All Forum Posts by: David Chen

@Scott Hibbert I actually put my earnest money down on one of the units you are describing (becomes nonrefundable Jan 2). The purchase price is $432k. I did notice that the 3rd bedroom is lacking and does not have an easily accessible bathroom. My plan is to rent the master bedroom and the adjacent top floor bedroom for a combined 1800-2000 while living in the ground floor bedroom. Hello anxiety and cold feet. In your opinion, should I reconsider this purchase before it's too late?

@Marcus Roberson

@Marcus Roberson that's a great point! I'm working with Fairway Mortgage. As it stands, there is an FHA option with 3.5% down which would wipe out all my bank accounts at the moment. This would be at a 3.75% interest rate. There is also a down payment assistance program that I will more likely go with, that would bring my entire closing cost down to around $4500 and have an interest rate of 5%. My plan is to go with the DP assistance program, then refinance to a lower interest rate mortgage after about 3 years. As I understand it, my down payment would not have to be paid at that time, so in theory I will have my current cash as reserves or to put toward my next deal or other invrstments. Essentially, my much lower down payment would offset the higher monthly mortgage payment until I can refinance to the lower rate. Hopefully this all makes sense. My lender also told me that the physician program starts at a purchase price of over 500k. Is this legit? Anyway good luck on your RE journey and let me know if I can help in any way. Hope to see you around town!

Thanks for the replies so far! There's some really good information for me to consider.

@James Carlson You're right. I was looking at some other properties that were in less expensive parts of town (Aurora, Westminster, Thornton, etc.). It does seem far more likely that I would be able to cash flow a 4BR property in those areas of town while keeping the purchase price the same or lower than the one I am considering now. I am definitely making sacrifices on some of the financial metrics in order to find a place I would be comfortable living in and commuting from for a number of years. I also set my location goals partly according to my sister, who would be a no headache tenant, who also has connections to many potential trustworthy tenants.

@Scott Hibbert At first when I was trying to apply 1% and 50% rule around Denver I thought I was crazy! I guess that's an adjustment many of us will have to make when looking at markets like ours. Your point about other newly built rental properties possibly driving supply up and reducing rent prices is something I hadn't thought of. I've been lucky enough to be paying no rent, since I've been staying with my parents while looking at properties and getting settled into my job.

First time homebuyer and new to the real estate investing world. Thanks for all your advice in advance!

I am a newly graduated dentist looking to house hack in the area just west of Denver proper. I am currently looking at a property in Lakewood, close to Edgewater, with a purchase price of $432k. The property is a 3 bed, 2.5 bath townhome "row house" in a newly built complex. The immediate neighborhood leaves something to be desired at the moment (think liquor stores, pawn shops, industrial businesses) but surrounding neighborhoods (West Colfax, Edgewater) have seen significant growth in the last few years, and the property is near a light rail station and is a 15 minute drive from downtown Denver. I am considering jumping into a house hacking situation here.

I will only be able to afford a down payment of about 3% at the moment, and am looking at a loan package with an interest rate of about 5%. According to some estimates I have done with my real estate agent, my monthly mortgage along with other expenses (taxes and insurance) will come to about $3000 per month. I am planning on renting to a family member at a slight discount as well as another roommate. Based on similar listings in the area, I would conservatively estimate that I could rent my other two rooms for a total of $1600-$1800, leaving myself with a monthly expense of $1200-1400 per month. My short term goal is to move out of my parents' basement while paying a mortgage (after rental income) that comes out to what I would pay for a comparable rental situation. My long term goal is to build a portfolio of buy-and-hold rental properties that will hopefully segue into a comfortable and hopefully early retirement.

My concern is that this property, as the numbers stand now, will not be able to generate a monthly cash flow (even if I factor myself in as a renter). It seems like most (non-distressed) properties in the greater Denver area are in this same boat. It just seems all the "Rules of Thumb" i.e. 50% rule or 1% rule found in the Bigger Pockets books are nearly impossible to find in a market like Denver. I will not be able to dedicate a significant amount of time or financial resources toward rehabbing a property due to my job. Although it is generally advised against, I will be hoping for appreciation to make this a better long term investment.

In a situation like mine, would you consider this a viable investment for my long term goals? Would it be more prudent for me to save up more capital for a rehab or look harder for a better deal? Is it ever ok to consider a negative cash flow situation by betting on above average appreciation? THANK YOU!

First time homebuyer and new to the real estate investing world. Thanks for all your advice in advance!

I am a newly graduated dentist looking to house hack in the area just west of Denver proper. I am currently looking at a property in Lakewood, close to Edgewater, with a purchase price of $432k. The property is a 3 bed, 2.5 bath townhome "row house" in a newly built complex. The immediate neighborhood leaves something to be desired at the moment (think liquor stores, pawn shops, industrial businesses) but surrounding neighborhoods (West Colfax, Edgewater) have seen significant growth in the last few years, and the property is near a light rail station and is a 15 minute drive from downtown Denver. I am considering jumping into a house hacking situation here.

I will only be able to afford a down payment of about 3% at the moment, and am looking at a loan package with an interest rate of about 5%. According to some estimates I have done with my real estate agent, my monthly mortgage along with other expenses (taxes and insurance) will come to about $3000 per month. I am planning on renting to a family member at a slight discount as well as another roommate. Based on similar listings in the area, I would conservatively estimate that I could rent my other two rooms for a total of $1600-$1800, leaving myself with a monthly expense of $1200-1400 per month. My short term goal is to move out of my parents' basement while paying a mortgage (after rental income) that comes out to what I would pay for a comparable rental situation. My long term goal is to build a portfolio of buy-and-hold rental properties that will hopefully segue into a comfortable and hopefully early retirement.

My concern is that this property, as the numbers stand now, will not be able to generate a monthly cash flow (even if I factor myself in as a renter). It seems like most (non-distressed) properties in the greater Denver area are in this same boat. It just seems all the "Rules of Thumb" i.e. 50% rule or 1% rule found in the Bigger Pockets books are nearly impossible to find in a market like Denver. I will not be able to dedicate a significant amount of time or financial resources toward rehabbing a property due to my job. Although it is generally advised against, I will be hoping for appreciation to make this a better long term investment.

In a situation like mine, would you consider this a viable investment for my long term goals? Would it be more prudent for me to save up more capital for a rehab or look harder for a better deal? Is it ever ok to consider a negative cash flow situation by betting on above average appreciation? THANK YOU!