First time homebuyer - hoping to HH in Berkeley / Sunnyside

[Account Closed]

Hi all,

New to BP but incredibly excited about the community here and have been reading through the list of BP books. I have always been very diligent about maximizing retirement and savings with my W2 job but I’m realizing that saving can only take me so far in terms of wealth building.

I am a first time homebuyer and hoping to dip my toes into house hacking or Airbnb with my first home. I stayed at a Airbnb in someone’s basement on my first visit to Denver and loved it so that is definitely the direction I’m leaning right now. 

I'm currently renting in Sunnyside and am hoping to stay in this area. I have around $50k to put down on a house right now and could possibly ask family to help with more. I need to stay in my current lease til May 2022 but am starting the hunt now. My current thought is to find something in the next few months, purchase it, then start a rehab so I can move in and starting having folks in the basement (rent / Airbnb) once my lease is done. I'm still not sure what my next steps for real estate investing are - whether it's BRRR or flipping - but I'm thinking doing this process for my first house would be good practice and I could start developing some of the skills necessary. Plus I can identify which parts of the process I enjoy the most and start building a team and systems to manage the rest of the process.

I’d love any feedback on this plan and any thoughts on whether this is feasible in Sunnyside / Berkeley. Thanks in advance and happy to be a new member of this community!

[Ben Rhodin]

Hey @Account Closed! Welcome to the forums and welcome to the amazing world of REI. You are definitely on the right track to get started early and be in a position to move when you are set up and ready!

There are a few things to take into account reading your plan. First is since you will be using a low DP owner-occupied loan, you are required to occupy the home within 60 days of closing. So that is something to keep in mind when planning out your timeline. So if your lease is up in May 2022 and you want to stay there until then, I would plan on closing on a place around the end of February, which would give you two months to rehab it. 

The first step would be to chat with an investor-friendly agent, and lender to get your plan situated. Sunnyside and Berkeley aren't the most affordable places in Denver, so depending on your goals of house hacking and your ability to obtain a high enough loan may adjust your plans a bit. So getting an idea of what you will be able to qualify for is the most important step, as it may adjust your areas or strategies.

Your first house hack will be great for gaining experience and setting you up for your future investments. It's a great low-risk entry point, and the rent savings are what really skyrocket you. Your 50K saved will be a good amount for a DP and some rehab depending on the property. I would also dig into the Denver STR requirements and regulations just to gain some familiarity with what the setup process is so that you aren't stuck with figuring it out once everything is ready.

Another thing I wouldn't discount is...Check your current lease. Are you allowed to sublease (or Airbnb arbitrage?), or what is the penalty for early termination? The reason I ask is that a lot of the time when you get set up and ready for purchase, it doesn't make financial sense to stay in your lease. Why pay $1500 in rent (or whatever you are paying) for the next 6 months, when you could spend the $1500 to terminate early and save that extra $1500 a month from living for free at your new house hack? Just something to keep in mind, always look at the whole picture and see where your money is best put to use, even if you have to lose your security deposit, you may save money in the long run!

Happy to discuss more and help you get started on your search!