All Forum Posts by: James Carlson

@Ben Panfalone

Email incoming.

@Amanda Young

You can find long-term rentals that work, but they are tougher to cash flow in Denver. (I totally agree with Chris, though, do not forget about the other ways that rentals make you money.) We do see some of our clients doing well with the medium-term rentals. (We have one ourself in a 1br condo in Capitol Hill.) The easiest way appears to be buying a house with 5 or 6 bedrooms and renting by the room. A little more work to maintain leases, but you can see cashflow nearing $1,000 if you buy right. 

Have you thought about Colorado Springs? It's not quite as crazy as Denver and the same rent-by-the-room model can work down there as well. I take it that this is a pure investment for you and not some sort of live-in, house hack?

I wish you luck!

@Andy Horn

Awesome to hear you're taking a big step. Colorado Springs is a great town. If you're looking for somewhat of a city vibe, in Colorado, and want to still be relatively affordable, Colorado Springs ain't the worst place to be a first-time homebuyer. My wife and I own a duplex here with some partners and just bought another home that we're living in for a few months while we get it ready to be a rental (before heading back to our Denver).

Yes, if you're coming from the Dave Ramsey school of thought, suddenly leveraging yourself can seem counterintuitive. 

Have you spoken with a lender yet? I'd do that sooner rather than later to make sure that when you find that right property, you are ready to pounce. And start familiarizing yourself with rental numbers in those areas. Old Colorado City is a little gem, but rents can vary widely depending on area. (Our two places are about a mile east of downtown, so we certainly understand the allure of both OCC and downtown.) I know this is not for a rental, but you never know when your primary will turn into a rental in the future

Anyway, I wish you luck!

@Robert Chaiton

First off, awesome to hear you're taking a step toward your first place in Denver. It's a great place to be, and while prices aren't ideal, if you have to live somewhere, better to get some equity and house hack the crap out of it while you live there. To your questions:

1. Just piggybacking off of what @Jeff White said. The idea is that if you have a primary residence and an investment property and your finances go south and you can only pay one mortgage, you're going to pay to keep a roof over your head. Therefore, a primary residence loan is less risk for the bank than an investment loan. 

2. 1 year as others have said. I'd just add that you could shorten that clock a little for circumstances. (The loan officer needs to be able to make the case to the underwriter that circumstances -- you actually hated the neighborhood, for instance -- cause you to want to buy a new primary residence.) But you're only going to get away with that once. The second time you try that, the lender's gonna say, nah, first time's a mistake, second time's a charade.

3. Just like others have said, if you qualify for a conventional loan, you can do a 5% conventional loan every year. 

I wish you luck!

@Kevin Reinell

That's a great question. As with so much in real estate, there is no magic answer. Here are some of my thoughts from working with house hacking clients in Denver and Colorado Springs. 

Facebook groups
My favorite resource are Facebook groups specifically for subletting/roommates in your area. I know Colorado Springs has one group for that, for instance. Denver has two groups like that. It's usually filled with both 1. people renting out their rooms; and 2. people seeking a room to rent. You can get a sense of prices from what people are charging for their rooms and what people are offering when they seek a room. 

Check comps on Facebook marketplace, Roomster.com, Roommate.com, etc.
But just like checking real estate sold comps, you gotta be specific. Listings with crappy photos, poor furnishings and a terrible, too-short description are not really comps for your place. 

(Don't get me on my soapbox about the stupidity of spending hundreds of thousands of dollars on a home only to skip the $100 for HD photographs for your rental.)

The 65% rule?
We had a client who has done two house-hack deals in Colorado Springs down near Fort Carson, and his rule-of-thumb for rent-by-the-room is that you can get 60-65% of what a studio in that area would draw. If you could get $1,000 for a studio on Rentometer.com, then you can get $600-$650 for a room. Haven't tested it myself, but he says it works for him.

Check the deal diaries?
Can you search in the deal diaries section of BP for similar situations in your area? I know I posted a client's diary from Denver. Maybe others are doing the same.

Good luck!

It will be interesting to see how this plays out. (This same proposal was talked about in 2018 without any action.) I know the Realtor associations in Denver (DMAR) and Colorado Springs (PPAR) are paying attention, and I'm guessing every other association would too and will be putting their full weight on their legislators to push back on this. 

I've said this before on here, I'm not opposed to Airbnb regulations and it seems, on its face, rational to classify a home rented on Airbnb all year, every year as a business. What I don't like is how short-term rentals are the boogeyman getting picked on for everything. 

While proponents of the bill will say it makes sense to tax a business as a business, the real reason is to try to recoup lost revenue for rural counties. Because of the Gallagher rule, the state can only get 45% of its total property taxes from homeowners. As prices spiked along the front range, the state dropped rates paid by homeowners. In rural areas that haven't seen the increase in home values, those reduced rates meant a lot less funding for vital services. 

I totally understand the frustration of those areas. I just don't know if this proposal targeting Airbnbs is the way to remedy the situation.

@Tyler Henry

I think they got a lot of hits off of Facebook page for traveling medical professional types. And also Roomster. 

We've also found a good resource for the rent-by-the-room, house-hack types are Facebook groups for subletting/roommates in your local area. There's a group for Denver roommates and one in Colorado Springs as well. People are posting on there a lot looking for a place to stay.

Good luck!

Hey @Marcelo Chaparro

First off, congrats on taking a leap. Best advise someone told me was to learn a little, act a lot. If my wife and I waited until we felt totally comfortable and knew everything about Denver, we might still be looking. Instead, we bought, learned, made a few mistakes, made some good money and now have five doors and are excited for more.

If I can kid you a bit, I love reading that anyone's goal is to "buy properties that are not that expensive." It always makes me chuckle, like there's two groups out there -- those that like to get a deal and those that like to massively overpay. I know what you mean though. I agree that buying right matters, but don't get so consumed by the idea of finding a great deal that you let a year go by without buying. 

As everyone else has said, Denver is a tight market that requires some creativity. Either renting by the room, house-hacking, medium-term rentals, short-term rentals, etc. Choose your flavor. But it is harder and harder to do the traditional SFH home, long-term rental for cash flow. But especially for that first purchase, if you have to live somewhere, you better own it and get some equity out of it.

I'd recommend connecting with two people: 1. a lender who can tell you what you qualify for; and 2. an investment-minded agent who can guide you through the process.

Good luck!

Just to piggyback off of Craig here, I like the Clayton neighborhood in Denver as well. As he alluded to, there is development going on up there. You've got Denver Rock Drill, a huge hotel/retail/commercial space going in at 38th and Gilpin, which is in Cole, just west of the Clayton neighborhood. Also, Ken Wolf, who developed much of RiNo including Denver Central Market, just sold a massive industrial complex at 38th and Steele. If I was 24, I'd buy a decent enough house up there, house-hack for a year or two, maybe move on but keep it/rent it and see what comes of my home value as the RiNo development moves north and east.

Good luck!

@Vanessa Franco

Yes, you'll have to report it as income but as @Jai Reddy said, you also have expenses that you can deduct so it shouldn't be much if anything at all come tax season.