Denver peeps! Help a newbie analyze a house hacking scenario!

[David Chen]

First time homebuyer and new to the real estate investing world. Thanks for all your advice in advance!

I am a newly graduated dentist looking to house hack in the area just west of Denver proper. I am currently looking at a property in Lakewood, close to Edgewater, with a purchase price of $432k. The property is a 3 bed, 2.5 bath townhome "row house" in a newly built complex. The immediate neighborhood leaves something to be desired at the moment (think liquor stores, pawn shops, industrial businesses) but surrounding neighborhoods (West Colfax, Edgewater) have seen significant growth in the last few years, and the property is near a light rail station and is a 15 minute drive from downtown Denver. I am considering jumping into a house hacking situation here.

I will only be able to afford a down payment of about 3% at the moment, and am looking at a loan package with an interest rate of about 5%. According to some estimates I have done with my real estate agent, my monthly mortgage along with other expenses (taxes and insurance) will come to about $3000 per month. I am planning on renting to a family member at a slight discount as well as another roommate. Based on similar listings in the area, I would conservatively estimate that I could rent my other two rooms for a total of $1600-$1800, leaving myself with a monthly expense of $1200-1400 per month. My short term goal is to move out of my parents' basement while paying a mortgage (after rental income) that comes out to what I would pay for a comparable rental situation. My long term goal is to build a portfolio of buy-and-hold rental properties that will hopefully segue into a comfortable and hopefully early retirement.

My concern is that this property, as the numbers stand now, will not be able to generate a monthly cash flow (even if I factor myself in as a renter). It seems like most (non-distressed) properties in the greater Denver area are in this same boat. It just seems all the "Rules of Thumb" i.e. 50% rule or 1% rule found in the Bigger Pockets books are nearly impossible to find in a market like Denver. I will not be able to dedicate a significant amount of time or financial resources toward rehabbing a property due to my job. Although it is generally advised against, I will be hoping for appreciation to make this a better long term investment.

In a situation like mine, would you consider this a viable investment for my long term goals? Would it be more prudent for me to save up more capital for a rehab or look harder for a better deal? Is it ever ok to consider a negative cash flow situation by betting on above average appreciation? THANK YOU!