Buying a Condo to get started?

Question

Bill S. · Answer

@Tanner Westerheid you must be an engineer (I know one because I was one) or an accountant. You are way too risk averse. What's the worst thing that can happen? You end up with a foreclosure in 3 years and have to start over. When you are 27! I didn't own a 2nd property until I was 35 and my first one until I was 27. I had the same frame of mind about debt and ability to pay. I wish I had started when I was 24. I would be 10 years ahead now. The chance of your worst case scenarios is very very slim. Find a house that you can live rent free and expense free with all rooms rented. Make sure you can personally cover the costs (all be it painfully) with two rooms empty or non paying. Buy the house in the best area you can afford. You will probably never regret it.

Do this every year for 10 years and you will be a wealthy person and be able to to retire by 40.

It took me 10 years to figure out that risk is not always a bad thing.

Matt M. · Answer

Forget finding a "plex." A lot of newer investors get caught up analysis paralysis and on the latest thing they've heard/read. I've got many clients just like you that I've put into 4-5 bedroom homes with 5% down. They rent out the rooms for $750+, live in them a year, and go out to buy another one. Some of them are just a bit older than you and on their 4 and 5th homes. One of my earliest clients to use this model hit his 10th place last year. He's quitting his 9-5 next year.

If you want to retire in your 40s, you won't get there with $70k a year. You've got to be aggressive and real estate is one way to do it.

Sometimes you've just got to jump.

If you want to retire in your 40s, you won't get there with $70k a year. You've got to be aggressive and real estate is one way to do it.

Sometimes you've just got to jump.

Chris Lopez · Answer

@Tanner Westerheid Denver is insanely overpriced based on the [stupid] 1% rule? The 1% rule does not dictate prices. Supply and demand do. There is a lot more demand than supply at the moment. Denver is priced accordingly based on solid market fundamentals, not BS loans like they were 15 years ago.@Bill S. is spot on! Go buy a house hack and then repeat it every year. You'll be retired by 40.

James Carlson · Answer

@Tanner Westerheid

There's no wrong answer here. It depends on your comfort level. That said ... my thoughts ....

• I agree with some of the above comments. You'd be fine buying a 3/2 in Athmar Park/Barnum or East Colfax for under $400k, rent out the other two rooms and in a year or two or three, you can move on to another and continue to rent the previous. You will be fine. 
• What about a slightly higher priced home with a separate basement space? We just had a mid-20s client buy this exact thing. You rent out a room up top long-term and then you Airbnb or short-term rent the downstairs. This could offset your mortgage quite a bit. 
• That said, I don't get everyone's disdain for condos. This was actually my wife's and my first purchase (and later became our first rental). Sure the HOAs can be costly, but it's good experience with the buying process without the higher price point. (Plus, you're 24 and may want to stay in the downtown/RiNo/LoDo/LoHi area and finding a smaller condo in your price range in those areas is doable.)

The most important thing I think is action. I'm a big advocate of your primary residence being your first investment. You have to live somewhere; might as well own it. Then you can start looking elsewhere -- out of state, etc.

Good luck!

Alexander Ball · Answer

@Tanner Westerheid I bought my condo (3bed 2 bath) in Reston for about 200k and make $1,500 a month renting the spare rooms.  I think after accounting for everything I pay like $50 a month.  What that doesn't include is taxes which I'm pretty sure I will owe a lot on at the end of the year.  Renting out spare rooms in a primary residence is not the same as a rental so you rental income is taxed pretty much as just additional income.  It does work though and I am saving/making a lot more in the long run then I would if I just rented.  One thing I've realized is it's actually common enough to find houses that have a basement with a full kitchen.. I'm not talking about a duplex I literally mean a property that is zoned as a SFH with an additional living space.  Keep your eye out for one of those.. a buddy of mine has a property like that here in Norther Virginia where duplexes basically don't exist.  As for out of state investing, I'd recommend getting your feet wet with a house hack.. It's a super hard thing to mess up and an awesome learning experience.  At the very least get prequalified and start looking, you'll find something that works! Good luck

Connor Anderson · Answer

Hi Tanner,

You are in a similar situation to what I was in about a year ago, but luckily for you, you have no debt unlike I did.

For me I couldn't qualify for a SFH to house hack and ended up buying a 2 bed 2 bath townhouse for $260k that I added an additional bedroom to in south east Denver. I also have friends that are having great success house hacking 4-5 bed houses in the $350,000 range and renting by the room just north of downtown Denver.

If you would like I would be happy to grab a coffee or drink and go through some different options with you.

Christine Kankowski · Answer

Sounds like a good option to me.  That is how i started and the tenant paid a majority of the mortgage.  Later i sold it for $100K profit (although I really wish I kept it)

Buying a Condo to get started?

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