Sold the DREAM home, bought a "duplex", House-hacked and Airbnb'd

[Michael Vialpando]

Investment Info:

Small multi-family (2-4 units) buy & hold investment in Colorado Springs.

Purchase price: $430,000

Cash invested: $30,000

Hello! I'd like to share an update on our last adventure and thank you all for the help along the way! Last year, we moved away from our 5 acre, 5 bedroom "dream home" with a creek in Monument, Colorado. We traded it in for a 1898 Victorian in downtown COS. It is a 3/2 with a 1/1 cottage that we Airbnb'd. The swing in cash flow was $3,195/mo in our first year. My wife has been able to reduce work and focus on going to NP school while I've been able to save up cash quickly for the next deal!

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

House-hacking from listening to Brandon Turner and Scott Trench's Set for Life book were very influential. The low entry cost and risk also made the decision much easier.

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

We found this deal on the MLS. We paid top-price for the house since it was move in ready. We outbid with an escalation clause and then negotiated new roofs, furnaces, and hot water heaters - everything else was already new.

How did you finance this deal?

We used conventional owner-occupied financing - 5% down, 30 year fixed. We liked the low rate and the long term rate for better cash flow.

How did you add value to the deal?

We didn't have to do much besides the furnishing and decor. We did some landscaping to add curb appeal, but that was about it.

What was the outcome?

We used to have a negative cash flow at our "dream house" of NEGATIVE $2,637 a month. We purchased the old house for $393k, but with taxes, insurance, utilities, repairs, and other monthly costs, it brought us up to a large monthly liability.
With the new house, after all expenses (and outsourced cleaning) and even saving for capex and repairs, we were cash flow POSITIVE $558 per month.
That swing in cash flow was $3,195 per month. It has been amazing.

Lessons learned? Challenges?

We learned a lot on the fly, but also avoided a lot of headaches and expenses thanks to all the information here on BP. We also have to give lots of credit to Daniel's book, Optimize Your Airbnb, so we quickly climbed the ranks to be in the top 1% of listings in the area for 1 bedroom listings.

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

We worked with traditional residential real estate agents from The Behr and Behr Team with The Platinum Group. Leah is absolutely amazing and on top of her game! Nothing slipped through the cracks and she helped address and negotiate concessions.