, but I'll take the mixed use of any kind in the middle of a residential area. 

@Jane S.

It is super tough here in Colorado Springs. House-hacking is a great way to go, but it doesn't make the acquisition process any easier.

I'd say in order to get our clients under contract in this crazy market the last few months we have relied on a few tactics (And these are by no means a sure-fire way to win):

• Price. Duh, higher price equals a better chance, but what I mean is trying to know what price others are at. We stay in close contact with the listing agent throughout the offer period. You'd be surprised what they'll tell you about other offers if you're willing to ask the blunt question. Having a good idea what others are offering certainly helps our buyers decide what price to come in at.
• Escalation clauses. You offer X base amount but also say you'll pay Y amount above the highest up to a maximum of Z. (Ex. Base offer of $320,000, willing to pay $2,000 above highest to a maximum of $340,000.) It allows you the chance to beat higher offers without having to bid against yourself if there don't happen to be other higher offers. Just be sure to include a clause making this contingent upon receipt of the higher offer.
• Get in early. It doesn't always work, but on two of the deals I closed in the last month, we got in the first day and made a strong offer by that evening. If you want it, the comps support it, and your numbers work, don't be afraid to come in at or over asking right away and put a quicker acceptance deadline to try to force their hand. 
• Know the seller's motivation. Again, back to that ongoing conversation you have with the listing agent. One of our offers was the same as two others, but we offered a rent-back at no cost. I knew the rent back was a big deal to the sellers. If the agent says the sellers really don't want to have a difficult inspection, maybe include some sort of "only health and safety items" clause for the inspection.

Don't lose hope! Keep at it. You'll nab something good. 

@Corey Collins

Yeah, not sure what will work best out in Dayton, but here's what we see from our own medium-term rentals in Denver and Colorado Springs and from our clients' experience with rent-by-the-room models:

• Facebook marketplace. You can post an ad in the rental section.
• Furnished finder. We've got a few good leads off this, though you do pay for the service.
• Post in FB groups targeted at sublet/roommates in Dayton. A quick search returned this one and this one.
• Zillow is okay, but probably not for a room rental.
• Airbnb is a good free option as well. Even if you don't want to do short-term rentals (less than 30 days), you can just set the minimum night stay to whatever you want. We do this for our Denver rentals and set the minimum for 90 nights. 

Good luck!

@Austin Shulman

Welcome to BP! And congrats on taking a small step toward real estate investment in Denver. So many things you can do to get started.

• I'm assuming from your post that you don't own the place you live? If that's the case, I'd suggest buying your primary residence. Maybe that's a SFH in one of the Denver neighborhoods that haven't gone as super nuts with prices -- I'm thinking Athmar Park, Barnum, East Colfax, Englewood. Those places have some great appreciation potential. Or maybe it's a condo. Either way, I think taking action to get your first home is the best first step.
• Talk to a lender to see what financing would look like. Any good agent will have a few great ones.
• Look into down payment assistance programs, like CHFA's. I've worked with a few people who used this, and it's a great way for those without a lot of reserves to get into a home.
• If you really want to kickstart the investment side of this, opt for house hacking in Denver. Two options with this: Find a 4-5br home and renting the other rooms. (This likely gets you the best returns, but it also is the least privacy. (Here's an example from some buyers of ours.) Or find a home with a basement apartment or an ADU that you can rent out separately. Not quite as much rent money, but you have your own uninterrupted space.
• Set up keyword alerts for these forums, so that any time someone mentions, say, "house hacking," you get notified. Also, you should follow the Denver real estate forum. 

I wish you luck!

@Corey Collins

I'd agree with @Colleen F. You can likely get something for that room. Not sure what it is, but you can do it. I know in Colorado Springs, you can get $600-$700 for a room just about anywhere in the city. In Denver, that's more like $700-$800. That's long-term. I'm guessing rents are a little cheaper in Dayton, but I don't know that market.

The medium-term/traveling nurse model is a great one. We do it on two of our rentals in Denver, including this one which I wrote a deal diary for. In our experience, you're getting 20-40% more in rent than you would as a long-term rental. Granted, this is a whole space, not just a room, but TONS of traveling nurses are looking for single rooms.

Good luck!

@Bridger L Logan

Great idea, first off. We see a lot of our clients in Denver and Colorado Springs have success with either rent-by-the-room or some sort of basement apartment/ADU setup. And both are super hot markets right now.

Here are two deal diaries of such setups -- one, a young couple who were living there and renting the place by the room, and the other, a young couple who were off-site but still rented by the room.

It can certainly be done and is a great way to get your first place, have mortgage reduction (maybe even cash flow), and get some landlord experience. Good luck!