All Forum Posts by: Adam D.

We would like to help you with your search. My wife and I started with a duplex in Aurora. We lived in one side and rented the other side out. After doing updates and upgrades to the house, the rent from the other side paid all but $50/mo of the mortgage. Then we saved the money we would have spent on the mortgage for a down payment on our second duplex in Aurora about 18 months later. We kept at it and have built a nice portfolio. We can be of better help and give more specific guidance if we have more information such as...

Location of job 

Expected commute time to job or distance from job

Family income and expected home price

What kind of updates can you do yourself to the house?

Required # of bedrooms and home square footage

How much do you care about school quality in the area

In your first bathroom pics, why didn't you move the towel bar up from 6" above the toilet? that's unusable! In the second bathroom, why do you have a gold door handle and brushed nickel faucet and shower kit? This screams "homeowner DIY" rather than PRO. There are many missed details. The devil is in the details and those details will take 10k away from your profits every time. They only take about $800 to fix though. Take the time and make it coordinated.

So, for a personal loan, we have used in the past, cash advances on credit cards. They can have a 0% rate for 12 months or maybe 2-3% rate for 18 months. The down side to credit card cash advance is that there is a 3-4% fee on day one to take the money out. But, if paid off in 12 months, it comes out to about 4% which is better than the 10% you quoted above. 

Another thing we have done is we have applied for and gotten a personal loan from one of our banks. You may have to pledge something for it or maybe nothing. We had the option of stretching out the payments to 5 years on that loan but the rate is 7-8%. Check with your banks about rates for personal loans. 

We have also encouraged our tenants to take a title loan on a car. You might think about refinancing a vehicle. We have no experience with that though. 

With a mortgage for an income property, make sure you submit your entire written and signed lease to the mortgage company/bank for them to use as extra income. After you finish your basement and have 2 tenants in your home, you should be earning a significant sum. If the tenants won't sign a 12 month lease, ask about a 6 month lease which converts to mo. to mo. after the 6 month term. If they don't want that, at bare minimum have a written month to month lease for them to sign to present to the bank.

This really depends on your prequal. maximum. Talk to a lender to see your max budget. Having said that, 4-plex may or may not be an option. Also, you're missing closing costs for your loan, and other fees like inspection, appraisal. Add 1.5% of the loan total to be safe. 

For your estimated rent, make sure you check multiple sources, craigslist, zillow rental, hotpads (now owned by Zillow), apartments.com, rent.com, rentals.com. Depending on the size, square footage, location, you may be surprised. If it's a 1/1 on each side, your assumed rents are high. If it's a 2/1, they may be ok depending on location and square footage. Also, if you're living in one side and renting the other of a duplex, you don't need a manager because you're right there. You said house hack so you'll probably live in it, then your numbers change but you'll still be paying less than what you pay in rent right now and you'll own the place.

If you want a multi for 300k in the Denver area, look to "old Aurora" bounded by Yosemite on the west, I-225 on the east, 6th ave on the south, or Montview Blvd. (20th ave) on the north. That's where we started with a duplex. Also, I would consider buying FHA rather than conventional with 10% down. You'll want some cash left over for rehabs. Co.Sp. is another good area for your price. However, it all depends on where you work. You don't want to make the commute from Denver to the Springs or the Springs to Denver daily.

@Billy Barnes Hi Billy, good for you to want to invest in RE. My wife and I live in CR too and have some properties. We always recommend to people that they buy a multi unit 2-4 with FHA financing as a first step. Live in one unit, rent the others out. If you don't want to be a landlord yet, you could buy a single family again with FHA financing or some low down financing option and do a live in flip. I would recommend this because you're interested in flipping. Depending on where you work, you might look down to Colorado Springs. You can find some older, handyman specials or properties in need of TLC. We don't know anything about wholesaling and don't want to get into that aspect but you can find some great articles on Bigger Pockets about each aspect of RE investing.

You could get an electric radiant cooktop with a single element. Just have a regular 15 amp 120volt outlet under the counter inside the cabinet where you will put this. After your final inspection, pop this into the laminate countertop and plug it in. No rewiring required. Most people only cook on 1 or 2 burners at a time anyway so it should be fine. 

Here's one:

http://www.homedepot.com/p/12-in-Radiant-Electric-Cooktop-in-Black-with-1-Element-CR1115/203753700

We've worked with FirstBank to close two 4-plexes in the last few years. They are holding them in their own portfolio.

If you're going to hold the property for 7 years or more, new is probably great! Nothing should need to be replaced because it's all new so maintenance may only be landscaping, which can be the responsibility of the tenant. After that, you'll have to budget for exterior paint around 7 years, then maybe a water heater, builder grade WHs are only the 6 year kind. However, if you plan to sell within 5 years, from my experience, unless there is high appreciation, you may not be able to get back what you paid for the property when new. New properties tend to sell at a slight premium to 10 year old buildings, but that's because everything is new, you get to pick colors and finishes to customize it to your taste. 

If, however, you can buy the model home, these are usually the last ones to sell and builders are sometimes obligated to sell the models before opening up a new section on which to build. If that's the case, you may find a motivated builder seller to buy from. However, it's not really a "new" house then because they've used it as an office and had thousands of families tour it so there will be a bit of wear on the flooring already.

Good luck and happy investing.

Find a local branch of First Bank, efirstbank.com and talk to a lender there. We have used First Bank for rental properties and will continue to do so. They are a portfolio lender and seem much more flexible than other banks that sell the loan to others. Because they keep the loans on their books, they are more flexible with terms. You may be able to use your rental income as a regular income when qualifying for the loan. We just closed a 4-plex in the Springs for about 5.5% interest but I have a full time job to fall back on so not sure about your self employment situation.  Good luck.