NW Denver House Hack

[Chris Freeburg]

Investment Info:

Single-family residence buy & hold investment in Denver.

Purchase price: $475,000
Cash invested: $30,158

House hack in NW Denver.
Main floor (2BR/1BA) rented: $2,000/mo.
Basement (2BR/1BA, with full kitchen) projected rent (summer 2021): $1,500/mo
Monthly cashflow after fully rented: $1,000/mo.

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

Previously house hacked with STR rentals in New York.
Moved to Denver: wanted more privacy and less management while still utilizing house hacking to minimize my mortgage payment and leverage a small cash investment in an appreciating market.
Decided to target SFHs with separate entrances and full kitchens.

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

I found the property on the MLS and made an offer through the brokerage I later joined professionally as a realtor (CJV Real Estate).

How did you finance this deal?

30-year mortgage. Refinanced in summer 2020 to take advantage of low interest rates.

How did you add value to the deal?

Fresh paint to modernize living space (purple bedroom, orange and green patio space -> all are now modern gray w/ white trim)

What was the outcome?

After one month vacancy, rented top unit at fair & competitive rate near top of the market.
Lease signed for 18 months so renewal timing will land in the spring when there is more tenant interest.
Plan to purchase next house hack in summer 2021 and rent basement at which point, investment will cash flow $1,000/mo. in an appreciating market.

Lessons learned? Challenges?

2BR/1BA not as desirable as 3BR/2BA: Storage and multiple living spaces are appealing.
Garage, large yard, and allowing pets attractive for many tenants: I added non-refundable pet deposits and increased rent per pet.
Renting in fall/winter is a challenge: I experienced one month vacancy (standard to expect 5% vacancy).
Prioritized tenant selection: Tenants (Denver landlords themselves) are clean & pay on time.
Decided not to allow marijuana to minimize liability: reduced some interest.