House Hacking a New Build in Berthoud, CO

[Jamie Brown]

Investment Info:

Single-family residence other investment.

Purchase price: $370,000
Cash invested: $30,000

This is a new-build house I purchased to house hack. I rent the master suite and a secondary bedroom/bathroom for a total of $1,800 per month. My portion of the mortgage is $300. With the money that I'm NOT spending on my own mortgage, I'm paying off the HELOC I used to purchase it (taken out on my other rental property) and am saving up for my next deal - hopefully a multi-unit along the Colorado Front Range.

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

I didn't want to spend a ton of money on my living expenses each month, but also didn't want to live in a sketchy area as a single female. Purchasing a new build in a steadily growing area has enabled me to get a good house (with some equity already) and have roommates pay a majority of my mortgage. It's a win-win; 1) they get a great place to stay, 2) they're paying my mortgage 3) I'm saving enough of my own money that I can purchase another investment property soon.

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

I've been stalking the MLS for about a year and noticed this good deal come up. I talked with the builder and was able to get an even better deal as an end-of-the-year promotion for a market home (which means I didn't get to choose any of the finishes).

How did you finance this deal?

I took out a $30,000 HELOC on my other rental property.

How did you add value to the deal?

Part of what made this house a great deal is that the end-of-year promotion included a bunch of upgrades for free. I got landscaping, a fireplace, granite countertops, up-graded cabinets, a patio, and an additional bedroom + bathroom for the normal base price. The extra room/bathroom enabled me to get another roommate, and ask more for a really nice house.

What was the outcome?

I'm renting the master suite to a young professional couple ($1,100/month), and a bedroom/bathroom to a nurse ($700/month). So far the roommate situation is going well. Eventually I plan to rent the entire house out when I move on to my next place.

Lessons learned? Challenges?

Always have more $ in savings than you think you'll need, especially for a new build. Those little things like internet setup, extra furniture, blinds, etc. add up quick. Also, wait for the right roommate and trust your gut - even if it means paying the mortgage by yourself for a month or two. Dealing with a person who doesn't feel right (especially when you're living with them) is only going to end badly for everyone.

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

CityWide home loans gave me a great rate and great service. I was also pleasantly surprised with Richfield (home builder).