All Forum Posts by: David Williams

Hi Andrew! Looks like you are building momentum in the right direction. I too live and invest in Denver and at times question is purchasing out of state a good option. I however think the best asset and thing you have that separates you from other investors is you local market knowledge. You know the area! Sounds like you have good skills to help rehab and good connections with fellow rehabbers and potentially future partners. 

Perhaps the best way to grow a portfolio without a ton of income is to continue your househacking method. Maybe you pull a HELOC on your current home or a cashout refinance with rates being so low and get some equity out that allows you to buy your next home. I'd consider pulling the cash out of the current home and then keeping it as a rental as a low cost way to immediately have one income producing rental and then house hack your next purchase, wether that be a duplex, basement or rent by the room scenario. If you really are trying to boost cashflow consider continuing a rent by the room scenario on the home you depart, this will be the best approach to get the most cashflow and improve your DTI (most lenders will count 75% of your rental income as income in DTI)

Pulling a full BRRR in Denver is tough, but even getting 50-60% of your money out on BRRR is beneficial here. I say be creative, leverage you relationships to help secure loans, maximize your rehab ability and consider where you fall on the comfort vs. profitability scale and go for it here in Denver! If you can hustle to find a way to make things cashflow you can know you're in a market where the appreciation is better than any affordable out of state markets.

Good luck my man!

Hi Ryan, looks like you got some good HELOC info above. It can be harder to find a lender willing to HELOC on an investment property rather than primary for sure. If you run into roadblocks there it may be possible to do a cash out refinance, pull equity and potentially get a lower rate. We closed on a cash out refinance in June 2021 at 75% LTV and lowered our rate from 3.75% to 3.5%. So depending on your current rate and value in home this can be an option as well. We shopped rates and funny enough best option was through Costco affiliates and Lending.com had the best rate and terms. Just an alternative to get some equity out of your home! Good luck!

Hey Dreyson! For our first investment property we househacked. It's by far the best financing terms; lowest amount down (3.5-5%), best interest rates and an excellent way to learn how to landlord without big risk. You can use the new income from renting out rooms, basement or additional unit to save for your next property. After owning the home for a period of time and the home continues to appreciate and/or you add value to the home you can do a cash out refinance (depending on rates) or get a home equity line of credit and put this all toward your next purchase. After living in the home as your primary residence for one year you can depart that primary and buy another househack (or just a primary residence) with those same awesome financing terms. You can then have your first home be a rent by the room or single occupant rental and then you are well on your way. Congrats on getting ready to take the next steps!

Hi Silas! Congrats on becoming a new landlord!

I, by far have had my best conversion rate by listing on Zillow. Craigslist has been a nightmare for me with tons of scammers. Facebook has gotten me lots of inquiries, but they mostly are  "hi, is this still available" and have not turned into actual renters. Apartments.com has given me minimal inquiries, but the ones I have gotten have been legitimate.  I also like the feature through Zillow where a renter can apply to multiple properties for one cost..which to me seems like a fair thing to offer renters when they are eventually paying for other people (hopefully my) mortgage plus some. Hope that helps!

Dang, that is super frustrating to get to that point and then it all fall through. I guess good thing they didn't get into the property and then break the stipulations in the lease leading to a potential eviction process.  

One thing I have found helpful is to create a PDF with highlights of the requirements for an application to be considered..ie. credit score, 60 day pay stubs etc. and I share this with prospective tenants when they are considering applying so that the requirements are very clear. I also have stipulations of the lease included, ie pet policy, lease length etc.  Now hearing your story I think I will add a few more lease requirements to the document. Or just share a copy of the lease (marked copy) to avoid any difficulties, but in my experiences the more simplified the message the more it gets across to prospective tenants. 

Hi Cynthia, it would totally depend on the goals of selling the property. If the goal is to get out of the home quickly and without performing any maintenance or going through the process of listing and selling the home then this may be a good option. These are investors making this offer and thus are going to need to offer you a price that makes good business sense to them, so your bf inevitably will not receive top dollar for the sale of the home. But would receive the convenience of a quick/walk away sale. 

If using an excellent agent, the agent will be able to advise you on the most cost effective and appropriate way to get the home on the market and receive top dollar. Through minor repairs or cosmetic upgrades you can ensure when you list in this seller's market you get tons of buyers interested and get top dollar! Though you will pay a commission for the service of an agent, a vast majority of the time the increase in sales price gains the seller a better "net" price aka more dollars in the sellers pocket.  

So if there are some legit problems to the home, or the goal is to be able to walk away from it quickly, then selling to the investor makes great sense. If the goal is to get top dollar then going with an agent would make the most sense. 

Hope that helps!

If you plan to hold then HECK YEAH! pump up that cashflow. 

Im a fan of using rent-o-meter to get a rough historical idea of what similar comps are renting for. This usually gives me a range, because it is historical data and depends on how far back your search is looking there may be some seasonal trends you will want to know. For example here in Denver most renting takes place in the summer months and can be slow and lower rental rates in the winter. Once I have a range and an understanding of seasonality, I then cross reference the property for active listings on Zillow and FB marketplace as these are your primary competitors at the actual time you will be listing your rental. After that it all comes down to how well you market the property to ensure you get a top candidate for the right price! Good luck!

Hi Ashley!  congrats on getting ready to prepare to get your first rental property. If you're totally new to real estate investing may I suggest reading Brandon Turner's The Book on Rental Property Investing. Its a great broad read to introduce you to all things related to real estate investing. The next thing I would recommend is using BP to find an excellent agent in your area who specializes in investment properties. Then lastly find a local real estate investor meet up, either virtual or in person to begin to network with others who are chasing the same dream. Don't be afraid to be a beginner we all had start somewhere!

Investment Info:

Single-family residence buy & hold investment in Edgewater.

Purchase price: $351,000
Cash invested: $65,000

1909 SFR mini victorian in major need of renovations
Purchase Price: $351,000
Loan amount after cashout refi: $375,000
Estimated Annual Rent: $30,000 gross / $25,500 net
Downpayment/closing costs: $23,000
Seller Concessions: $18,000
Repair Costs: $50,000
ROI: 35%
Cash on Cash Return of: 20%

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

Looking to build a rental portfolio here in the greater Denver area

How did you find this deal and how did you negotiate it?

MLS though real estate agent. Issues on inspection and were able to get $18,000 in seller concessions.

How did you finance this deal?

Traditional owner occupant mortgage with 5% down

How did you add value to the deal?

Full renovation of all surfaces. New paint, flooring, new kitchen remodel, complete basement refinish, complete landscaping refinish,
structural reinforced and water mitigation added

What was the outcome?

Complete our 1 year of residence in summer 2021. Have performed a cash out refinance and have downpayment for next purchase with plan to purchase in August 2021. Will hold this investment with anticipated rent of $2,500/mo.

Lessons learned? Challenges?

No problem cannot be fixed. Some things may seem scary initially, but with the right people and a budget to handle problems, any issue can be resolved.
Sweat equity during a pandemic really paid off!