All Forum Posts by: Jeff White

@Nikki Mata Hi Nikki, nice to meet you virtually, I'm a local Denver investor/agent, and I would be happy to discuss options on selling both of your LTR properties. I work with 95% investors, so this is exactly my wheelhouse. 

@Mina Spice The easiest way to find someone would be to search the Aurora area you are in and search for sober living home operators. By doing that, you will be targeting the exact organization you are looking for, and you can find ask them if your house would work for that strategy.

@Keith Howes Hey Keith, interesting decision making on a new build. I find new builds to be one of the tougher investments to make work in today's environment with high interest rates, higher insurance rates, HOAs, and that's not even counting the higher property taxes with new builds too. 

Also, on the back-end as a rental, how large is the rental base for tenants that make enough income to afford a $3,600 per month rent payment or higher?  That is a huge rent payment for someone to live in Brighton, and that demographic does exist, but I would you would have a larger vacancy rate than a Class B asset, and what happens if that tenant loses their six figure job(s)?  Coming up with $3,600 per month isn't easy without a great job.  

A class rentals are of course nicer and more move-in ready, but high price point. I like the B and C class rentals in Denver metro for that reason because there is a larger tenant base that can qualify and still cover the mortgage through job loss, divorce, recessions, etc. 

Have you considered the other options that could work for a family, ex. side by side duplex, house with ADU, house with carriage house, house with a walkout basement, etc?

It would be worth exploring all options, and if you are willing to live in a duplex or one of those options, the rate for owner occupied financing isn't 8%, it is closer to 7%.

Also, since the market is softer, you could easily ask for a seller credit to buy down the rate closer to the low 6s, and meet somewhere in the middle with a similar mortgage payment as a new build and get something that would be a really good house hack for a family with privacy, garage, etc and get the benefit of renting the other side or ADU. Yes, these properties won't be as nice as a new build, but you won't have to spend new build prices.

@Hallie Reynolds Try Kendall Liedtke with Colorado Insurance, he helped me with my properties, his phone number is 720-833-8421

@Kyle Allen That's great you are looking for your first rental, LTR vs. MTR discussion really starts with your time, MTR does require more upfront work and furnishings with MTR vs. no furnishings with LTR. 

I personally like LTR as a strategy since once you attract high quality tenants, it isn't that much work relative to MTR and STR strategies, but the key is you have to look for properties where you can add bedrooms, so you can do rent by room, rent to market tenants, rent to Section 8 tenants, and the more bedrooms that you have the higher rents you will get.

How to do you add bedrooms?  You have to find properties that have dens, additions, larger square footage to find rooms. The average room size is 10 x 12, so you can think of a 2200 square foot house, and if it is a 4 bedroom now, you know there is definitely enough square feet to add a couple of bedrooms, and that's how you can be creative by making a deal when others see that 4 bedroom house as a 4 bedroom, but you just turned it to a 6 bedroom and made a deal out of it. I'm not saying all 4 bedrooms with lots of square feet will work, but that's just an example of how to find cash flow in a market like Denver. 

@Eric DeNardo Definitely possible, but the hardest part is the buy part, there are plenty of wholesalers around ton spending tens of thousands of dollars on marketing to get off market deals, and that's the competition to get those deals, not impossible, but definitely tougher for the average investor that doesn't have the time.   

Also, going in with realistic expectations, you aren't going to be able to pull 100% of your money out, but what if you pulled 80% out and you had a good rental property asset that will probably break even best case scenario? It really depends on perspective. With rates over 8% for investment properties, it will be tough to cash flow without a creative strategy such as STR or rent by room.

@Ryan Williams Nice job, Littleton is a fantastic area for house hacking, just takes the right investor to see the potential, and I know that duplex, and there is plenty of value add for your client. Cheers to them!

@Michael Shea I'm not a tax accountant, but I've done the rent by room strategy for over 6 years as a house hacker, and I've recognized rent by room tenants rents in the Schedule E part of the tax return. The border income that you listed is only required when purchasing a primary residence, you can't use the roommate tenants , even with existing leases to help qualify for the mortgage.

If you are buying it as a investment property, you just need to record it on your tax return for 2024 tax return and in 2025, when you file your taxes, you will be able to count it positively for your debt to income ratio.

@Bryan Gonzalez

Congrats on just getting started, BP is a great resource for motivation and learning.  Welcome!  Getting started is the hardest part, especially that first property, and what strategy to start with. 

It really depends on your goals, are you trying to buy investment properties? A new primary? Are you open to house hacking? Do you want cash flow? Do you want more appreciation? Are you open to creative strategies?

Congrats on taking the first step, usually people get hung up on only one strategy, and the best way to start your real estate investing journey is house hacking with lower down payments and interest rate since it is a new primary residence, especially since you can probably rent out your primary and cash flow when you move out.

I'm a local investor and realtor here in Denver metro, and I've found success with house hacking here in Denver for myself (rent by room, Airbnb, Section 8, LTRs, etc) along with my clients too. It is that powerful of strategy that speeds up your time towards financial independence much faster than any other strategy!

Currently, there are a few ways to house hack in the Denver metro area and still live for free depending on your level of comfort.

1) Rent by Room - personally, my favorite strategy, you buy a large house, live in one room, and rent out the other rooms. This strategy is very effective, especially on houses with lots of parking and houses with lots of bedrooms and bathrooms in areas near the popular locations around town.

Realistically, you can get $750-900 per room that shares a bathroom, and $900-1100 per room that has a private bathroom. If you do the math, when you get to 6+ bedroom houses, the numbers work out better with living for free and also cash flowing while living there. My last two clients closed on houses that became 8 bedrooms rent by room house hacks that cash flow, so it is possible in this market.

2) Multifamily - Purchase a 2-4 unit property with 5% down conventional loan, and live in one unit and rent out the others. The pro of this strategy is that you can buy a bigger property with more uunits, and the cons are that it will probably need some updating and turnover of tenants to achieve market rents or higher. 

3) STR - Short-term rentals or Airbnb. This strategy is great, but it fluctuates depending on the time of year, you probably won't live for free because it is more challenging since you are only Airbnbing a small space or basement unit.

4) MTR - this is a good in between style of creative strategies since you can furnish a place nicely that would rent out on Airbnb but you want a long-term high quality tenant like a travel nurse or corporate rental that stay for 2-3 months vs. under 30 days for most Airbnbs.

Combining strategies is the best way to go, ideally, you would find a property with a separate entrance or walkout basement, live upstairs in the one of the bedrooms, rent out the other upstairs rooms and STR/MTR/LTR the bottom unit. Also, finding multifamilies in locations where you can use creative strategies such as Airbnb. You get the best of both worlds, and you can reduce your cost of living and sometimes live for free, even with a 7% interest rate.

Personally, I don't recommend starting with properties with HOAs since HOAs can restrict your ability to house hack it with different strategies, and they can even restrict your lease from being under one year.

Hope this helps! I'm very passionate about house hacking, and I think it is the best strategy for any investor just starting out from college since you have the flexibility. Let me know if you would like to connect, it is a great time to buy in 2024 because the hardest part is just getting started. 

@Trevor Toft  Your expenses seem way too high for a townhome unless it has a lot of deferred maintenance, I don't think it will be that high, it is great to be conservative, but the 50% rule doesn't apply to all rentals, especially in HCOL areas like Denver. 

For example, if you rent is $4k per month, do you really think you need 50% for expenses or $2k per month, maybe it is a beatup property, but you are probably not getting $4k per month on a junk property. 

The 50% rule works better in midwest markets where houses sell for $100k and rent for $1k per month.  

Also, your debt structure is your asset more than the property, I wouldn't sell it, I would keep it as a rental, and maybe use a HELOC on it to tap into some equity, and then go another primary residence.

After buying another primary residence, I would re-evaluate every year or two to see how you can better maximize the returns.