All Forum Posts by: Jeff White

@Brian Fiorillo Welcome to Denver!  You will be very happy to move here, especially with our winters compared to Michigan.  That's great that you have a background in flips and being a landlord because it will serve you well in Denver.

1) There is a wholesaler market in Denver, but obviously, it is very relationship-based, and the investors getting the best deals are the ones with years of credibility and track record of performance. It isn't impossible, but the good wholesalers here spend lots of money (10-20k per month in advertising!) to get those off market deals.

2) It really depends, you have lots of great areas in between those spots. Greenwood Village is very suburbia, do you want more city?  Close to downtown? Do you want to house hack?  Do you want to flip?  What's your price range?  What are your goals?  Have you talked to a lender?  That will determine when and where you can start looking.  There are lots of great spots between Greenwood Village and the airport. 

If you are coming out to visit, I'm happy to grab a coffee or beer and talk about the market!  

@Luke Werkmeister-Martin Welcome to Denver!  It is a great place to be here on BP. You will find lots of information that will help you on your investing career. 

As for strategies, I'm a big proponent of house hacking since we all need a place to live. 

Here are the best strategies in the Denver metro market today from best ROI to worst:

1) House hack a large single family house (5+ bedrooms) and rent by the room. You won't get the luxury of living in your own space or unit, but you will generate the highest cash flow and ROI since you get way more per room than per unit. Using this strategy, you can live for free and make money while living there.

2) House hack a single family with a basement apartment and rent the basement on Airbnb and rent out the spare rooms upstairs. This will get you the lucrativeness of Airbnb with the rent by room tenants as well, so you will get to live for free and probably cash flow a little by this strategy.

3) House hack a townhome/condo and rent out the other rooms. Similar to top strategy but on a smaller scale. With a lower barrier to entry by price point, this strategy will also work, but it will probably be more breakeven than anything else. 

4) Buy a 2-4 unit and rent out the other units. This strategy is the most popular one recommended on BP, but it doesn't work as effectively here in Denver due to the high costs of most multifamilies and most of them have lots of deferred maintenance.  It isn't a great place to start unless you have deeper pockets. 

Personally, I've invested in single families that have unique layouts with separate entrances, basement apartment apartments, etc. I have done rent by room, Airbnb, Section 8, normal units, and multifamily investing.  

Large single family houses work great because it gives you lots of flexibility to maximize your ROI while you are living there. I've done all the strategies above, and you can combine different strategies to suit your needs (ie. live in the basement and rent out all the rooms upstairs to get more rental income).

@Fahadbin Alam 

1) Mother-in-law apartment is basically another living unit in a single family house with kitchen, laundry room, bedrooms and bathrooms.  Sometimes, they are in a basement, and sometimes, they are just an addition to the house or above a garage.  Some people rent them on Airbnb, and some people rent it out separately.  They are more common out here in Denver, not sure about New Jersey.  It is a way to get the benefits of a duplex. Also, usually single family homes are in better condition than multifamily homes, so you get the best of both worlds.  Check with your local municipality for zoning though. 

2) Actually, I only put 7% down using a FHA loan on my 1st house hack. I did put about 50k in improvements and repairs, and with appreciation, I was about to refinance it into a investment property loan (at least 25% equity). Actual numbers, 630k purchase price in 2017, and I refinanced it last year at 815k.

3) It depends.  There are three types of refinances: cash out, rate and term, and HELOCs. Each one serves a different purpose. 

Cash out is a the goal for everyone, it means that you have enough equity to pull money out, if it is a your primary residence, banks have less equity requirements (usually 15% or more), and investment properties are higher (usually 20% or more). 

Rate and term is the one that I've used in the example above. I couldn't pull any cash out since I didn't have enough equity to do a cash out for an investment property, but I hit 25% equity, so I replaced my FHA loan with a new conventional loan that saved me $400 per month, so it was worth it.

HELOC stands for home equity line of credit, and it is a basically like a credit card but using the equity on your house as the line of credit.

It is a little early, you should get a few more responses, or, pay the extra cost to reach out to Section 8 tenants directly on gosection8.com.  I think it is $70 for one month's access, it is worth it if you can get higher rents. 

The other options are Zillow and Facebook Marketplace, but you will get Section 8 and non-Section 8 tenants. 

@Dasia Washington Hi, I will vouch for Denver, it is probably just as competitive as Nashville, if not more right now.  I would choose a place you want to live and house hack in that location.  It is much easier to manage a rental when you live there or live in the same state vs. dealing with property managers 2000+ miles away. 

If you like great weather with all 4 seasons, lots of outdoor activities and beer, proximity to the mountains, growing city, Denver is the place to be!

There are lots of people house hacking here, and even in this market, house hacking still works. 

The best cash flowing strategy is finding a 5+ bedroom 3+ bathroom single family house and renting by the room, but that is also for people that don't mind giving up a little privacy to cash flow the most.  This strategy you will live for free and make money while living there.

The next strategy is finding a house with a basement/mother-in-law apartment, living upstairs and either renting the rooms upstairs and Airbnbing downstairs or living upstairs and Airbnbing downstairs. Both strategies work great, and you will probably live for free.

The third strategy is to buy a traditional multifamily and live in one unit and rent out the others, but Denver's multifamily inventory is very small and most of them need 30k+ of work.

@Fahadbin Alam Listen to James above, he is a great realtor and knows his stuff with house hacking and lending! 

Congrats on getting your 1st House Hack!

I can definitely answer your question, here's what I did with real examples.

1st House Hack - 4 unit - I purchased this multifamily in August 2017 with 7% down (couldn't do 3.5% down because of the FHA self-sufficiency test).

2nd House Hack - 1 unit (single family house with mother-in-law apartment) - I purchased this property in the summer of 2018 with a 5% conventional loan (a little over a year later), and I was able to move out of my unit in the 1st House Hack and into the basement apartment of this house hack. I didn't have change the loan or anything.  

3rd House Hack - 1 unit (single family house with mother-in-law apartment) - I purchased this property in the summer of 2019 with 5% conventional loan (one year later), and I just moved out of the 2nd House Hack, had a renter move into our master bedroom in that property, and moved into the top unit of this property.

4th House Hack - 1 unit (single family bi-level house with mother-in-law apartment) - I purchased this property in the summer of 2020 with 5% conventional loan (one year later), and I just moved out of the 3rd House Hack and rented out the master room, and moved into the master bedroom of this house hack. 

Do you see the pattern?  All I did was move each year, and I was able to acquire four properties much sooner because each one was my primary residence than if I tried to purchase them as investment properties (minimum 15% for single families). 

Also, since the Denver market is very expensive (median price is 500k+), that would be at least 75k down payments for investment properties vs. 25k down payments just to move into the property for one year. That's a huge savings, and I'm in the acquisition phase of my portfolio, so I will do whatever it takes to get more properties here.  

Also, I didn't mention that I refinanced the 1st House Hack into a conventional investment property loan, but I had built 25% equity over that time.  I'm looking to refinance my 2nd House Hack as well. Sometimes, you can get the benefits of appreciation.  

There is definitely risk to putting 5% down payments, but I also bought down the interest rate and paid points to give me the lowest mortgage payment with that down payment to mitigate that risk. 

@Taylor Fortini Congrats on signing up for BP, it has made a huge difference in my investing success and portfolio.

What a great fix and flip for your first one!  That will be tougher to come by again this year, but it is definitely doable with a solid marketing campaign. 

That's a fantastic goal, and you can definitely achieve it, probably way sooner than 60 via 1031 exchanges and looking at out of state markets to scale up. 

If you are only looking at only Denver metro, I would suggest house hacking your way along the way to grow your portfolio because you benefit from owner occupied financing, consistent appreciation (6% last 40 years on average) and long-term economic prospects for Denver. Your goal would be harder to achieve here without significant equity or debt partners.  

@Ernest Wade Hi Ernest, due to low inventory and sky rocketing prices here in Denver, some investors have looked at new builds as a way to enter the market. When you can pickup a new build townhome for 600k compared to old 60-70s ranch homes that are 400-500k, it sometimes makes sense to consider the new build option since you won't have any maintenance for at least a couple of years and with low interest rates, it isn't that much more over 30 years. 

Some of the new builds have separate levels that can easily be rented out as separate rooms with private baths, so you can definitely attract high quality rent by room tenants to fill the space and even cash flow depending on the location and cost of the property.  Also, Airbnb is an option in Arvada and Wheat Ridge for investment properties too.  

Airbnb is a little more work, but cash flow is usually better in the spring and summer months. Some investors combine the strategies, and rent out the property during fall and winter to a long-term tenant as a furnished rental (think corporate rental), and then switch it over to short-term Airbnb style to get the best of both worlds.   

Of course, new builds are still a premium price point, but for the long-term buy and hold property, I don't think you can go wrong with a new build. 

@Christopher O'Brien Yes, you can rent out the rooms, but first, check out your city's occupancy limits and HOA is if there is one.

I've done it successfully here in Denver, you just need the right systems in place and house rules to establish guidelines for all roommate-tenants to abide by. The key is short-term leases (4-8 months) because it can give you flexibility if it isn't working out for either you the landlord or the tenant, so you can not renew the lease at the end of the lease term.

Also, most rent by room people move a lot, so not having a 1 year lease is better for them in most cases. 

@Chase Yokoyama House hacking for me, and I've repeated it 4 times!

It is a great low risk/high return type of investing strategy since you are basically getting a low downpayment loan, and get on-site property management experience as well. To me, it is the best beginner's strategy that doesn't take a lot of time or money to get started.