All Forum Posts by: James Carlson

@Evelyn Castillo

First off, good for you for taking some steps into the real estate game. Whether house hacking in a high-cost area depends on how you define "profitable." So, two things on that:

1. The way I look at it, and how I counsel my buyers on house hacking here in Denver, is that you have to live somewhere. Renting is a fool's errand all around. So next step is to buy, so you're building equity. If you're going to buy, then doing a house hack is way more cost-efficient than not doing it, right? 
2. Most people are just talking about cash-flow. I get that, but if you can find a home in which you live for a much-reduced monthly payment and you get the appreciation that comes with a high-cost, highly desirable area like Denver (or in your case, Miami), then that's a good game. Denver's averaged 6% home price increases annually for the last 45 years. (That's including the down years of the late 80s and the 07/08 crash.) 

Buy something, rent out the rooms, pay a low monthly payment (or none at all depending on how well you house hack), and watch your home go up in value over the next 10 years. 

@John Prucha

Barnum is great! You can see the trajectory of development coming down from Sloan's Lake, into Villa Park (man! the new builds going on there), and now into Barnum where you're seeing a few flips. 

It's not surprising, either, when you see how close to downtown Denver you are and realize there are no other closer neighborhoods with homes in that $350-$450k range. We have a ton of clients who are young professionals buying in that area, either to owner-occupy or to house hack. 

Will it ever be LoHi? Probably not, but it's got a little stretch of commercial on 1st from Meade to Knox that will be interesting to watch and see if it evolves from the tire shops and mechanics shops it is now. 

I think you sit on that property for 10 years and watch what happens. Cheers!

@Debra K Rubio

You might reach out to @Drew Fein here on BP. She's a real estate attorney in Denver and might be able to help. 

@Christina Z.

It sounds like you're going to have a nice chunk of change when you sell. That's great! Congratulations! I'd consider re-allocating that capital. If you were making a little cash on it each month, I'd say keep it, because Denver's not likely to go anywhere soon with appreciation. But $4,000 is nothing to sneeze at.

So then the answer is whether to stay in Colorado or go out-of-state. There's no right answer here. Really, it depends on how you want to do this. Denver, for instance, has seen an average of 6% annual home price increases since 1975. That's a lot of appreciation to potentially gain if you stay in Denver area and can find a cash-flowing property. (You might also consider Colorado Springs as you can get in a bit cheaper and the same upward trajectory is seen there.)

Out of state you're going to get better cash flow but you won't see much appreciation compared to this state. It's just a matter of what's most important to you and how much work you want to do from a distance.

I wish you luck!

@Andrea Weule

Interesting to hear about someone with rentals in Denver and the midwest. Do you have a preference? We have buyers and investors in Denver who worry about cash flow, and the struggle is real here. You're not going to kill it cash flow wise. (Unless, you're doing a house hack, rent-by-the-room, but that's not really scalable.) 

But appreciation? Since 1975, Denver's averaged 6% home price increases every year, even accounting for two downturns. That 6% appreciation is a much bigger bump than any cash flow you get each year. Just as an example, if you had a $400,000 last year, you have a $424,000 this year. You're not getting $24,000 in cash flow each year. 

@John Prucha

Congratulations on the buy. A SFH zoned for an accessory dwelling unit in Denver at that price? I'm guessing you bought in the Barnum area or somewhere nearby? I will be interested to see how the ADU build goes. Who are you using to do it? Are you doing a full garage and ADU on top?

I have a lot of clients who want to house hack in Denver with a carriage house or basement apartment. (On the spectrum of house hacking, it has slightly less revenue potential but more privacy for the owner. Tradeoffs.) Some want to find zoning for an ADU, and I always advise to just find a place with the basement ready to go. It's much easier.

@Roger Forgatsch

First off, congrats on the purchase in Colorado Springs. Also wanted to echo @Bill S. here. A deal diary is interesting if we get to see what kind of rents you're getting, investment model you're following, any rehab needed, etc. 

@Beau Fannon

Ouch! A shot across the bow of Denver! I think the idea of Denver as a boomtown is outdated. We used to be an oil-driven city in the 80s and 90s, but that has shifted in the last 20 years, and there are no indications that the shift is going to reverse. 

Our economy has become much more diverse and oil is not even close to the top driver. Those UHaul trucks continue to come. Now where the hell are all those kids going to live? Who knows. Ain't nothing cheap here, but they're also buying and renting and fueling businesses that provide jobs, etc. etc.

Also, the home price increases in the last 45 years would also say Denver's not that mercurial. From 1975 to 2020, we've had only two small slumps -- in the mid-to-late 80s when oil prices nosedived and the savings and loan crisis happened; and again in the 07/08 bubble burst. Even accounting for those times, our home prices have increased an average of 6% in that 45 years. That ain't bad and is a pretty good indicator of Denver's trajectory. (Hint: it's upward.)

Plus, I've been to Austin. It's muggy as hell and hot as Hades half the year! And our beer's better. And we have legal weed. And the mountains. And a better downtown. And we put green chili on everything. Take that!

@Tom De Napoli

Great post with some great links and backup info. We are certainly seeing this in Denver. While people seem to be moving everywhere in Denver, we have had a number of buyer clients looking in the suburbs like southeast Aurora, Castle Rock and up north in Arvada and Westminister and those are the deals that are seeing multiple offers, over-asking offers, and other bells and whistles like appraisal gap coverage and waiving of inspections. 

Not that this is a big driver of the dynamic, but we work with a lot of young house hacking clients, and they want a 5br house to squeeze out as much revenue as possible. You don't find affordable big homes in the city. They're in the 'burbs. 

@Andrew Geller

I tend to think this Corona Virus seems overblown considering the death rate among those who get it is so low. That said, the virus does appear to have already slowed down travel internationally. That will come to the US at some point. 

One thing I wonder is whether you plan on living in the home? I ask because in Denver, Airbnb rentals are only allowed in your primary residence. And those trying to skirt the short-term rental rules are getting caught at a higher rate than most other cities. (Not only that, but the city has charged a few people with felonies over breaking the STR laws.) So be sure you're operating within the rules (or be sure you're okay with the risks.)