All Forum Posts by: Jeff White

@Grayson Hussey  I heard of them, but I don't know anyone that has signed a lease with them.  How much higher rent are they offering you vs. if you rented it to a traditional long-term renter?  

The negatives of Airbnb is there will probably be a little more wear and tear on the property since you have will more people cycling in and out.  Maybe it is worth the extra cash flow and a three year lease though.

I'm aware that the Yield Curve is one indicator to forecast a recession, and this is just looking at it today.  On Monday, it might be fine.  Three months from now who knows!  Are you concerned?  Do you want a recession to cool down your market?  

I'm not too concerned since I believe there are deals in all markets, and I'm a long-term buy and hold investor, so it doesn't impact me.    

Here's the link:

https://www.cnbc.com/2019/03/22/us-bonds-treasury-...

@Suly B.@Chris Lopez

Great podcast, I learned a lot of things that I didn't know before such as bonus depreciation, and how I can utilize cost segregation on properties with under a 500K basis.  

@Craig Curelop

I lived in a world of not knowing what house hacking was until October 2016 from a book that totally changed my outlook on real estate investing by @Mark Ferguson, and he mentioned house hacking a duplex (living in one unit and renting the other) and living for low cost or for free, and it changed from mind and life forever.

Thus, as I was curious for more information, that lead me to do a google search and find the holy grail of real estate: BiggerPockets, @Brandon Turner, @Scott Trench, and Mr. Curelop, and all the posts, information, etc...totally changed my perspective even more to a new level.  The light bulb turned on!

In late summer of 2017, I decided to sell my condo, buy a 4 unit in Denver, and start the journey of house hacking my way to financial freedom.  I rented out the three units and lived in one unit myself.  During the course of the summer, I did Airbnb one bedroom for a period of time, so that did help with the cash flow during those months.   The final numbers on the four unit for 2018:

Purchase Price: $630,000 (8/11/2017)

    Actual Gross Rents: $56,000

    Actual Mortgage: ($42,000)

    Actual Utilities:  ($3,600)

    Actual Maintenance/Vacancy/Capex:  ($3,600)

    2018 Net Cash Flow:  $6,800

• For 2019, I should achieve about $8,000 in Net Cash Flow as a fully stabilized property (still have some under-market rents in two units, but those tenants have been on the property for 15 years and are great tenants).    

For my second house hack, I moved out of the 4 unit, and I bought a single family with a mother-in-law apartment in October 2018 a little north of Denver in a suburb named Northglenn.  I'm using a couple of strategies.  Since it is literally divided like a up/down duplex with its separate entrance, I've rented out the top unit (3/2 unit) to a family for $1,875/month.  

The mother-in-law also has a basement (that's where I'm living with my girlfriend).  I'm renting the other rooms in the mother-in-law portion for ~$630/room for three rooms as well.  Since I needed to add an egress window to the basement to make it legal and some other improvements, it took a few months before stabilization in Feb 2019.  Here are the projections:

Purchase Price: $375,000 (10/17/2018)

    2019 Projected Gross Rents: $43,000

    2019 Mortgage: ($28,000)

    2019 Projected Utilities: ($3,300)

    Projected Maintenance/Vacancy/Capex: ($2,500)

    2019 Projected Net Cash Flow: $9,200

• From the lessons I learned on the first house hack, I was able to find a better deal on the second one.   What's incredible is that not only am I living for free, but I'm finding a way to make money while living there.  It is absolutely amazing strategy for anyone, and I plan to continue to keep doing this until I achieve financial freedom.  I don't see how anyone doesn't want to do house hacking if you don't mind moving even with a significant other.    

@Marc Spagnuolo  Awesome, you have the right attitude and perspective.  

In my opinion, you should definitely consider a house with a mother-in-law apartment or a normal house and rent by the room.  Along with the multifamily house hacking strategy, either of those strategies will help you achieve your goal of reducing or eliminating your housing costs while learning how to be a landlord too.  

If you are looking to target a single family with a mother-in-law (or basement apartment, or mother-in-law addition, or additional family living space, realtors use different terminology), you need to find ones that has a separate entrance already to start, and then you want to look for separate kitchen (wet bar is okay since you have some of the plumbing already in place), and go from there.  If you are looking at basement apartments, you also want to see there are egress windows, especially if you are going to rent the basement.  

Most houses don't have egress windows built before 1990, so you will have to factor that into your costs (about $3.5-5K per window). These types of properties are harder to find on the MLS, but they are out there.

For the normal house and rent by the room strategy, you will find a lot of those types of houses relative to houses with mother-in-laws and multifamily properties and less competition, but definitely run the numbers for renting by the room, and find a house with 5+ bedrooms since you can easily find people to rent to.  The best houses to do rent by the room strategy are located within 15-20 minutes to downtown Denver.  The closer you are to downtown, the better, but you pay a premium for that.  

@Marc Spagnuolo  Congrats for being interested in pursuing house hacking!  It is a terrific way to build wealth to achieve financial independence in a reasonable amount of time while still working your W-2 job.  

As for trying to find a multi, It definitely is possible but very challenging, you would have to ideally find a 2-4 unit property, most likely off market that is at least a 2 bed/1 bath for each unit, ideally, a 3/1 for every unit since you can earn higher rents, so the numbers work a little better.  

Unfortunately, fair or not, multifamily sellers don't like FHA/CHFA/first time home buyers type of loan programs since they believe the buyers aren't as good as someone putting 20% down conventional loan or all cash. That's where you need a good realtor/lender combo to be ready to go.

I'm currently house hacking a single family house with a mother-in-law apartment, and it is working great right now, and I didn't have to compete with 100s of offers or over paying on a multi since those are harder to find where the numbers make sense.  

@Anthony Gayden  Thank you for your service as a federal employee!  It sucks right now I'm sure, but awesome job, yep, that's the power of buying good deals, leverage and making sure you have enough in reserves.  You are getting closer to not relying on any job, and hopefully it will all be over soon and you can continually buy more real estate and be even more prepared when the next shutdown hits or no longer need a W2 job again and become a full-time investor.

@Brandon Guite  No problem, I'm happy to help!   It was located just south of Sloan's Lake in a Denver neighborhood called Villa Park.  Just east of Sheridan Blvd and North of 6th Ave.  10-15 min walk to the light rail.  10 minute Uber/Lyft to downtown.  15 minutes from Red Rocks.  I had a lot of selling points on AIrbnb, but most importantly, great customer service, gift baskets, some type of theme for your place, TVs, DVDs, clean and neat, and you should be good to go.  

@Brandon Guite  , I second that recommendation, both @James Carlson and Erin are fantastic if you want to pursue Airbnb.  They can provide you with plenty of data points, tips and help to price your Airbnb correctly and achieve the highest returns.   That's awesome you are utilizing the Airbnb strategy, definitely something that works very effectively if priced correctly and in a decent location . 

I personally Airbnbed one of my units in a 4plex for about 7 months last year, started as just a shared bedroom and then Airbnbed it out as a private one bed/one bathroom apartment with full privacy after not liking sharing a bedroom.  As for quick numbers, I averaged about $45/night net renting as a room and $80/net renting as a 1 bedroom/1 bathroom, which is a good reference point for your place.  As you can see, very lucrative if done right and you get good reviews and SuperHost status.    

As for the unit, It was fairly fixed up with a smart TV, TV in the room with Netflix, internet, fully furnished, laminate floors, baseboards, tile, light and bathroom fixtures, and new stainless appliances, but definitely not anything really unique with the layout except we tried to go for a Colorado theme, gift baskets, thank you note to guests, pictures of the mountains, etc.  The location was good because it was next to 6th and Sheridan, so close to the light rail and also downtown, so that definitely helped attract more people.  

We were seeing close to 95% too 100% occupancy rates in the summer and closer to 90-95% during spring and fall.  If you have a cleaner , you can definitely book those random one off days (ie.  guest checks out Wednesday at 11AM  and new guest checks in Wednesday at 3PM) and achieve fantastic occupancy rates.    

No experience with AirDNA, but you can figure a good price for yours by looking at your competition and then dropping your price 15-20% to start and then raise it up after you get a few 5 star reviews.

Keep the place clean, fresh towels, provide good customer service, make it easy to get in and get out (smart locks), guides to fun/cool places, etc.  I would say provide some unique touch that separates yours from any other Airbnb.  You can have a theme, give them some little gifts 

My neighbors were fine with it, but also, my neighborhood was mostly multifamily, so people there are more cars parked on the street and more people coming and going, so it isn't a big deal to them.  A neighborhood like Littleton might be a little different.  

@David Greene First, I want to say how much I value both of you guys on the podcast.  Thanks so much!  Both of you offer fantastic advice, opinions, and enjoyment to something that we are all passionate about and can learn more from each day.  

Anyways, my question for David is this: you are definitely a pro and very successful at BRRRRing properties long distance, what's your long-term goals now? Continue to automate your systems and scale more to more doors? BRRRR larger properties (5+ units)? 1031 exchange some of your properties for a large multifamily? Move in with Brandon in Hawaii and rent one of his units!!? Just kidding!