Denver, CO- House Hacking or Affordable Ski Access Areas

[Frank Basile]

Hi everyone! 

I am hoping to get some advice on House-Hacking in the Denver, CO area. I currently live in Los Angeles, CA, and have managed to save up $35,000 in liquid cash for a down payment on a house. With Mortgage rates being as low as they are right now, and my willingness to make a company change within my Industry, it seems like this could be the best time to make the transition into homeownership in Colorado. 

My Primary goal is to live in a home in an area relatively accessible to the mountains, ski resorts, and the city. I would be comfortable paying $2,000/mo with Mortgage, PMI, Taxes, etc... In order to achieve my desired location, and not break the bank, it seems that I would need to possibly buy a property with potential as an ADU.

Is this the case? If not, please correct me and I would appreciate if someone could direct me to some towns that would potentially meet my expectations on what I would be able to afford? 

Also, are there any rules/regulations that I would need to be mindful of if I chose to, for example, buy a house with a basement and separate entrance to rent out? 

Please feel free to ask me any questions that might be helpful in providing some effective answers for me. 

Thank you so much!

Frank

[Jeff White]

@Frank Basile Welcome to BP! That's great you were able to save up 35k, which is a fantastic place to start and you can utilize a low down payment mortgage.

Denver metro has a lot of great pockets that work for your goals with price and proximity to the mountains and the city such as Lakewood, Wheat Ridge, Arvada, west Denver (west of I-25), Westminster, Thornton and Northglenn. In all of those cities, you can find single family houses between 400-500k with 4+ bedrooms and 2+ bathrooms. 

Regarding a separate detached ADU in Denver, they aren't as common as you see in Los Angeles. In fact, they are extremely rare here since the cost of construction, permits, time, etc makes it tough on most homeowners.

Have you thought about a house with a separate entrance to a mother-in-law apartment, basement apartment, etc?  Those are the best ones to consider with your goals in mind. The important things to consider are finding a single family on a multifamily zoned lot, number of parking spaces, number unrelated parties allowed in that city/county, and overall lot size (for future development).  

Those types of properties give you multiple options to utilize the rent by room strategy, Airbnb, rent to a long-term tenant, or a combo of two of those strategies depending on your comfort level and time.

If you want the best cash flow, you can find a single family house with a basement apartment, and live in one bedroom, rent out the other bedrooms upstairs, and then Airbnb the basement. It is a little more work with the Airbnb portion, but you will achieve great cash flow, probably $1000+ net cash flow per month over your mortgage.

If you want good cash flow and less work than above, you can buy a 5+ bedroom/3+ bathroom single family house, live in the smallest room, and then rent out all the bedrooms. You will get $750-800 per bedroom that has a shared bathroom, and $850-900 for the master bedrooms with private bathrooms. Net cash flow will be between $500-$1000 per month. Of course, check out occupancy limits in the county/city that you choose.

If you want the least amount of work but lowest cash flow (cover 50-80% of your mortgage payment), I recommend finding a house with a basement/mother-in-law apartment, and live upstairs and then rent out the basement to a long-term tenant.

Denver metro has experience terrific appreciation like most metro markets, and over the last 40 years, Denver averages 5% appreciation, so Denver is a great bet long-term.