All Forum Posts by: James Carlson

@Derek R Clark

Damn. That sucks. Sorry to hear about it. Not that you didn't do this, but it seems a time to reiterate that any buyer in Colorado should do their due diligence. Buyers and agents get wrapped up in making the deal work that sometimes they ignore steps everyone should take to protect themselves. A $120 sewer scope is an easy example (and an absolute must) as @Matt M. said. We've had numerous deals in Denver and Colorado Springs where the seller says they just scoped the line and it's great, and when we scope the line, it's -- uh -- not so great. 

There is no standard "mold disclosure" form in Colorado, unlike lead-based paint that has it's own form. However, sellers are required to disclose all known adverse material facts, and presence of mold would seem to be one. As everyone said above, talk to a lawyer. You might reach out to @Drew Fein.

You mentioned a few times that it was a duplex but marketed as a SFH. I never heard if that came up to bite you in the butt?

First off, welcome to Denver! It's pretty great here. Second off, congrats on taking a step toward real estate investment. A lot of people can get trapped in "learning" and never actually do anything.

Denver's a tough town to cash flow in. So you have to get creative. The rent-by-the-room model can really work. (Here's one example of some of clients of ours who are doing it as a pure investment, not house hacking.) 

In general, it's a good idea to own where you live vs. rent for all the benefits. (Equity, depreciation, appreciation.) And if you have someone else offset your mortgage, even if you're not cash flowing, that's a win in my book.

But as was said earlier, talking to a lender is your first step. Knowing what you qualify for will do some of the heavy liftng in terms of areas and size of home.

Good luck!

@Grace Wang

Sounds like you're on top of it. I wish you luck. And post your deal diary when you're up and running. Like you, I'm always interested in how other Denver investments are working out. Cheers!

@Elisabeth Ihler

Great freaking question. We have clients all the time that want to buy in the areas zoned for ADUs in Denver, and their jaws drop when they hear what ADUs are going for right now. 

I know higher-end builds are going to get you into that $250k range. L&D Construction, for instance, has a niche in building ADUs in Denver. But most of their stuff is going from ground up with a 2-3-car garage with a new foundation poured and a 1-2br unit atop it. I did see on their Facebook page recently that they've done a ranch-style, single-level ADU, which should reduce the cost a bit, but not as much most people think.

So, still the question remains ... anyone else have insight?

To your extra credit question: My guess is that if the ADU recommendations found in the Blueprint Denver plan are fully implemented, then demand for ADUs would rise and more companies would enter the market for them and bring down cost. (For those nerds who love a good city-wide comprehensive plan, the Blueprint is found here, and the discussion of ADUs in Denver is found on pg. 84.)

@Grace Wang

Good topic. Sounds like you have already solved for this, but I agree. We have had clients in Denver doing a medium-term rental/rent-by-the-room model, and they use a pretty standard lease for everyone. (They're not living there, but I think it would be the same even if you were doing a house hack thing and living in one room.)

The one thing I've heard some questions about is liability for common-area damage. I'm not sure if you put this in the lease or not, but I think all damage in the common areas is the responsibility of everyone unless one person cops to it. This might provide some social pressure to have the responsible party speak up.

@John Mayer Thanks for the shout-out. I owe you a beer! (Or coffee or kombucha or whatever your chosen poison.)

@Marston Garceau First off, a premature welcome to Colorado and congrats on taking a step into real estate. That's exciting. I can still remember being pumped when we closed on our first property just four years ago. Now we have five doors and are excited for the next one.

It can be difficult to figure out where to start. Here's what we teach in our first-time home buyer classes in Denver. 

Find an agent

Finding a lender and an agent go hand-in-hand. Any good real estate agent will have a good few lenders. So maybe find an agent who understands what you want to do, has experience working with buyers like you (an investment-minded agent), and has a personality or style that you enjoy. (Don't underestimate that last part. You'll likely be working with that agent for some time.)

Talk to a lender

Knowing what you qualify for will help formulate your search. And yes, I'd work with someone local to the area you're working in. In my experience, they pick up the phone when you call and work their asses off. Also, when it comes time to make an offer, the listing agent will often want to see that you're working with someone reputable. If it's someone out of state, it might not be as attractive to them. So ... call the lenders your agent recommends and a few others if you want. Deliver documents to the lender. Discuss options. A good lender will walk you through various plans -- what your monthly payment looks like if you put X amount down versus Y amount down.

Develop a search and go see homes!

This is the fun part.

Anyway, I wish you luck!

@David Corboy

Like @Matt M. said, talking to a lender is a first step. Understand what you can afford and then, with the help of an investment-minded agent, develop a search around those parameters. Maybe it's multi-family in Denver, though those are hard to come by and seem to be inflated in price so much so that it can be harder to cash flow on it. You might consider a straight up single-family house to either rent as a whole or by the room. Not as sexy as the duplex everyone on here wants, but it makes you money and is an easier sell on the back end. 

Are you going to be living on this property? If so, that opens up all sorts of options as well. Anyway, talk to a lender, talk to a good agent and go from there. Good luck!

@Jeff White

Always good to hear your thoughts on this. Are you two still up north or are you on to to your third place now?

@David Chen

I hear you about your sister. I think that's great, and again is just a different consideration for you when deciding what and where to buy. That said, if the potential for easy tenants is why you would choose your area (because your sister and her connections would stay there), I would push back a little and say that with a little work, you shouldn't have trouble getting tenants elsewhere either. 

@David Chen

As an example of what a cash-flowing rent-by-the-room/house hack in a different area of Denver could look like, this deal diary I posted a few days ago from a client of mine might be interesting. https://www.biggerpockets.com/forums/522/topics/783521-rent-by-the-room-investment-in-denver?page=1#p4603926