All Forum Posts by: Jeff White

@Kate B. It is time of year, ideally, for rent by the room, you want all your vacancies to be from April to August because you will get the most exposure and visibility to the widest audience looking to move here. 

Right now, it is tough since it is right before the holidays. You have to be a little more aggressive this time of year, try messaging people that are moving here from out of state, post on roomster and roomies, try relisting your ad at a lower price, etc. 

You will find someone, but right before the holidays is probably the hardest to find tenants for rent by the room.  Good luck! 

@Michael McClearn The cash flow is much better as a rent by room investment, but the problem is there aren't any property managers willing to take it on with 4-6 unrelated parties with separate leases as of today in Denver metro that I know about. You would have to change it to one lease where everyone is accountable, but most property managers won't even do that.

Since more house hackers are doing rent by the room strategy, I'd imagine we might see a few property managers willing to take it up in the near future, but I'd imagine they will probably charge 15-20% PM fee for managing it due to the more work, liability, and lease-ups that will result from rent by the room strategy. Thus, the extra benefit of cash flow might be negligible compared to renting it normally since that doesn't include any lease-up fees either.

@Bao Vu Hi Bao, the only way to get rental property that is a 1% deal or close 1% deal is to purchase a single family house in the 400-500k range with 5+ bedrooms and 3+ bathrooms and utilize the rent by room strategy.  Since rent-by-room strategy works best with more bedrooms and bathrooms, ideally, if you found a 6 bedroom place and averaged $750 per room (very realistic in most parts of Denver), that would gross you $4,500 per month in gross cash flow.  Therefore, you would need to find a place for $450k. There are still plenty of houses that fit that description all around Denver metro, but mostly in Westminster, Arvada, Northglenn, Lakewood, West Denver, and Southwest Denver. 

Since you are buying a large single family house, you need to look out for occupancy limits and make sure you have plenty of parking. It doesn't work in every neighborhood or location, but it is a strategy that works best if you desire the highest cash flowing property. 

@Chris O'Halloran Welcome to Denver man!   Denver is a fantastic place to invest. 

The BRRRR strategy is very challenging to accomplish here due to finding deals that work since a lot of local investors are fine buying fixer uppers for expensive prices. When the worst house on a block sells for 400k and the best house sells for 500k, it doesn't leave you much room to work with.

Basically, you will have to build relationships and find off market deals since that will be your best bet if you are looking to BRRRR.

Congrats on getting your Social Security # and establishing credit, check to see if it is possible to house hack by talking to a lender. It is easily the best strategy to maximizing returns while living in the property and eliminating your housing costs and sometimes make money living in that property depending on where it is located and number of bedrooms and bathrooms, etc. 

Also, you have a competitive advantage with your background as a carpenter which will serve you will if you do all the improvements yourself. 

To answer your questions:

1) Depends on the county, but most places if you pass a homeowners exam, you can do a lot of work yourself and pull your own permits. 

2) It is always a good idea to permit everything since whenever you sell it , you want to disclose that, and it will give peace of mind for most future buyers. The only things that can be done without permits are when you are doing demo that's not structural, simple improvements (adding cabinets), like for like (ie. replace light fixture with new light fixture), but everything else is fair game depending on the county since they all want to collect permit fees. 

3) In my opinion, the best areas in Denver are west Denver neighborhoods (Villa Park, Barnum, Valverde, Westwood, Athmar Park and Harvey Park. Also, the cities of Westminster, Arvada, Thornton, Northglenn, and Lakewood. 

Those neighborhoods and cities are probably the last affordable markets for both BRRRRs, fix and flips, and house hacks since you can get more house for less price relative to the "popular" parts of Denver like SLoan's Lake, Highlands, Berkeley and Sunnyside and downtown.  You can easily find high quality houses in those neighborhoods for 400-500k. 

4) For loans, if you are looking to do just BRRRRs, I would talk to hard money lenders such as Pine Financial, and you are looking at 10-12% interest rates for those while you are under construction and then refinancing into a normal conventional loan.

For house hacks, since you will be making it a primary residence, you can get a FHA 3.5% loan and a conventional 5% loan fairly easily.

Since you have an advantage with your background and ability to buy materials at a discounted price, you have lots of potential strategies. BRRRRs are definitely the hardest because you have to be able to find beat up properties off market, close with cash or a hard money loan or partner with someone that has the capital, fix it up, find tenants, refinance, and then repeat. Not impossible but the ones doing it in Denver have great off market deal marketing strategies and deep pockets to make it happen. 

House Hacks are the easiest since you are usually finding properties that don't need a lot of work, putting only 5% down and then saving on living costs while building equity, cash flow and getting tax benefits. 

You could combine both strategies and do a BRRRR house hack by moving into a house that needs a lot of work and you can add value by adding bathrooms, bedrooms and remodeling the kitchen and then refinancing to pull your money out, but again, it is a tougher strategy since most house hacks are livable condition.

@John Mayer Based on James using your house as a case study, it looks like a great deal, and you made it work very well by renting by the room. Also, Barnum is definitely a good and upcoming area.  Congrats! 

@Savannah White Great last name!  Welcome to Denver.  I personally house hack here in Denver, and it has changed my life immensely since I enjoy moving each year and finding great tenants!  You have made a great choice be moving here, and there are lots of opportunities to get started, and I recommend house hacking for new investors since it will make a huge difference by minimizing and sometimes eliminating your housing costs.  

@Patrick Finney Great job Patrick, looks like a solid one!

@Kevin Brown I like the creative thinking, but that sounds like a huge process dealing with the city, purchasing a property cheap enough to make the numbers work, getting all the permits, construction delays, dealing with contractors when you work full-time, etc. Also, you would need to find a single family on a multifamily zoned lot too.  

The big questions to ask yourself: what are my goals? What will get me to accomplish my goals the fastest? 

Anyways, to me, it sounds like you want to house hack and do it a few times. That's great, and you don't have to go through the whole process of building a new duplex from the ground up, especially for your first deal.

Since you have a full-time job, why not maximize your cash on cash returns by implementing one of a few house hack strategies: 

1) Buy a large single family house with 5% down payment and rent each bedroom out - this is the best cash flow strategy in Denver right now. It requires more work, but well worth the returns!

2) Buy a 2-4 unit multifamily with FHA 3.5% down payment - this is a good strategy too, but they sell for premiums in Denver, and a lot of them need work.

3) Buy a house with 5% down payment with mother-in-law suite, basement apartment, ADU, addition, and live in one part and rent out/Airbnb the other part - this is a more creative way to get the best of both worlds without having to pay a premium for a multifamily. Usually, these are in better condition than multifamilies.

 4) Since you have enough for both a construction loan and a down payment, why not buy a house hack with 5% down and buy a investment property with 20% down payment. That way you get to maximize your returns and deploy your capital.

@Katie Hoffman Congrats on looking to house hack in Denver, that's a great idea to achieve your goal of purchasing a house in Highlands Ranch or out of state rentals long-term. 

I know that area of town very well since I have a couple of properties over there, and I'm getting 1,500 for 2/1s that are updated similarly to those without granite countertops. The big issue I see with aiming for 1,800 for that place is that it is a multifamily property: shared walls, no garage, location (close to Federal), no A/C?, and a really small two bedroom place - 717 sqft means tiny bedrooms. 

Thus, because the size of the units and timing (November and December are not the easiest months to find tenants), you are looking at 1,550-1,650 rents per unit most likely. 

Also, the best way to determine rent prices is to get onto Zillow, trulia, hotpads, facebook marketplace, and craigslist. Look for properties nearby and see what your competition is offering their 2/1s units for. Since it is a duplex, you have to look at apartments, townhomes, condos and other multifamilies since those are your comps, not houses that are 2/1s.  Look at other 2/1s that have similar square footage and updates. 

Looking at the listing, it appears it was rented for 1,395 back in May 2018, so that's not a bad baseline. Since it was recently flipped and has nicer features with market/rent appreciation, you will get more than that, but probably not 1,800.

Also, if the property was split since they are selling each half, you would have to combine them into one legal description to purchase as a duplex since right now, they are selling each side individually and you would need two loans to purchase. 

@Cameron Lam Great stuff Cameron, how do you plan to deal with showings/vacancies for your Arizona rent by room properties once you move to Utah?  Do you have virtual tours for all your properties?  Do you let the tenants choose and you screen the prospective applicants? Or, are you planning on having someone handle that aspect of your business?