All Forum Posts by: Ben Einspahr

@Jacob Shumate Here is some food for thought:

- If you are not already, I would aim for not including utilities in rent. Could drive for more applicants.

- Marketing 60 days out might be a lot if your lease agreements are 2-3 months to start off. It would start with first identifying if you as the landlord want to extend the lease agreement and if the tenant is interested extending. I would have this identified 30 days prior so you can start marketing asap. Do you agree Jeff White?

- Would think you would be able to have room filled with in 2 weeks. If you are past that time line, drop monthly rent to less than $725 per month. Don't be going months on end with empty room just because you are set on a price you want.

-FB market place should do the trick.

@Alfred Hall Love the idea and thinking outside the box! This may sound like an echo to what @Alan Le and @Erik Browning said but simply put, this is a very difficult strategy for the first investment property.

As you already know the VA loan is by bar the best route to go because that is where you will get the most leverage. However, the larger you go does not mean the better of a deal you will be getting (mainly for the Denver Metro Market).

I am a huge fan of keeping it simple (especially for the first investment). If you are bringing the family into the mix, I would go with the SFH with some form of separate income suite that does not require you and you family to live in the basement. ADU or separate mother-in-law suite. You will get your privacy and some additional income to offset living expenses.

This is coming from someone that has executed similar strategy a few times with a growing family.

I will follow up with some additional resources to help point you in the right direction.

Best of luck!

Hello BP community. Wanted to highlight the details of Sean Links first house hack purchase. Deal closed July 2023. Investment details below! Great job Sean battling through all of the challenges with this first one!

Investment Info:

Single Family Home. 6 Bedroom/ 3 Bath

Main House = 5 bed/ 2 bath. Rent out to section 8 tenants.

ADU= 1 bed/ 1 bath. Rent out on a separate lease agreement (not section 8).

Purchase Price:

$530,000

Cash Invested:

$37,000

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

I have a great job as a software engineer but eventually want to be a teacher. Looking for a way to decrease my living expenses, invest for my future, and live comfortably on a teacher's salary. House hacking was the perfect solution after educating through podcasts.

How did you find the deal and did you or the agent need to do any negotiating?

My realtor Jeff White found the deal on the MLS. There was not a lot of negotiation with price but keeping the deal alive took a lot of negotiation (having an investment friendly agent matters!). My original lender backed out at the 11th hour and I frantically needed to find another lender (thank you Troy Howell). Bad appraisals were a huge problem on this deal and required us to go back to the seller multiple times asking to extend our deadline to close.

How did you finance the deal?

Conventional loan with 3% down as a first time home buyer. I have a high paying salary as a software engineer and actually switched jobs so I could increase my salary and buying power. Before I switched jobs, I was making $90K/year and could afford to borrow 400K. I am now making $126K/year and was able to borrow up to $650K.

Did you add any value?

We added Egress windows to the property so each room can be rented out. Also required some miscellaneous electrical repairs.

Photo Showing ADU + Main Portion of the Home

Projected Monthly Income After Moving Out

Projected Annual Return After 5 Years

I was thinking about the estimate I gave to build a kitchenette from scratch. To clarify, that  of 15-25k estimate is just for bare minimum to build kitchenette. Keep in mind if you are doing a full rehab to the basement, it could cost north of $50k all depends on the level of upgrades you do.

@Jake Andronico great job on the renovations! One thing I did not make clear in the post was that those photos I attached were just some examples I pulled from random listings where said renovations would make since.

Hello BP Community! I recently had a conversation with @Jacob Munson about Denver House Hacking, during which he asked an excellent question: “What are some typical renovations you see for house hacks?”

This is a very common question I receive, so I wanted to share the details here for others to learn from.

Some Less Common Renovations:

-ADU Build Out- Building an Accessory Dwelling Unit (ADU) from the ground up in the Denver Metro Area is an expensive and time-consuming process (costing over $200k and taking 2+ years to complete). In my years of experience, we have only had one client execute an ADU buildout. While it is possible given the investor's goals and lifestyle, I would not recommend this for a first investment.

We recently talked with "that ADU guy" diving deep into the world of ADUs in Denver and how to build. Happy to share my notes for anyone that is interested.

-Building a basement kitchenette from scratch- Building a basement kitchenette can be quite expensive if there is no existing plumbing that can be easily tapped into. Demolishing concrete for drainage and routing new plumbing can cost $15k-$25k for the whole project. All depending on the level of finishes you go with and amount of work needed. We have had a few clients do this and were pleased with the outcome.

Most Common Renovations:

Most of these can be a DIY project with some help from YouTube videos (excluding adding the washer/dryer for any electrical work needed).

-Framing a wall to create a separate entrance- In the Denver Metro, it is very common to have a basement entrance located close to an exterior door, such as a door leading to the backyard or garage. With some simple framing and drywall, this can be done for less than $2000.

If you are a visual person like me, here is an example (door leads directly to basement):

-Using existing plumbing to create kitchenette-

Basement utility sinks can easily be converted to functional kitchenettes. All of the plumbing is already there. You will just need to update the sink, cabinets, flooring, etc. Make it look pretty and functional! With some DIY videos, this can be done fairly inexpensive.

Example below:

-Adding a Second Washer and Dryer

Most single family homes only have 1 washer and dryer. Sharing can be an inconvenience. It is pretty common to add a small stackable washer and dryer so laundry is not shared and will make renting after moving out easier. When all said and done, this can be done for around $5k. Some can be more expensive than others

We just recently did a case study of an ADU basement buildout. Happy to share the details + before and after photos!

@Chase Jacques-Maynes love the aggressive goal! It is typically not recommended to put a house hack under an LLC while you are living there.

Most do it after moving out and turning it into a stabilized rental. If you want to insure you are protected, don't go cheap on insurance. That will always be your first line of defense, even if you have an LLC.

I just recently interviewed a few lawyers we work closely with and asked them a similar question. "Should I put my House Hack into an LLC?" Ill DM you my notes.

Best of luck

@Rony Rockford Congrats on the first post. I would first double check Lubbocks rules and regulations regarding STRs. Here in Denver, you are only allowed to have one STR per dwelling. You can always have one as a STR and the other set for min stay as 30 days? That could work.

Also, I do not think you need to hire a STR PM if they are in your primary and you only have a few. With a few systems in place you can easily self- manage (hiring out cleaning, auto messaging, etc).

If you are renting by the room, I do not think the juice is worth the squeeze renting furnished. I would just list them as unfurnished on 6 - 12 month lease agreements. Easier to scale if you are planning to move out and stabilize in 12-24 months.

I self managed a few STRs + MTRs for 4+ years. Happy to send some of the helpful tools I use. Let me know.

@Kristen Dolotina, First question that i would ask is why is your perfect agent recommending this lender? Have they been doing business together a while? Does this lender have a solid track record? Do they answer the phone outside of business hours? Is there underwriting in house?

These are all questions that can be answered on a simple 30 minute phone call with the lender. 

A very common question I receive is, “Ben, whats the best places to house hack?” I can not answer that simply because... well it depends! Depends on your goals (short and long term), privacy needed, ability to work remote, liquid cash available, etc. What I may consider a great house hack (married with a family) could be completely different from someone just graduating college!

What I can do is provide concrete data where some recent house hacks are and are NOT being purchased. Then let you come to your own conclusion. 

Attached is a map of some of the recent transaction closed. In addition to House Hacks, it breaks out Nomads, and Traditional Landlord Rentals.

Some things I notice.

• Majority are West of I-25
• Not to many centrally focused in the Denver Metro?
• Top Cities
  • Arvada
  • Wheat Ridge
  • Lakewood
  • Westminster
  • Thornton/ Northglenn
  • Aurora
• Not so popular cities
  • Parker
  • Littleton
  • Englewood

Hope you find value in this data! Happy to dive deeper into the data if anyone is interested. Let me know!