All Forum Posts by: Ben Rhodin

Hi @Cody Stevenson! This is one of the most common dilemmas of anyone in Real estate. I know exactly where you are speaking of and I have a lot of clients that look in that area each and every day. I would agree with @Will Barnard above in that you need to just go through each proposal and see where you come out on top. Unless you want to get creative with the current property in terms of renting it out, it isn't going to be a strong performer in terms of cash flow, but appreciation and future potential can be strong. 

In short, the answer is going to come down to where is my money best spent. I know Washington has strong appreciation and potential as well, so the Denver appreciation may not be as much of a factor. If you are able to offload the property and use that capital to build your STRs up there and produce much stronger cash flow, and still take on the appreciation it might be best. You would be looking at needing a PM for this property, which will take out another chunk of change in your cash flow, so you may be finding yourself breaking even in terms of that after all expenses.

Without knowing the exact property I can only give so much advice, as there may be repurposing opportunities with the property which could create stronger cash flow. You could also potentially get an owner-occupied HELOC while you are still occupying and take advantage of that in order to have additional capital.

[Solicitation Removed by Moderators]

Hi @Tanner Pile! This is the reason we steer our clients to save their FHA loan until they purchase a multifamily, as you can only have one active at a time (with a few caveats). The differences between conventional and FHA in the single family realm are very minimal, and conventional will provide you the better terms overall, and allow PMI to drop off automatically. Unlike FHA where you have to refinance out of it to remove the PMI. Main reason to go FHA over conventional is if you are unable to qualify for conventional, as FHA does have more leniency. But both allow for 3-5% down options, which is where a lot of new investors get confused, as they always here use an FHA low down payment loan to purchase a house hack. But you can do low down payment with a conventional loan.

However, the reason to save it for a multifamily, is that even with an owner occupied conventional loan on a multifamily unit you will need to put down at least 10-20% depending on how many units, where as the FHA will allow you to do 5%. Hence, using the FHA on a multifamily is great!

If that is the reason you are having trouble securing that FHA loan than you have to get rid of your current FHA loan to move forward. You could refinance out of it into an investment property loan, but depending on when you bought it you may not have built up to that 20% equity in the property to make that happen. It wouldn't help you a ton to refinance into a traditional conventional loan, as you would reset your owner occupied clock, and would need to stay in the property another year (give or take) before you could secure a new owner occupied loan. If you can't refinance into an investment loan, then you may be best off finding a SFR that you can get creative with. Either renting by the bedroom, or finding a place with a MIL that you could rent separately to act as a duplex. That way you could utilize a low down payment conventional loan, and then refinance out of your FHA when you hit that 20% equity mark in the future!

Hey @Jason Breton! This is a common question especially this year... But its important to understand how real estate works over the long term. Unless you plan on holding a property for the short term, real estate will increase in value over the long term. So 15 years down the road when your property is worth $100k more you aren't going to be worried about the $20k extra that you paid upon purchase. However, as prices do increase and rents aren't keeping up at the same pace, creativity is key here in Denver. It is tough to make the single family properties cashflow, and small multi's will cashflow but are in a higher price point, and can require a lot of deferred maintenance. Finding creative ways of renting SFRs is a great way to achieve cashflow and take advantage of the strong appreciation here in Denver! For example, just taking a SFR and turning the basement into a separate area and renting it separately. This can achieve over $1k in cashflow even with the inflated prices. Their are other strategies that work, like STR, medium term furnished rentals, or rent by the room strategies, and these will all keep you out of having to pay the hefty price tags of small multi family here in Denver.

Happy to connect, and chat more but we still have no problem finding our clients strong properties on the MLS!

@Nick Parenti you won’t know until you try. A mortgage lender may surprise you, depending on what your previous work was. There are circumstances to make things happen. Also depends on what “new” means. Happy to recommend a fantastic one here in Denver.

I agree that you should start with the end in mind, and I would push yourself to challenge what’s possible. I am always a believer in don’t think everything is black and white. Think about where you would like to be in two years with Real Estate (maybe have two properties through house hacking) and then think ok how can I accomplish this while still being able to travel the world.

Just a happy thought😁

Hey @Chris Gould! Id love to connect, I am always looking for wholesale deals here in Denver for my clients and myself. Never a bad time to jump in especially if you can do it while maintaining your work in Indiana.

As for your questions, the general market slows down during the winter, especially after November 1st. We will of course see what happens this year, as we have seen a bit of a slow down, but due to everything else, it is still pretty competitive. Investors are of course always looking, and a less competitive market, of course, brings better deals. Especially if it is fixer-uppers that they can renovate and have ready for springtime, you should be set solid.

Hey @Nick Parenti! I would push you to think about what is possible, and how you can utilize the time that you are given to really scale to your fullest potential. Why not use the next 8-10 months to get a strong baseline, and also get some possible cash flow to help fund your travels!

I've had clients in similar boats or relocating for a short period to somewhere, where they don't think it's beneficial to pick up a property where they currently are. If you pick up a property in Boston right now as a house hack prior to you traveling. You can maintain it as your Primary residence and fulfill the owner-occupied requirements. I am not an expert in the Boston market, but some potential ideas could be rent by the room, multifamily, or STR. Then you could STR your area while you are away, and you can get set up with a PM to not have to worry while you are out and traveling. Then when you return, you may be close enough to the year mark to pick up a new one here in Denver, otherwise, you can probably use relocating as an excuse to get into one prior to the year mark here in Denver.

Of course, it will all depend on your capital situation and what your financing options look like currently. But never bad to pick up an extra property if possible. Just another take on it! Good luck and have fantastic travels! Let's connect when you touch down in Denver.

Hey @Account Closed! Welcome to the forums and welcome to the amazing world of REI. You are definitely on the right track to get started early and be in a position to move when you are set up and ready!

There are a few things to take into account reading your plan. First is since you will be using a low DP owner-occupied loan, you are required to occupy the home within 60 days of closing. So that is something to keep in mind when planning out your timeline. So if your lease is up in May 2022 and you want to stay there until then, I would plan on closing on a place around the end of February, which would give you two months to rehab it. 

The first step would be to chat with an investor-friendly agent, and lender to get your plan situated. Sunnyside and Berkeley aren't the most affordable places in Denver, so depending on your goals of house hacking and your ability to obtain a high enough loan may adjust your plans a bit. So getting an idea of what you will be able to qualify for is the most important step, as it may adjust your areas or strategies.

Your first house hack will be great for gaining experience and setting you up for your future investments. It's a great low-risk entry point, and the rent savings are what really skyrocket you. Your 50K saved will be a good amount for a DP and some rehab depending on the property. I would also dig into the Denver STR requirements and regulations just to gain some familiarity with what the setup process is so that you aren't stuck with figuring it out once everything is ready.

Another thing I wouldn't discount is...Check your current lease. Are you allowed to sublease (or Airbnb arbitrage?), or what is the penalty for early termination? The reason I ask is that a lot of the time when you get set up and ready for purchase, it doesn't make financial sense to stay in your lease. Why pay $1500 in rent (or whatever you are paying) for the next 6 months, when you could spend the $1500 to terminate early and save that extra $1500 a month from living for free at your new house hack? Just something to keep in mind, always look at the whole picture and see where your money is best put to use, even if you have to lose your security deposit, you may save money in the long run!

Happy to discuss more and help you get started on your search!

Hi @Rene Martinez! The only suggestion I would have is looking into DSCR lenders. I have a few good contacts, one that is based out of Boulder here in Colorado. They will lend on the property's ability to repay the debt instead of your personal ability like traditional lenders. They do come with slightly higher fees, and interest rates (Around 4-5% nowadays) But they are very quick and easy to work with.

Hey @Chip Martin/Chip! Welcome to BP and welcome to the Denver investment world. I am wondering where you got the idea that Denver isn't able to produce cash flow properties? While it is true that traditional rentals don't do that strongly here, there are plenty of ways to make solid cash flow (upwards of $1,000 a month) here in Denver. Just to quickly name a few... rent-by-the-room, single-family property, with ADU or mother-in-law suite that you rent as a "duplex", short term rentals, and medium-term furnished rentals. I have clients (and myself) producing great cash flow here in Denver every day using these strategies, plus that you get to take advantage of our strong appreciation!

Personally, I always suggest starting your journey in your own backyard, as it gives you the experience and knowledge to then take it to other markets. Taking on a property by yourself out here, and managing, rehabbing (if applicable), and everything else involved will give you the confidence to walk the walk when you go out of state. Not to say it's absolutely necessary, but it's definitely helpful! I would also recommend house hacking, or working with your current residence if possible. These ways will give you a nice low-risk entry into REI, allowing you to more quickly gain confidence and be able to scale more quickly!

Happy to chat more regarding the Denver market, or advice on out-of-state markets as well! As I do both, you should also think about coming out to the House Hacker's meetup this Wednesday in Denver and mingle with some like-minded investors!

@Landon Miller I would always get financing settled first. It will be easy enough to update the financing portion if you decide to not sell or vice versa, but it's good to have the whole picture before you get too invested. It's easy enough to update financing, and you can really just get better off, but if you finalize your investment strategy and the financing doesn't support it you are back to square one! Working at a mortgage company you should have some good deals and perks as well. Financing is almost always the first step.

Knowing Westwood, I would definitely be worried about over updating, check around and see the competition, and definitely talk to a PM. I am happy to recommend some if you want. The other question is if you did decide to keep the property, do you currently or how quickly would you be able to get the Downpayment for your next property? It seemed that you needed the proceeds from the sale to fund that new downpayment. If that's the case then there is your answer right there.

It seems like most things are leaning you towards selling it if you are worried about being able to afford any unwanted repairs or capital expenditures, and if selling it allows you to get into a nice new house hack (if that's where you go) then you can live for free or at least cut your living expense way down. Which in turn will increase your savings rate exponentially, which then gives you more time and money to invest elsewhere!