All Forum Posts by: James Carlson

@Tomas Saenz

Not sure about Chicago and Illinois, but we have had a lot of first-time home buyers in Denver and Colorado Springs who have used various down payment assistance programs. The most common one here is the CHFA program that puts you in a 3.5% down payment loan program, gives you that 3.5% for the down payment but then -- as you asked about -- will charge a slightly higher interest rate. 

It makes sense. Nothing is free, so they're going to get their money back somehow. But heck, paying 5% instead of 3.5%, while not insignificant, is not a terrible deal if it means the difference between you not buying for two years and buying right now. 

Other than that, at least our moderate-income loan programs are pretty solid. Nothing nefarious going on. Of course, you should do your own due diligence for your area. 

Good luck!

@Marcus R.

Totally agree. It's one of the few neighborhoods that still has a sense of that history. Though I fear that it's only a matter of time. I mean, even the rebranding of that area as RiNo is a signal in that direction. And I think what used to be an art district is quickly becoming a brewery district. Not the worst thing in the world. (I love me a good beer.) But I worry about the homogenization of our Denver neighborhoods. 

@Kimberly Hammer

As @Bjorn Ahlblad said, you'll want to talk to your city or county zoning department. In Denver and Colorado Springs where we work, if a home is zoned single unit or R-1, then you can rent a mother-in-law suite or basement apartment all you want while you live there. It's considered an accessory use to your primary residence. I love this model, by the way. For me personally, this is how I would be house hacking, because I like a little more privacy.

Now ... if you move out, the lot is still a single-unit lot and can only be rented in its entirety to one party. To put it another way, you can't technically rent the main unit or the main house to one party and rent the carriage house/basement apartment to another party. Again, this is just how it is in most Colorado cities, so check your local zoning

Now, what you can legally do and what you can get away with is another thing, but you should know what the laws are and operate according to your risk tolerance. 

Good luck!

I hear you about privacy. Before getting too far ahead of yourself in deciding what you want to buy, I'd recommend talking to a local Denver lender. No charge, they'll ask for a few documents and you'll get a good sense of what you qualify for. That number is going to direct your search more than most other factors, so knowing it up front is really helpful. 

Any good agent should have some preferred lenders who they enjoy working with. Or do a search here on BP for lending professionals in the Denver area. 

@David Maldonado

I have had a similar experience as @Brian G.. I just had a client under contract on a home in Aurora, CO (connected to Denver). It had a 450sf carriage house out back. The appraiser valued it at $25,000, or $55/sf. That's only about $250-$300/sf less than the main-house $/sf values we'd see in that area. 

I hear you about the income generated as well, but they don't do an income valuation. It's all based on market, and right now, the market just doesn't know what to do with these units. It's ridiculous as they bring a ton of value in terms of mortgage reduction and even cash flow. But while I think our Denver appraiser's value was nuts, it's probably also true. I see most SFH with carriage houses where were work in Denver and in Colorado Springs go for not that much more than SFH in the area without the carriage house.

That will surely change as more and more people recognize the value of an ADU/mother-in-law suite.

@Kendra Levy

Congrats! I love the mother-in-law/basement apartment suite. I always think about house-hacking on a spectrum. You've got most money and no privacy on one side (rent-by-the room model) and least money but most privacy on the other side (multi-unit where you live in one and rent the others). The separate entrance/basement apartment style is closer to the multi-unit style. Anyway, sounds like a great deal. Way to go.

To @Betsey Biggs' question ... the zoning does matter. In Denver and Colorado Springs, for instance, if the home is zoned single unit (Ex: "SU" in Denver or "R-1" in the Springs) then you can rent that basement separately while you live there, but you can't technically rent it out and the upstairs separately if you move out. Can you get away with it? IN a lot of cities, yes, as long as your neighbors aren't nosy, but it's smart to be aware of what the laws and codes say so that you know what risk you're taking on.

@Ramon Alire

Too true. I have three BP tabs open right now on my laptop. "Must respond to this or that!" There's constantly some interesting post about Denver or Colorado Springs or house hacking or investing in general that draws entries from folks doing creative things. 

@Mateo Steele

I think buying where you live should be your first purchase. (Of course take all of our recommendations with a grain of salt ... we all live and work in real estate in Denver.) But if you're going to live somewhere, you might as well start gaining equity. 

I know house hacking in Denver is popular for a lot of young people, so maybe that's the route for you. It definitely makes financial sense. But there are other factors as well, like your desire for privacy. Not everyone wants four roommates. If you do, great, go for it, and we've seen our clients do it with great success. If you want a little more privacy, you might find a small SFH in the Denver area with a basement that can be sectioned off in some way to create either a long-term rental down there or a short-term rental/Airbnb space.

And to your concern about "finding a deal." Don't get caught up in that. BP is a fantastic site, but it also creates unrealistic expectations. You don't absolutely have to find something under market or off market. Taking action and holding on to a property for the long-term is more important, in my opinion. (Had a client who waited a year and a half to buy and yes, they got a "deal," but because of our 6-8% yearly appreciation, that "deal" in the current market was no better than if they'd paid market value a year and a half earlier ... and they would have been gaining equity that whole time and possibly cash-flowing with their house-hack.

Anyway, good for you for taking the first steps. At your age, just buying something and holding on to it will be a great move. 

To put a finer point on what @Darren Smith posted, the eviction moratorium bill died in the Colorado state senate, so it's not going anywhere. 

And Gov. Polis' order requires only that landlords give 30 days notice before commencing eviction proceedings. That's more than the 10 days notice required under existing state law, but it now gives the power back to landlords to evict for non-payment. I'm sure this will come as relief to landlords in Denver and Colorado Springs and elsewhere in the state. 

@Josh Bakhshi

Best advice yet! Renovations done today ain't doing squat for your resale value 10 years from now. Because any "cool" updates you do now will by then be "like, soooo 2020."

That's $2,650 sounds pretty good, but you've got to look at whatever Denver neighborhood he's in. If you're Golden Triangle or Cherry Creek or LoDo, average rents are all in the $2,000s. 

I think in the end, it's simple math. Review comps in your Denver area. Are some getting meaningfully more rent? If so, what's different about them? Kitchens? Bathrooms? In-ground pool in the bedroom? Whatever it is, price it out and see if what you spend will be made up plus some in rents during the time you plan to own it. 

Great thread.