All Forum Posts by: Jeff White

@James Carlson That's a tough situation, I would wait the standard two weeks and then confirm the nurse is negative before filling the vacant rooms. Also, to provide full disclosure, I would inform all the prospective tenants that the nurse did test positive but now is negative to ease any issues.  

I think this issue will be coming up with nurses and non-nurses alike, so it is good to be prepared and informed just in case a tenant gets it. 

@David H. I'm currently going through a refinance for one of my properties, should I wait till I'm done with it before pursuing this SBA grant/loan. I don't want to affect my refinance. Just wondering if they do a pull on your credit report for this grant/loan?  

@James Carlson Congrats to you and the two buyers! Terrific deal and great numbers for a more expensive house hack in Denver, especially Barnum area, but it looks like a really good one and already fixed-up too. This deal shows that you can still live in a nice house hack and make money with a FHA loan as well!

@James Carlson That would be sweet if it passes. Thanks for posting!!!

@Robert Chaiton I can help answer your questions.

1) The reason why lenders give low down-payment programs is because the buyer is making that property their primary residence. They believe that owner occupants are less likely to default on a mortgage than an investor buying it as a investment property. FHA is the 3.5% down program, and conventional is the 5% down program.

2) You have to live in the property for one year from the date of the closing. You can sometimes get around it due to unique circumstances like job moved 50 miles away, relationship change (getting married/divorced), etc ,but if you have all of your life variables the same, it is just one year, and then you can buy another property.

3) You can only have one 3.5% FHA loan at a time unless you have good reason to get another (see point 2 above). Regarding the 5% down conventional, you can use that again for a single family house if it is your primary residence. So, if you don't mind moving each year, you can keep using that program as long as you keep qualifying for more properties.

North Denver is a great area to house hack!

@John Mayer Excellent, not sure how capital gains taxes work with inherited properties, but selling it would get you a good chunk of cash to invest, and you could probably achieve your goal a lot sooner! 

Assuming that you have to pay taxes, closing costs, realtor fees, etc, and you are left with 300K to invest, here's how I would invest it in the Denver market to achieve your goals:

I would buy three large single family homes (6+ bedrooms, 3+ bathrooms) with basement apartments with separate entrances that cost between 400-450K with 20% downpayments in Westminster, Lakewood, Englewood, Thornton, or Northglenn, also, these houses would ideally be separated from the top and bottom (ex. 3 bedrooms 2 bathrooms upstairs, 3 bedrooms 1 bathroom downstairs), so you could rent by the room for a premium on the top rooms, and rent by the room on the bottom rooms or rent out the whole bottom unit to a family. That way you have multiple options while still achieving your goals.   

Here are the inputs:

Purchase Price: $400-450K per property

Downpayment + Closing Costs: $90-100K per property

Mortgage Payment: $2,000 - $2,200/month assuming $2K/year taxes and $1.5K/year insurance

Total Monthly Rental Income renting out all the rooms (6 bedrooms x $700 rent per room on avg): $4,200

Total Monthly Rental Income renting out all the top rooms (3 x 700) and renting the bottom unit to a family ($1,700): $3,800

Total Net Rental Income Before Utilities/Maintenance/Reserves/Capex:  Low: $1,600, High: $2,000

Utilities: ~$400 assuming that you pay for everything, internet, heat, electric, gas, water, storm drainage

Maintenance/Reserves/Capex: $400 to have enough to cover any items that could need repair, maintenance, etc and accounting for age of house and more wear and tear 

Total Net Cash Flow Per Month: Low: $800/month High: $1,200/month, Middle: $1,000/month

Also, I didn't include you adding any extra rental income for for adding utilities to rent/garage spots rent/etc, so these cash flow numbers are very conservative but realistic. 

By self-managing these properties, you will receive $3K/month in cash flow which would be that much closer to your goal!  

With a property manager, you are looking at $2.3K/month in cash flow. 

Either way, you will be much closer to your goal, and if you combine it with house hacking a couple of times, you and your wife will hit your FI $5K goal much sooner, probably in 2-3 years!

@John Mayer Congrats! That's awesome, you should definitely sell or get a HELOC, you could easily buy few condos with 20% on each making a much higher ROI than leaving all the equity in the Hawaii property.

What are you goals? Highest ROI? Highest cash flow? Highest appreciation?

@Jesse Park I would look to find a property near the new builds to get the benefit of appreciation and long-term potential. 

You can try and do a house hack with a new build, but it won't likely cash flow that well without significant down payment, and what's the benefit for trying for a new build unless you plan on living there a long time?  The nice thing about buying a detached house in the 400-500k range is that you will find that they have similar amenities as the new builds except more space and a higher likelihood of cash flowing. 

Regarding building an ADU, again it depends on your goals, but the ROI on ADUs in Denver aren't that great and a lot of appraisers don't know how to value them properly since there aren't many comps, so refinancing could potentially be an issue as well.

For your first house hack, start simple and go from there. There are plenty of houses out there right now that can potentially work for you.  

@Jesse Park You have the right idea to look for a house hack.  In my opinoin, unless you are handy, I wouldn't recommend a fixer-upper house on the very first house hack (unless it is easy paint/floors/appliances type rehab). Regarding down payment, put down 5% and use that 15% for reserves and saving for the next property.   

Also, there are lots of 4+ bedroom houses that are basically move-in ready in Denver metro, you just need to look in Westminster, Arvada, Northglenn, Lakewood, west and southwest Denver, Littleton, and Aurora. In those suburbs, you can find good quality move-in houses in the 450k range. Ideally, find a house that has space to add another bedroom and/or bathroom.  

If you want a house near Sloan's Lake, Highlands, downtown Denver, Rino, then you are going to pay a premium to live there, and because of that, unlikely to find a house hack in those locations. 

I'm currently house hacking a 7 bedroom/3 bathroom house in west Denver, and it is working out great. I paid close to 500k for it, and it was basically move-in ready, in fact, I was able to get tenants in right away. There are deals out there right now.  
 

For a water heater replacement (40-50 gallon), you should be able to get a replacement all-in cost for about $1200-1300