Why I did 2 House Hacks in Denver, and you should too

[Daniel ONeill]

Hi!

My name is Danny, and I am extremely involved in the real estate industry. I work for a private equity multifamily company, I have my CO brokers license, and I am just over two months into my second house hack in the Denver metro area. Below is a brief rundown of my first two house hacks, and why I think everyone who is considering getting started in real estate should house hack.  

For my first deal, I closed on a house in Centennial CO in November of 2019. It was a 6 Bed, 2.5 bath (if you include the office and a not to code room in the basement), I put 3.5% down, and even got seller concessions which helped me with my closing costs so the house was mine for about $15K. I added a full bathroom in the basement, and ended up cash flowing it for approximately $600 a month after all costs in addition to living rent free( PIMI + Repairs). Obviously having 5 roommates wasn't ideal, but the savings were huge and I liked the idea of doing something entrepreneurial outside of work. 

Supposedly the house has appreciated $20-30K in value (makes sense given that interest rates have dropped and people keep moving to Colorado...?) before including the upgrades I made to the house, but I don't bank on that as I haven't actually sold it and realized those gains. I do see the amount of money coming into my bank account every month and it has been great for my savings so what I am doing is paying off. Since moving out, I have put another tenant into my old room, and make an additional $650 / month, so I am conservatively cash flowing $1250 while having a beefy $500 budget to deal with any issues that may arise. 

Fast forward to August of 2020, I now have my brokers license which I use to monitor the Denver market for deals, and I saw what appeared to be a opportunity that seemed too good to be true. It is a 7 bedroom, 4 full bathroom house not far from the University of Denver area. The house was priced below market, and after calling the seller's agent, they made it clear that they wanted a buyer that wasn't going to be difficult and to take the house in "as is condition", although they didn't expect anyone to waive the inspection contingency. Long story short, after completing due diligence and using an inspector, the house appeared to be in great condition. Although it had some weird ADA alterations that were made to it, it made perfect sense to close on.  I submitted an offer $10K above asking price to lock up the deal and make sure that I won it. I was awarded the deal, and I am so far extremely happy with the purchase, and the appraisal that was $10K higher than my offer confirmed my suspicion. 

My original plan was to rent out 6 of the rooms and live in the 7th, but I ended up changing that plan after walking the house with a contractor. The far side of the house already had connections in place that would make it really easy to add a mother in law suite, in addition to a separate entrance. I added a door to wall off the mother in law suite which I now live in, and had a contractor add a sink, stove, cabinets, and also had them tear out the rug in that "7th" room to add vinyl plank flooring. After years of saving money by living with 5 roommates or in craigslist apartments, I now have my own bathroom, kitchen, and separate entrance : ). Oh, and did I mention that I am cash flowing this house by about $300 a month while not paying any rent or costs associated with living? If and when I decide to move out, I estimate that I will be able to get $950 for the space that I am living in, which again would give me another passive(ish) stream of income of about $1250 / month. 

Seeing the size of my bank account grow over the past year has been awesome, and I love the idea of being financially independent ASAP. These two house hacks are pushing me in that direction, and I believe that I will have a lot of flexibility in my life if I stay on this path. Do you live in Colorado and want to replicate my strategy? Send me a DM and we can make that happen, I would love to be your agent and show you how to find a deal similar to one of mine!