Minnesota to Colorado?

Question

Hey BP Community!

I recently had a family member move from the Midwest to Colorado (near Loveland) and am considering also making the move. I had posted a few months back about my desire to buy and house hack my first property after becoming debt free. I have been saving like crazy and will have about $20,000 to put toward a down payment/closing costs by the end of the year.

Ideally I am looking for a muli-family, but would also consider other strategies such as the rent by the room.

My question to all the Colorado RE investors, what are some good cities/towns to start to search?

To narrow the focus, I am willing to look anywhere from Denver up to Fort Collins.

It would be a dream come true to live in Colorado.Thank you so much!

James Carlson · Answer

@Mike Paisley

First off, congrats on saving a bunch and being ready to buy. You've got the cash now to likely make a move with a lower down payment. That's awesome.

As to where to house hack in the Denver area ... man, that's up to you. I'd talk to a lender first. What do you qualify for? What do you feel comfortable spending? (Not always the same thing.) That number will play a big part in dictating your search.

After that, think about locations that you like. Denver's the big city. More to do, higher prices. You can find reasonable homes just on the outskirts of downtown (I'm looking at you Athmar Park & Barnum neighborhoods and you too, Chaffee Park.) Going north and west is always a good option. (Westminster, Thornton.) You'll be more suburban and get more house for your buck.

Also think about your biggest goals. And be real with yourself. Is making the most money the highest priority? Or does location factor in at all? Does maintaining a sense of privacy matter to you? The spectrum of house hacking ranges from more money/less privacy to less money/more privacy. We have some clients who are open to roommates and willing to sacrifice privacy to crush it on the spreadsheet. Others know themselves and while they could make more money with rent-by-the-room, they value a little privacy more and opt for the basement apartment setup.

I wish you luck!

Craig Curelop · Answer

@Mike Paisley - Congrats man! The hardest part in saving for your first down payment.

Multi-family is tough in Denver. You can find things that work... but they just won't cash flow nearly as good as any rent by the room type of investments. Though, they are much less work.

I have had clients successfully execute the rent by the room model up and down the front range. You will just want to be careful of occupancy limits.

As for specific towns, I have seen the most success in Arvada, Westminster, Thornton, Lakewood, and Loveland/Greeley up north. In Greeley, you need to make sure the zoning is right.

Ian I Leinwand · Answer

As others have pointed out above talk to a lender and get pre-qualified. There are FHA programs and other programs that allow you to only put 5% down. So with 20k you would qualify for a house in the 350-400 range. You will also need employment to qualify and good credit.

Narrow your search area. You are unlikely to find a multi-family in Norther Colorado or Denver area for less than 400k. You will have more options with a house hack.

Daniel Haberkost · Answer

With only $20k multifamily may be difficult, if you go FHA you'll have enough for the down payment but there won't be much left in reserves. Here in CO Springs that would be tight and up where you're looking it's going to be even more expensive. When I first moved here (also from the Midwest) I was intent on house hacking a multi family yet ended up having to go single. Turns out, renting by the room here works extremely well, there is such a lack of affordable housing that you're able to get a large pool of responsible tenants very quickly when looking to fill vacancies. I've had no vacancy renting by the room and my tenants stay for the long term. So if you do end up going that route just know it can work very well.

Whatever you choose to do, I think you'll be very happy you made the move here! It's quite the improvement over the Midwest.

Ben Einspahr · Answer

@Mike Paisley

I am currently house hacking in Arvada. My wife and I love the area.

Keep in mind, it is not necessarily a deal breaker if your rental income is not covering 100% of your mortgage. After all expenses you are out $500/month, that is still a win in my book. More importantly focus on number after you move out.If you are planning on repeating the process again and again, your first HH does not need to be a home run. Its important to get your foot in the door vs. sitting on the sidelines for 6 months looking for the "perfect investment". By getting creative and sacrificing a little of you living space you can make just about any 4+ bed SFR work.

Best of luck!

Mike Paisley · Answer

Thank you @Craig Curelop and @Ian I Leinwand!

I just got done listening to the BP podcast (Craig) where you explained how you moved to the Denver area from Silicon Valley. Great story and very motivating. From my understanding, finding a 5BR for under $400k is a great place to start for rent by the room strategy. I will narrow my search to Arvada, Westminster, Thornton, Lakewood, and Loveland. Thanks for your input!

My goal is to move to the area and as long as I am in a situation where my first property is break even and my housing expense is covered, I will be able to save even more $ (I work remote and can work/live anywhere) until I can purchase a second property. At that point in time, I will have my boots on the ground and have a better understanding of the marketplace.

Mike Paisley · Answer

Thank you for the feedback everyone! So it sounds like I might need to be a little more patient and save more than $20k?

I'm not opposed to going the single family, rent by the room route to get into a property within my budget and still have my mortgage (or at least the lions share) covered.

Is there anything else I should be considering/taking into account?

Patrick Soukup · Answer

Sweet! Northern Colorado and Denver are getting pretty pricey, but with $20k, you're really close to being able to do it.I love what you're considering and hope you're able to make it happen! Happy to connect if you find your way out here.

Aaron Zimmerman · Answer

That's great that you've been saving so much. However, you might not want to rush in and have some more reserves unless you get multi-family houses there for cheap. I'd recommend having at least three months of expenses. Depending your area, it might be enough but just wanted to bring to your attention.

Minnesota to Colorado?

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