All Forum Posts by: Jeremy Norman

@Trevor Aydelott What is your plan with this house?

Ultimately, it should come down to whether it still fits your numbers. Remember you can usually renegotiate on new information such as this too.

@Corrin Godar, I appreciate your perspective. I also generally agree with it on a gut feeling level - but on paper, the numbers can work. I have not house hacked and probably won't do a traditional house hack any time soon due to our attachment to our current home.

That said, I did want to point out that from people I've interacted with at REI groups, I think there are answers to a lot of your issues - even in Colorado Springs.

1% Rule: Colorado Springs usually does not meet the 1% rule, but the 1% rule is not a very good rule for estimating cash flow. If you need to replace appliances, for instance, they are roughly the same cost whether you put it into a 400k SFH in Denver or a 65k SFH house in Pueblo -- or even 200k house in pueblo just down the street, for that matter. When it comes to percents, Wood, Nails, and Shingles don't care what you bought the house for or what it rents for. (Property managers do though)

I've been running numbers in the Springs a lot this year. Most MLS properties do not cash flow if you're not living there, by my math... but a handful have. You're right that they don't come up often, but a good realtor will help you with that. I'd happily put you in touch with one that's brought me cash flowing deals this year, if you're interested.

Safety: I think other responses have way more experience here and had good suggestions. Although, I have to add that I've heard that if you're really concerned, it's a good idea just to put any new tenants (especially if it's a rent-by-the-room deal) on a month-to-month lease to start (say 3 months) so that you can move on quickly if you need to.

3. Pets: Not legal advice... but AFAIK, you CAN discriminate on people's comfort with dogs. It's not a protected class, unless there's a disability of some sort that affects the dog issue. Any of the realtor's I'd use these days are investors themselves as well as either property manager or part of a brokerage that has property management... so you can actually plan your investment out with them and use their experience to help make it successful.

Plex argument: Very few plexes come on the market, but a few have and cash flowed renting out the entire place. You will need to be ready to move as soon as it hits the market though, for sure.

I second Dan's suggestion for third space. In fact, just under a month ago Dan gave a talk there on House Hacking that was very good. (He's too humble to say so, I'm sure though). 

There's one down town that @Jacob Mueller is involved with that's worth checking out too if you're just getting started.

Welcome.

If your focus is mostly business, I suggest you check out the Bigger Pockets Business Podcast. It's got a lot of good information about how to build/grow/operate small businesses. The original real estate podcast actually has a surprisingly good amount of business skills as well, but is not as focused on it, obviously.

Good luck with everything!

Welcome. I am also new in the Colorado Springs area. I hope to see you at some of the local meetups at some point. 

This is one of the better ones here in the springs: https://www.meetup.com/Colorado-Springs-Real-Estate-Investor-Association/events/pwphgryznbcb/

Atlas Realty (@Jacob Mueller) also puts one on here in the springs that's worth visiting at least once. (They also do Denver, but I think it's the same content). 

As far as loans... From what I gather, HELOCs seem better suited as a replacement for hard-money and short term loans where rate changes over a few months are unlikely to be a problem. Cash out refinances are better for any money you may leave in a deal (turnkey/traditional or leftover from BRRRRs), especially considering where rates are at the moment. (Probably going the be the cheapest money you can put into a deal @ <4%) If you really need every last penny, HELOC might work. That's all theory though - we'll see what more experienced people say.

I am confused by what you are saying when it comes to your current house. You said you bought your home 3 years ago but are considering selling it to avoid taxes. If you are still living in it, you won’t pay capital gains taxes. As I understand it you just need to live in the house 2 of the last 5 years. If you’re considering selling maybe just keep it as a rental and get a new house - you should have 3 years to decide if you want to continue before you have to pay capital gains, and northern colorado should appreciate the quite a bit in the mean time. If you need the cash for another house, you can refinance your current house or get a second mortgage/heloc to get it (make sure it cash flows though)...

This is the plan we originally had for our first house, but listened to “conventional wisdom” and emotions... regret it thoroughly now though.

Thanks All. Middle of the week turned out to be a bit busy, so I have not been able to get back to this thread as quickly as I'd like. 

@Daniel Haberkost I am looking in Pueblo (proper) at the moment, not Pueblo West. Not opposed to it - just not the focus. My favorite areas are near the North Hospital or the college, if I can find a deal there - which I have not yet. It looks like there are good properties, even on the MLS on the west side and near the Minnequa area. We've only got a few very small areas inside those that we're comfortable with so far. (I wish the west side was easier, because the numbers look awesome there).

The superfund is an interesting area. It's due to an old mining operation - one that went away a long, long time ago. Honestly, I think that's going to be one of those areas that really pops once they get really rolling on cleaning it up. It's not there yet and they have not even dealt with the slag pile causing the issue - so we'll see. Also, since they are concerned with wind spreading more lead dust off the pile, I don't know why they would even mitigate houses already. We made an offer in the area (off market) without realizing it, actually. 

@Alyssa Dyer I'd really like to buy a small multi family. However, we keep going down single family rabbit holes because the prices just seem so good. We've made a couple offers on single family, too - so it's not as though it's a waste. The numbers work or are close enough pretty often. 

Ironically, it looks like you're in a market I also would highly consider - in fact I'm interested in buying there after I get some close-to-home knowledge of real estate. OKC has better cash flow from what I've seen. Pueblo might wind up having better appreciation now that so much of the front range of Colorado is booming - but if that's what you're after, look farther north. It's more certain to happen reliably along I-25 between Fountain and Fort Collins.

@James Carlson I've noticed some posts by you in the past and already referred Denver friends your way. They said they were into house hacking and such. I doubt they ever called though because I suspect they were not actually serious about buying investment property in Denver.

@Ali Boone Thanks!

Thanks. I’ve been following pueblo on BP for some time. I’ve read at least one horror story and also some of the positives. Overall, there are a few really good economic stories playing out there. A few bad ones too, but overall it’s positive. 

I’ve put in a few hours down there and am working on building a good team of advisors help avoid disasters. We found our primary realtor through BP, even (though we wound up running into him in person while scouting areas first). 

Hopefully that helps us put off any “advanced investing lessons” until we have a few more under our belt. Otherwise, we’ll roll with it.

Meanwhile, happy to offer an opinion on any deals in the area, for whatever it’s worth. I’m still learning the area and rental properties, but have a math, computer science, and economics background. So at least I can tell you if the numbers work and what they actually mean/represent.

Hello all. My name is Jeremy and I am just starting my journey into real estate investing in earnest. 

My wife and I did a flip house hack with our first house and nearly gave up on real estate through a bad experience with a realtor on the sale. A great realtor stepped in and fixed it, but afterward we started looking at businesses with brokers. After some time off though, I found the book on rental property investing (Brandon Turner) and it charged me (and then us) back up and we're now looking for rental properties in Pueblo, Colorado. We've recently gotten comfortable enough with that market to make a couple offers.

My non-real estate background: I'm super interested in business and spend my weekdays working as a computer programmer.

For a bit now, I've been consuming a lot of BP content. I'm excited to find others that are interested in cash flowing assets and the journey that starts now.