Budget question: how much house can I afford?

[Caitlin Caldwell]

Hello all!

My husband and I are just getting started on our real estate journey. We're heavy into research mode and looking to buy our first property in the next few months. Right now we're leaning SFH BRRRR method but also debating starting with a few flips to build our cash reserves. Either way, we'll probably take out a hard money loan for purchase/repairs and then either sell or refinance to a conventional loan. We're also looking to invest in our local Denver area, so definitely not in the cheapest market.

Since we'll do hard money loan to start, how do we decide how much house we should be looking for? If we're planning on BRRRRing, is it just a matter of what our personal DTI can afford on the conventional loan when we refinance at 75% LTV? If we know we'll just flip it, how much is too much? Is it just a matter of finding a HML and seeing how much they'd be willing to give us?

I certainly don't want to get in over our heads, but with the Denver market I also realize it's pretty slim pickings for sub 300k homes. Any advice you can give would be greatly appreciated!

Thanks all,

Caitlin