All Forum Posts by: Ben Rhodin

Hey @Marni Hall! Welcome to the community and congratulations on leaping to step up your Single Family. There are a lot of factors that will go into your trade-up, and depending on the scale you want to go. Im assuming that you would want to take advantage of a 1031 exchange on your single family to move into a Multifamily?

I would first get clear on where you are heading, and how much you are expecting to clear from your sale in order to better establish a buy box for the replacement property.

Hey @Diane Kruse! 

For our rentals, we typically end up with either Dent and Scratch appliances from the big box stores, or we go to Corn's appliance in Arvada. It all depends on where you get your used appliances, as there are too many stores out there that just pick anything off the street, give it a clean, and then put it out in the showroom as long as it runs. So at least go with a reputable store and not just the one that gives you a washer/dryer set for $300. They will break.

We have used appliances in most of our rentals, and they have all lasted longer than 3 years so far with no issues. One other thing is buying simple machines and not new and fancy ones with all the electronics, just more things to break.

Hey @James Humphrey!

James Carlson covered it pretty well below. Denver has never been a "cash flow" market. Especially as of late when rates and prices are high. I would also point out that the idea of Cash flow is very subjective, if you buy something in cash, yes it will cash flow, but it will be a very low ROI. So it all depends on your leverage position.

We have still been able to find cash flow on LTRs here in the Denver metro and surrounding areas, however, it usually involves a big value add, or buying a very poorly operated 5+ multifamily property where you aren't competing with homeowners or house hackers. If you want to create the cash flow and high returns, you have to be willing to put in the effort and do what others wouldn't do. 

The other options are in the creative financing space, either seller financing, or sub2, these options also can provide a sustainable cash flow model, because you are getting below market terms. 

I never like to hear that cash flow doesn't exist, as it's not true, it's just tougher to find, and you have to be willing to work for it. Nothing good comes easy, and as James also pointed out, in the long term Appreciation is what truly will propel you to wealth, not cash flow. But you can find things in Denver that will cover its own cost, or kick off some cash flow even in the LTR space, as long as you buy right.

Hey @Drew Hunter! Already some solid advice in here, and you are in a very advantageous situation. Boulder is a great rental market (if you got in at the right time and are looking for the long-term), but as Steve mentioned, you do have a lot of trapped equity, which isn't doing you any good and I'm sure if you did a ROE (return on equity) test, the property would be underperforming compared to other investment vehicles. 

This is a simple problem that I run investors through on a weekly basis, and it comes down to where will your capital be best spent, and how can we optimize your portfolio to best serve your goals. As Steve mentioned, Cash out refi is probably not an option, as the Boulder property probably would stop cash flowing at that point with rates where they are at. HELOC will be tough and costly because it's an investment property. You can't really optimize it because you can't STR a nonprimary in Boulder, but you might be able to do a furnished MTR depending on the property size. So selling would be the only effective way to access your capital. So then the question just becomes, can I get a better return on that equity elsewhere, if so... it might make sense to sell. and really anywhere in Colorado will still be a strong appreciation market, so I wouldn't worry too much about losing that. We have numerous Boulder rentals that we are possibly looking to do the same with, and I'd be happy to run you through my process on the Sell vs hold question! Just feel free to reach out!

Hey @Samantha B.! Congrats on the live-in flip. Those are some really solid numbers! Are you looking to put those profits into a new Live in Flip? or where are you heading with it?

Hey @Tanner Krall! Welcome to the community, and sounds like you've already got a few properties under your belt. What are your goals to continue expanding your portfolio? The easiest and most approachable strategy would be to continue your house hack journey and get a new primary, when you've reached 10 months in your current primary, and just rinse and repeat the STR strategy.

Hey @Andrew Tinnon! Welcome to the community, and you have definitely chosen the correct path with your past experience. For your first one, you can bring in your expertise in construction to have a competitive advantage with partners. I would focus on finding a more experienced investor in the fix and flip space, and bring them value by handling the rehab and doing the labor for it, in exchange for them funding the project and assisting with the numbers and design of the project. This way you can get into a deal, but have someone more experienced walk you through the actual process of a flip. I've done this with numerous other investors in your niche, and it's a great way to safely enter the fix-and-flip world!

Hey there @Jeremiah Gorske! Welcome to the community and congratulations on taking the first step with your purchase! The VA loan is one of the most powerful wealth-building loans out there, and hopefully, you are househacking that property! You'll have no shortage in finding like-minded people between NoCo and Denver, so just hit up all the events and reach out to any and all investors you meet!

What strategies or asset types are you targeting for the next one? Where are you hoping your next purchase will be? Put your goals out there and people will help you achieve them!

Hey there @Lauren Sherer! This is a common question amongst investors here in Denver, especially in today's market. I am going to assume you've already confirmed your property's eligibility for an ADU, but personally, I rarely suggest building an ADU in the Denver market for a couple of reasons...

1. They are time-consuming. If you are building one from the ground up, and fully permitted, you can expect this timeline to take at least 1 year to build, if not more.

2. They are hard to finance. You can expect a full ADU build to run around $200k in build cost, and there is very limited lending for a project like this, and if you find it, then it is expensive and short-term.

3. They are hard to get your money out of. The idea would be to cash out refinance and pull your invested funds out. But ADUs are not valued the same as regular homes, and here in Denver, we have had trouble getting appraisers to see value in them. I have had everything from an appraiser valuing it at nothing, to the same as a two-car garage, to over $100,000. It is very hit or miss, and you may not be able to get your capital out.

I typically recommend investors purchase a new primary residence, before they look into an ADU, as they will get all the benefits of owning real estate from buying a new property, versus an ADU that is a subsidiary of an existing property and won't get you the same benefits as far as taxes, and appreciation. You also get access to the best lending for your new primary!

But to answer your question, yes, you can't rent out the adu and main home separately per the city. Now the question is will they care and go after you... Probably not. It is the same as house hackers who have a basement unit. 

Hey there @Jacob Munson! Welcome to the forums and also welcome to Denver! Lots to unpack here, but in short, you aren't alone in taking on the strategy of house hacking with a STR/MTR, I personally do it out here (In Arvada), and have another rental that I do it as well, plus its a popular strategy amongst our clients. One of the major factors here will be the STR aspect, the MTR space is pretty secure and safe, and would work great in any of these areas, except I tent to push people as close to Downtown as possible, but you also have to pay attention to prices. As for your questions...

1) Have folks had success with STR/MTR in these suburbs and what kinds of setups (guesthouse, private basement, etc) seem to be the most in demand?

Yes, as described above. All of the different asset types work, but I would say and ADU or guesthouse will always be the most desirable, but also the most expensive and hardest to find for your purchase. Both my units and most of my clients are private basements or full homes, and they work really well, as less expensive alternatives to hotels, while getting the amenities of a home.

2) Which areas to avoid as far as STR/MTR ordinances go
As far as the areas you mentioned only Arvada will be STR friendly for primary residents and non owner occupied properties. Denver County does not allow STRs in non primary units, and Lakewood is about to allow STRs in owner occupied units. Other areas to possibly look into are Wheat ridge (owner occupied allowed, and non owner occupied is on a waitlist), unincorporated Adams county (denver zip codes but Adam's county), and Mountain view, which is unincorporated Jefferson county but Denver Zip code.

3) Any other comments or feedback that you think might be useful.
Personally, I love where you can continue STRs after you move out, as then you can double dip in the MTR and STR market. You can have STR during the high season, and MTR during the slow season but still infill vacancies with short term stays. Arvada is great area, convenient to everything and had plenty of compatabile homes in a friendly municipality.

There is a lot more to unpack, and would depend on your personal goals and situation, but feel free to reach out any time with any more questions!