Rent by the Room

[Donald Eggers]

Investment Info:

Single-family residence buy & hold investment in Redmond.

Purchase price: $376,000
Cash invested: $20,000

House hack owner-occupied investment turned to long-term hold.

What made you interested in investing in this type of deal?

The most conservative way to break into the investing market.

How did you find this deal and how did you negotiate it?

I bought it from a new home builder I worked for in a market I could afford.

How did you finance this deal?

Owner occupied 5% down conventional loan.

How did you add value to the deal?

I added a 5th bedroom to a 4 bedroom 3 bath house.

What was the outcome?

I lived here for 2 years before buying my second house and rented out each of the rooms. Each secondary room (4) is $850/mo and the primary room is $1,050/mo totaling in $4,450 in gross rents.

Lessons learned? Challenges?

House hack/rent by the room is best with a high bedroom and bathroom count.
I make sure that there is 1 bathroom per 2 tenants/rooms.

Did you work with any real estate professionals (agents, lenders, etc.) that you'd recommend to others?

Kip Pierson with Northwestern Home Loans in Central Oregon
Hayden Homes in Central Oregon

[James Carlson]

@Donald Eggers

Great looking start to your real estate investing. There's really no easier entrance into it than house hacking. Smart to add the 5th bedroom. Here in Denver, it makes so much sense to add that room or just pay a little extra for a 5br house up front. 

In Westminster, a growing suburb northwest of of Denver, the marginal difference in price for a 4br v a 5br is easy less per month than the extra $800-$1000/room in rent you get. 

What's next for you?

[Donald Eggers]

@James Carlson

Hey James, thanks for that, I totally agree! I am also an agent in Central Oregon, which like Denver, is an extremely tight market. Many investors are eating cash-flow with 20% or less down. With that said, I have 5% down in this property, and cash-flowing more than a lot of STRs. I agree, it is a great option for people like me with a little baby portfolio.

What's next (right now): we are currently working on flips. We just finished our second of three flips from the last year and just got it under contract. The third we're going to try to keep as a rental.

What's next (in the future): development. We are looking for houses with larger lots and favorable zoning to utilize our owner occupied loans and subdivide and build while we work there. We are also dabbling in investor funded projects but nothing has stuck, YET!

How about you? How is Colorado, and where do you find yourself on your journey?