All Forum Posts by: Ben Rhodin

Hey @Jameson Waltz! I know it's probably too late, but I'm not sure I agree with your Realtor's and Lender's assumptions on your current property. The Rental income should offset your DTI unless you were showing a loss on your tax returns for it. I typically am not a fan of selling properties, unless a new opportunity makes sense. But knowing the Denver market, would your condo make a good candidate for an MTR? I am not sure where it is located, but if it is in the Denver Metro, that would be a good way to increase your cash flow by a couple of hundred bucks at least, which will outperform most things in the Midwest, and the condo will continue to appreciate, which is where you build wealth.

Either way, I would recommend buying a new primary here in Denver that you could house hack, instead of exploring out-of-state opportunities. The main reason is, that by minimizing your housing expense you'll be putting a ton of capital in your pocket that isn't taxed, instead of trying to generate more income. The second reason is, that you'll be able to put 3-5% down on this property, making your capital go further instead of having to put 20% down. and finally, because the Denver market will continue to appreciate. Then if you still have capital left over you can explore buying an out-of-state investment using a DSCR loan.

Hey @Madeline LeBrun! How long have you been a travel nurse? As these jobs are usually contract-based, and not a W2 employment you will typically need 2 tax returns in the field. The second issue is since you are usually receiving a stipend and other benefits, a lot of your income is nontaxable, which lenders aren't able to use to qualify you. These are the complications with traveling professionals most of the time. But definitely talk to a savvy mortgage broker as they may have other loan products that will work if conventional won't be a route.

You would have a ton of opportunities here in Denver, whether it is an SFR with an ADU, an SFR with a basement apartment, or a small multifamily. There are some great up-and-coming areas in Denver, that I have been steering my MTR clients towards, and if you buy as a Owner Occupant, then you can STR your unit while you are on assignment.

Hey @Jeremy Clarke! As already mentioned this would not be possible. However, your quoted interest rate is really high. Is this a DSCR product or a conventional loan? I could believe that interest rate if it was a DSCR loan, otherwise, find another lender. I've got investment loan rates for my buyers hovering around 7% currently, and if you buy a primary you can get even better. One way to get a better interest rate is to assume the current loan on the property you are buying.

Oh yea, I remember that post and I believe we chatted about it. The self-sufficiency test is an approval standard for FHA loans on 3-4 unit properties. Basically, 75% of the appraised rents for all of the units have to cover your entire PITI otherwise the FHA won't approve the loan. and coming from California as Im sure you are aware having anything cashflow with our price-to-rent ratios on long terms makes this a real challenge.

Hey @Michael G.! Short answer, if you want the best chances on your sale (especially a condo) definitely vacate the unit and sell it vacant. It is possible to sell with a tenant in place, but overall it hurts your buyer pool (investors only) and gives a bad taste in people's mouths. You will never remove investors from the buyer pool, but homeowner's are always the ones that you want, and are the ones that will be emotional and bid up your property. Investors may make for an easy sale, but it won't be for the highest amount. I would also steer away from using your Property management company for the sale personally, as they are not experts in that field and will usually fall short in the preparation and negotiation of the sale.

If you want to get the most for this unit, definitely plan to vacate the unit, plan to complete some updates and clean up (so it doesn't look like it was just tenant occupied) and market it to homebuyers. That will give you the best chances of getting the most returns, which at the end of the day is what you are after. 

Have you also thought about not selling the condo? If it's here in Denver, you may have other options as far as optimizing and pulling your equity out in other ways. Either way, feel free to reach out and I am happy to help you run through the scenarios.

Hey @Matthew Van Koevering! As @Ben Einspahr already mentioned, it is only Denver proper that maintains the regulations that the other side of a duplex is not your primary. If you purchase outside of Denver, which I would anyway you'll be golden, as long as you pick one of the STR-friendly cities. Denver is notorious in other regards as well for STR and regulations in general.

Converting the duplex to an SFR would have more cons than pros in general. and from zoning questions would be a tough thing to do.

Definitely, a home with a mother-in-law suite or a separate living space is your best goal. No need to reinvent the wheel.

Hey @Patty Nisbet! I know exactly where you are located and you are in a great spot for MTRs specifically. It is one of my "hotspots" for my investors, and I have quite a few clients in that area. If you want to get an objective look at it, let me know, I know what sells in that neighborhood, and how to properly market to these types of tenants. Not entirely true regarding the Kitchenette vs Kitchen, but it is definitely a plus if you have a full cooking facility, which doesn't have to be as big of a project as you may think. 

Either way, this will definitely be a great property over all, even when you move onto the next one.

Hey @Jesse Englund-Rohlf! I am happy to make an intro to my CPA, they are experienced here in Denver, and especially with Real Estate Investors.

Hey @Jason Lohse! Lots of good info from you in here, and I would definitely stay away from renting down here in Denver if you can. However, I believe there is a way to get away with not selling either property. But let's work through this together.

1. For The GA home you wouldn't have to 1031, as you occupied it as your primary two out of the last 5 years. So you are exempt from $500,000 in capital gains tax.

2. STRing the Fairplay home is an option, depending on if it is in incorporated Fairplay or unincorporated Park County. Either way, you should be good, unless the last few Fairplay licenses have been snagged. I am happy to check this for you!

3. Your 40-50k in DP is enough to get you into a reasonable place here in Denver, as long as you are qualified buyer. Using a low downpayment loan, you'll be able to get into a 500k home reasonably easily.

4. I have plenty of banks that will do HELOCs on investment properties, but also, is their equity in your Fairplay home? You could pull a HELOC up to 100% (I suggest keeping it at 90%) since it's your primary. I would definitely recommend this if possible.

Personally, I think you are overthinking it. You are in a great position and should have no problem getting a place here in Denver, and there are ways around the leasing of your Fairplay property, if necessary. I am happy to dive into the details with you, but I wouldn't think about selling either property at this time, and I wouldn't put too much stock into you Fairplay home value being down at his point.

Hey @Jesse Englund-Rohlf!

You aren't the only person asking this question. In short, my answer to this question is... if you have the capital it is better to put it to work in a new property, instead of building an ADU. This is due to a couple of reasons that others have already expressed here.

1. ADUs are very expensive, and most of the time very tough to finance. You will need to either use a LOC, or a construction loan to build it, which have short terms and high interest.

2. They take a long time to complete. In most of the Denver Metro Area, I would assume at least 1 year+ if not 2 years to complete a stand-alone unit.

3. Refinancing out of the construction or other loan on the back end may prove difficult, as ADUs are not widespread in the Denver Metro yet, so appraisers are not very confident in appraising them. So you may find yourself in a pickle when you can't refinance your current debt on it. I have heard stories of appraisers not valuing ADUs at all, valuing them the same as a garage. Unless you have some solid comps, they will most likely always botch it.

My main opinion with them is why dump all your time and money into a project that won't produce for a year or two, when you could leverage more of your capital and get either a new primary with an existing ADU, or simply a new investment property (maybe a small multifamily) that will be ready to go on day one, and hopefully produce some cashflow. But also, you gain all the additional tax benefits, loan paydown, and appreciation on that property that you wont get on the ADU, and you don't have to wait two years for it.