Denver medium term rental after a few years

[James Carlson]

Three years late on this, but I thought I'd go ahead and list this medium-term rental in Denver. 

This was our very first purchase in 2015. We intended to use it as a primary residence for awhile. Instead, we found a new place in a year and decided to move out. We knew it wasn't going to cash flow a ton, but we thought Denver had more room to grow and decided to keep it for the appreciation. (Glad we did.) So to juice the rents as best we could, we furnished it and started renting it as a medium-term rental to traveling nurse types. 

Details below the picture. (And more pictures of the unit at the bottom.)

Investment Info:

An 800sf 1br condo in Capitol Hill neighborhood in Denver initially for our primary residence.

Purchase price: $188,000
Cash invested: $20,100 

Initially, we put in $14,600 in down payment and closing costs. When we moved out, we spent $5,500 in furnishings.

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

We loved the building and the unit. It had a balcony and a dedicated underground parking spot love the ability to invest with cash flow and the ability to pull money out to move on to the next project.

How did you finance this deal?

Conventional loan w/ 5% down

How did you add value to the deal?

Didn't do anything until we moved out and then furnished it with what we'd like to think is an attractive style to the traveling nurse crowd.

What was the outcome?

About what we expected. We cover our mortgage plus about $75. But the real value has been in the appreciation we've accumulated in the last few years. (Not to mention tax write-offs and the principal paydown by our tenants.)

CASH FLOW

$1,795 -- average monthly rent

$1,570 -- PITI + furnished utilities
$90 -- 5% repairs
$62 -- 3.5% avg vacancy over the last three years
$1722 -- TOTAL costs

$73 -- monthly cash flow

APPRECITATION
Estimated sales price today -- $275,000
Appreciation since 2015 -- $87,000

Lessons learned? Challenges?

No huge lessons but some thoughts for sure:

• If we had known about house-hacking, we would have gone that route to start. I don't think we ever would have rented by the room, as Erin and I aren't interested in roommates and there are some things more important than cash flow. But we would have done a small single-family home with a lock-off basement that we could short-term rent on Airbnb. The cash flow would have been better while we were there and likely after we left as well.
• That said, I really believe your first "investment" should be your first primary residence. And this was certainly the case for us. We learned a lot about running numbers, leases, and handling tenants. We now have five doors between Denver and Colorado Springs.
• I still believe small spaces can do well in Denver. I just had clients close on a 600sf 1br unit in Capitol Hill that they're going to furnish and rent as a medium-term rental. The numbers will work there.
• Airbnb has been our best driver of business. Zillow does okay as well. So does Facebook Marketplace. Craigslist hasn't landed us a medium-term rental in two years.
• "Traveling nurse" is really short-hand for all kinds of renters. We've had summer interns, judicial clerkship recipients, people transferring to Denver and wanting a temporary space before landing permanently, and yes, some traveling nurses.

Here are some more photos of the place.

[Thadeous Larkin]

@James Carlson - thanks, that's super helpful.  Is there a way to exploit the algorithm so that it doesn't make the cost/night of the place seem so high when you're setting a pretty heft minimum number of nights?

The City Council meeting was cancelled due to weather because even God thinks the proposal is a stupid one and is trying to prevent it from becoming law.