All Forum Posts by: James Carlson

@Ken Latchers

Totally get it. I know in Denver and Colorado Springs, some STR owners have a sense of entitlement that there should never ever be any restrictions on what they do as if running a short-term rental does affect neighbors. Again, I can see both sides. I want sensible Airbnb regulations, but both sides need to cool on the hyperbolic rhetoric. STRs are not the downfall of western civilization. And STRs are not the golden child never to be touched by cities. The answer has to lie somewhere in between.

Thanks for your thoughts. 

@Kyle Larson

Welcome back! I freakin' love Denver, and it's where I've called home for 10 years now. Proximity to the mountains, 300 days of sun, great beer, legal weed, arts, culture, bars, restaurants, parks ... What's not to like? (Well, the prices, that's one thing.) 

House-hacking in Denver is the best way to get started in real estate investing. What house hack model you employ is just a matter of weighing your priorities. Are you willing to sacrifice all privacy to take three roommates to pay $700/room and most or all of your mortgage while you're there? Do you want a little more privacy for you and your girlfriend and so would would opt for a duplex or a SFH with a basement apartment to Airbnb/short-term rent?

All fun choices to make once you get to that point. Take in the meetups, ask questions on here, talk to lenders soon to see what you need to do for financing when the time comes ...  you're on your way. Good luck!

@Ken Latchers

I hear you for sure. I think a lot of people don't like STRs. 

I can't tell if you're pro or anti government regulation. It seems like you are anti regulation in a previous post -- "blue areas that are control freaks" -- but in your next post you would like STRs to go away. 

And you're right about my speculation on STRs being better for a neighborhood. I don't know that. And I think there is a difference between an STR owned by an out-of-state investor who has 10 of them and a person in the city that owns one or two and manages them diligently.

I also agree that profits aren't the winning argument for me. I care about neighborhood character, a sense of community, and affordable housing, and I think STRs have the potential to negatively impact all of those things. What I don't like is the blanket statements from some that all STRs are bad and that all of them are a drain on a community. As with long-term rentals, some are good, some are bad. 

@Adam Parker

There's no "right" answer here. There's the numbers but also your comfort level with spending big money, your desire for work vs. desire for a hands-off approach, etc. With all real estate decisions, it's a weighing of priorities. It sounds like you've had great success with your rent-by-the-room model in Denver. How much work is that for you to manage? I mean, $1400 cash flow sounds pretty good to me. But it's also more work to scale.

(I would ask where you're seeing SFH in the 290s in the Denver area. You might be able to find them but not with enough bedrooms to really kill it with rent-by-the-room.)

Taking a step back, you're in a good position and however you use your money will likely be a great step forward in your portfolio. I wish you luck!

Hey @Joe Gibbs Welcome to the BP forums! 

@Bill Keeth

Great question. In general I push back on any hard-and-fast "rules" out there. (1% rule, never bank on appreciation, don't factor in your gut on investments, etc.) Some people feel this way about HOAs -- never!!! I think as with everything, it depends. 

Our first three home purchases were condos in Denver. Two were our primary residences and one was a pure investment. HOAs are just another expense to factor in, and if the numbers work, then they work. We operated our condos as medium-term furnished rentals for traveling nurse types. I think for a lot of people, condos provide the only price point at which they can get their feet wet. I think it can be a good idea if you know what you're doing.

The one X factor mentioned above is that HOA dues can go up. Make sure you have some buffer in your numbers for this.

And this is also where a good agent who understands condos and HOAs comes into play. You want an agent who will read the HOA budgets and meeting minutes and who feels comfortable making calls to the management company and HOA board members to get the lay of the land. How many dues increases have they had in recent years? Do they have a Reserve study showing the proposed timeline of major capX repairs and the money required for it (and how much money they actually have for those repairs.) If it appears there isn't enough money to cover capital expenditures coming up, then that money comes from one of two places -- increase in dues or a special assessment.

Anyway, I wish you luck. 

@Jim Frederick

We've done it in a number of our rentals before, but mostly they're smaller units -- 1br condo, studio condo, etc. That doesn't mean there's not a need out there for your offering. Denver's got a healthy market for medium-term rentals. We see around a 25% increase in our rental rates with furnished medium-term. That's a rough number, but the 25% would fit with your $3,500 rate. 

In our experience, if you're buying newer stuff, it's going to be about $5000-$6000 per 2br unit. Now you don't have to furnish the kitchen or living room twice for a 4br, so I'd add another few thousand max for two more bedrooms. If you want to lower your costs, then use Facebook Marketplace for used items. I got tired of communicating with 15 different people over a couch, a rug, a coffee table, a bed, etc. so after the first time of using Craigslist, I went straight to IKEA and bought everything there. A little more expensive, but done in a trip or two. 

And I can't stress enough. PAY FOR GOOD PHOTOS! We use Virtuance.com and they charge $100 for 10 HD photos or around $150 for 24 HD photos. We have a client in Colorado Springs who bought a house to rent by the room and had a hard time getting tenants. Then he paid for good photos, and within a week, he was full. 

@Sean McDonnell

Totally. I happen to be for some regulation but my intellectual soul is beyond annoyed at the arguments from neighborhood groups. I've gone to the city meetings here in Denver and in Colorado Springs and the opposition sounds like get-off-my-lawn crossed with reefer madness. Rif-raf! Transients! Drugs! Parties! My favorite person in Denver got up and said they had photographic evidence and then she passed a single photograph of the end of a joint and a baby snickers wrapper. That was it. Neighborhood gone to crap!!! 

In reality, as you said, most STRs and Airbnbs are better for the neighborhood than a long-term tenant. They're literally cleaned every few days and if they're not, the reviews go down and the places stops being profitable as a short-term rental. 

Anyway, the news here is actually good. We'll see if it sticks. 

@Arnel Bueno

So this is purely an investment. It sounds like you have a more sophisticated understanding of the market than a total newb. So, it can be a little tough to find a good multi-unit in Colorado Springs, but it's not impossible. You're right that we've seen a ton of appreciation down here the last few years. Are we going to see that continue at the current rate? Probably not quite as crazy, but the number of people moving here and the current inventory (demand and supply) would say that you're not seeing a backslide any time soon either. We just bought a SFH home here and are prepping it for a rental. We buy for long-term hold. If we can squeeze some cash flow out of it right now, then we're happy to hold on to things and see how far this market will go in the next 15 years. Because all development and demographic trends look good.

@Jim Frederick

The numbers will probably work for a few years, which is great. (Finding cash flow in Denver is tough and increasingly so in Colorado Springs as well.) So for the first few years, you'll likely have few headaches because your repairs and capX will be nill. But at some point, things will need fixing, a water heater will go, etc. At that point, your numbers might start to look different as you factor in those small monthly upkeep bills and the bigger capX items. (We're not even talking about property management of 8-10% if you get to the point where you don't want to manage it yourself, but that's down the line.)

That said, it's yours now, and if you can make a few bucks cash flow, then do it. And I agree with what Chris above likes to say a lot that focusing only on cash flow ignores the other four ways of making money on real estate -- appreciation, depreciation and mortgage pay down. 

Have you considered doing a rent-by-the-room model? It's like house-hacking, without living in it. That corridor between Denver and Boulder seems to do well with that. 

Overall, congrats on the purchase and on taking some action. I wish you the best!