All Forum Posts by: Jared Bouzek

@Kyle Myers As implied above, I think just about all of the major carriers do some form of umbrella insurance, so you might start by speaking with the agent who does your auto and homeowner's policies. If you're looking for a local insurance broker to help give you options, I can connect you with somebody.

@Tim Schroeder I think @Steve K. has been an active BRRRR investor in the Denver market and has become a big proponent of it. You might connect with him to get his thoughts on it.

One of the main sticking points with BRRRR is the refinance part. That generally hinges on how you choose to acquire the property. If you have the ability to purchase in cash or at least pull from a HELOC attached to another property, it opens the door for you to pull cash out immediately. You will want to work with a lender who understands the delayed financing exception to do this. If you finance the initial purchase, you have a six month wait to pull cash out with conventional financing.

@Daniel Lee Welcome to Bigger Pockets. There are a couple of different options for you. FHA would allow you to put 3.5% down on up to 4 units. You can also find a lender who does the Freddie Mac Home Possible loan which would allow you to put 5% down on a 2-4 unit property if you qualify under the income limits.

@Tim Schroeder Welcome to Bigger Pockets. If you're going to be traveling to the property to do renovations yourself, I would second Colorado Springs. You could find something relatively affordable there if you're turned off by prices in the metro Denver area and be within a reasonable drive from Castle Rock.

@Matt H. You might have luck getting in touch with a local agent who could do a CMA for you. They would just have to hunt down the comparable properties that include an existing ADU.

@John D. I saw some stats the other day that even with other states beginning to legalize, Colorado is still way ahead of the pack in revenue generation. Colorado is very well diversified in my mind with major tech, engineering, and medical sectors. Plus we seem to appeal to those escaping the coastal areas to something more affordable. I think even if there is legalization on a national level, Colorado will still be a very appealing place to live and invest in the coming decades.

@Michael Bartlett It sounds like you're intent on moving up north and the core question is whether to hang on to your house in Colorado Springs. Have a lender run the numbers with you on pulling cash out of the home and purchasing a new house. You should look at doing them simultaneously so that you ensure refinancing the first property won't harm your ability to qualify on the purchase of your new home.

Even with a current rate of 3.5%, there's a decent chance that your overall effective rate including the mortgage insurance is in the mid-4's. If you happen to be in an FHA mortgage, that mortgage insurance may be attached for the life of the loan. So refinancing on NOO rates when you pull cash out may not be a huge change from a rate perspective although your payment will still go up as a result of pulling cash out.

It would be wise to sit down with your lender and walk through the numbers of what happens to your payment when you pull the cash out compared to how much you can rent for and if you're comfortable with that margin.

 Not to be dodgy with your question or anything, but the simplest answer to the baseline expectation would be when ROE has dropped to the point that you believe you can achieve a higher return at the same or lower risk level in another investment opportunity. This would trigger your decision to pull equity out of the property or sell the property to re-deploy the capital in the better investment opportunity that you have. I can't necessarily say that there is one set magical point for any given person.

In regards to your second question, I would go to the opposite perspective and caution you to not misapply analysis either. There are people who suggest using IRR or capitalization rates to analyze properties and I don't necessarily disagree that those metrics might be something that you look at. While those metrics do provide useful information, because so many people do not understand them, they tend to misuse the analysis and therefore could be led to draw incorrect conclusions from them.

Spend lots of time in the forums. When you run across terms that you don't understand, ask about them or do your own research to understand them. REI can be forgiving to the "ready, fire, aim" types in some cases but we're in a pretty forgiving market for now considering our recent appreciation.

@Laura S. As @Matt M. implied, moving up to multifamily (2-4 units) might be another solution to gaining some more cash flow and you likely have some options in your price range.