All Forum Posts by: Ryan Williams

Alicia, I think you are totally right in saying that a lack of confidence in numbers is what holds people back in deals. 

It took analyzing the deal many times before we took the leap on our first investment. 

For long term rent projections I used a combination of zillow rental manager (not the zestimate), Bigger Pockets rental calculator, and rentalizer to come to a number I was confident about. I developed a pro forma using a combination of investor friends pro formas and Bigger Pockets rental calculator numbers. And then I had investor friends/peers review my numbers to make sure I wasn't crazy lol Utilizing people who had done it before was crucial. 

For short term rentals, it's a little more involved because there are more expenses and you have to find a nightly rate rather than a monthly rate, which can be intimidating, but it's a very similar process. Seeing what data sites like AirDNA projections and then comparing and averaging comparable listings on Airbnb/VRBO 3 months out from present to come up with a nightly rate that you can be confident in. Comparing to other pro formas I developed an STR pro forma that includes expenses for my area and can be adjusted based on the bed/baths.

Taking the time to get comfortable with the numbers, doing analysis over and over again like Brandon Turner teaches, and then getting eyes on it from people smarter than me helped me finally take the leap rent out/purchase our next property!

And seeing it work out how I thought it would (actually better) bumped my confidence up 1000% and made me eager for my next deal! 

Hi @Account Closed, this is a great question and you're right, the 1% definitely doesn't work here in Denver. The following is an oversimplification, so take it with a grain of salt, but there's 2 kinds of investment markets:

1) cashflow market - markets like the midwest and south where you can buy into some decent initial cashflow and the 1% rule could still be applicable, but it more than likely won't appreciate too much over time. 

2)appreciation/equity markets - The Denver metro falls into this category. You buy into an investment property and it may break even or make a little return, but the pro is you have a high value asset that is being paid for by someone else and is going to have a ton of equity built up over the years. 

A combination of the two is the dream and what everyone is looking for! haha 

For an appreciation/equity market - you want to look at a variety of factors to determine if it's a good investment - cash flow, cash on cash return, cap rate, appreciation projections. When these metrics look better than the market norms you know that you have a good deal. 

Also, getting creative in appreciation/equity markets is a way to get to returns closer to what you would see with a deal that meets the 1% rule. Incorporating strategies like short term rentals or rent by the room can get you higher incomes and good return on investment in the near term term, rather than just the long term. 

I hope this is helpful!

Hi @Corbin Larsen, the laws are ever changing in the mountain towns here in Colorado, so it's key to research that as you're looking. I'm managing a property in Bailey and it does really well. They are still legal in Park county, so that is a good option. Friends of mine have properties in Summit County (Dillon & Frisco) that do extremely well. 

A good agent can help source properties for you. If your goals are purely numbers based an STR friendly agent can tell you the projected profits and expenses of certain properties in short term legal/friendly areas. I've elaborated on that some more in an article I wrote for bigger pockets on what you need to know before you buy an STR. But, if you're planning on using the property for personal use here and there and have strong preferences, an agent can help point you in the right direction, but that would be a little more subjective and dependent on what you want!

I'm an agent and a short term rental manager/investor here in Colorado, would be happy to talk more and help any way I can!

@Bill Wells I'm an STR manager here in the Denver metro and I think you are thinking about this correctly, and it's a great way to build a business and an income stream, especially if you already have the structure and systems set up with your own properties. Anything less than 30 days in Colorado doesn't need a real estate license to manage. Anything over 30 days technically falls into real estate licensing for property management/lease negotiations/holding security deposits/collecting rent etc. You would just need to know how Alabama's real estate licensing laws for property management are written. If it's the same as Colorado's anything under 30 days would be fair game! Contacting a property manager or an agent there would be a helpful way to get some more info. Maybe the agent you spoke with could show you the property manager section of their RE licensing laws, and point you to the right text/link.

Hi @Kathi Miller, I’ve had to deal with a similar situation here in Denver. I’ve used Frascona’s resources on the subject which is a local real estate law firm. They should have to provide correct documentation of the animal. It’s a sticky situation that unfortunately could go the way of the tenant/support animal if they pursued litigation. It may be worth a call to a real estate lawyer to see your options. They are the ones who could give you the best advice. https://frascona.com/landlords...

Hi @Katrina Morato, glad that you are looking at Colorado for out of state investing! I agree with everything @David Mackin has already said. It is hard to find good cash flow and returns right now if you are financing a deal, but with the market softening there are the occasional deal that pops up. 

Short term rentals are a great play in Colorado that can have great returns, you just have to know which markets allow you to legally operate a short term rentals. Many cities have moved to primary residence requirements. I wrote an article for bigger pockets that dives into the details of buying STRs, I hope that helpful! 

Are you looking in the metro areas or more in the mountains for vacation areas? 

Our first home was our first investment property, kinda by accident like @Erik Browning. We just thought that was what you were supposed to do. Graduate school, get married, then you buy a house lol! 

We started learning more about real estate investing after that and realized our first home in Denver had appreciated a ton in just a couple of years, we had refinanced to an incredible monthly rate, and our rent numbers would have us cash-flowing close to $1K a month if we rented. So we decided to post our house for rent and buy our next house as a house hack where we airbnb half of the home. That one move changed our monthly income and expenses pretty drastically so we are hooked! 

Organizing and making that plan reality took between 6-12 month from when we knew we wanted to turn our first home into an investment property and buy our next. We were worried that we wouldn't rent out our home quick enough and that the airbnb wouldn't be booked enough to hit our goals. I would analyze deals and do the math on a whiteboard every day for months until we finally had a really good idea it would work and took the leap! The home rented in a week and the airbnb has been at 95% occupancy since we started. I made my analysis on the conservative side so we had some margin, but everything has gone better than what we hoped for!

Hi @Avery Clair, love that you are trying to house hack once you move to Denver! Because the market is slightly cooling and interest rates are going up homes are staying on the market a little longer and presenting some opportunities for buyers, especially houses that need a little extra work and are BRRRR-able. Because monthly payments are higher you're competing against far fewer home buyers and investors in Denver than we saw 6 months ago, but you still have the opportunity to mitigate most or all of your mortgage payment house hacking.

My wife and I house hack currently by Airbnbing out a private entrance/non shared part of the home (more info on another post here if you're interested). It does great and pays us more than our mortgage payment, so we are living for free! 

Also, I wrote a blog post for BiggerPockets recently about why now is a great time to house hack. 

I hope all of this is helpful and looks like you're taking the right steps to make a great transition to Denver! 

Hey @Lauren Sherer, yeah in unincorporated Jefferson it has to be one acre plus - this is from Jefferson Cos STR Regs page :

Property must be minimum of 1 acre, meet the underlying zone district, have adequate parking, meet the requirements set for by the Wildfire Hazard Overlay District, have valid water and sanitation, have legal access, use the primary dwelling unit, be free of violations, and have no substantial detriment to the intent of the Zoning Resolution.

Also it states that:

How long does a Special Exception Case take? Roughly two months from application submittal to the Board of Adjustment hearing/decision.

I haven't personally gone through or had clients go through it, so maybe @James Carlson can give some insight on if it takes a couple months like they say or if it's faster/slower. They definitely make the process very involved in Jeff Co.  

Hi Dana, 

You are on the right track on how you are thinking about this. I currently am in a house hack/airbnb (you can check that out here) and our plan when we move out is to try to rent the half we live in currently, have the renter take out a new airbnb license in their name and for us to be "co-host/managers" on the same property with them taking most of the profits. Reading the regulations it should work, and be in line with the laws. Obviously you would want to have a great relationship with that tenant in order to do that, and it would be smart to have a back up plan in case that got shut down for whatever reason. 

For the basement units, or house hack houses that are connected continuous access as you have described, the city is a lot more lenient. There has been some rumblings of people getting denied STR licenses for some code/zoning infractions posted on another BP forum post.  These kind of house hacks would have more options to rent out as a contingency plan though if an STR fell through. You could rent by the room, or rent the basement unit out. 

I hope this is helpful!