All Forum Posts by: John Mayer

@Justin O'Malley

Having a $300 mortgage on a nearly half a million dollar primary residence is a phenomenal success. Count that fact that you’re only paying $300 to live in your bedroom, and in actuality, you’re cash flowing about $400 a month.

Housing is the largest part of the average American’s budget, and its money that you absolutely have to spend, regardless of where you live, so think of it like taxes. You have just succeeded in virtually eliminating that expense. Also, your ‘rent savings’ is better than real cash flow, because you don’t get taxed on money you save. Throw in your loan pay down (about $800/month in the first 3 years), tax advantages, and the potential for modest appreciation and you’ve got yourself a HUGE win.

My wife and I did almost exactly that same thing you’ve done, except we went with a 6bed 2bath and we rent out all 5 other bedrooms. It’s been a year and with the money we’ve saved and the chunk that it’s taken out of our monthly living costs, we’ve been able leave our jobs and start a business together. The house has also appreciated significantly. Don’t let nay sayers tell you otherwise, what you’re doing is going to have a huge impact on your financial future, and that’s something you can be very proud of, kudos!

@Christian Albright

You are on a solid path, and I totally agree with Chris on this one, knowing what you want makes all the difference.

Within a few minutes of receiving the redfin notification for the property that would eventually become my current home, I was on the phone with my agent and we set up a showing the following day. We walked the property for 20 minutes, everything checked the box, and we put in an offer just a few hours later: 5K above asking, a 21 day close, and a promise not to ask him to pay for inspection items below $2000.

He accepted, and that property now cash flows over 2K a month with some unbelievable tenants.

And yes, things have gotten even more competitive since then, but I think the principal still remains. If youd like to chat sometime don’t hesitate to lmk! I always enjoy connecting with other investors & fellow househackers

@Brandon Itkin

Believe me, I’m living in it, it’s not crazy lol. I personally know and have met with at least 6 other investors in Denver who own multiple homes like mine, with a 3:1 bathroom ratio. In fact, I’d say it’s the norm for room rental tenants to expect that they will be sharing a bathroom with 1-2 other people. The best and lowest maintenance tenants you will ever have don’t care about having to share bathrooms. They care much more about living in a nice home, with good & likeminded people, having tons of parking, and convenient access both to the city and the mountains.

@Travis Hatch

Definitely not a qualified HVAC professional, but I rent the the room in a 6 bedroom house, 3 of which are basement rooms that get pretty cold. We have each basement room equipped with a cadet wall heater w/ a digital thermostat and our tenants say they are very comfortable. They are 120v and don’t use a ton of electricity. My Xcel bill averages $150-$160 in the winter with 7 people living in the house, 4 with their own individual cadet heaters. I think they’re like $200 a pop at Home Depot. Install would obviously vary based on the requirements of your home.

@Brandon Itkin

It’s very feasible. I just did a Redfin search of recently sold (in the last 6 months), 5+ bedroom, 2000+ sq ft homes in the neighborhoods I listed out to you and found 250 closed listings less than $500K.

You don’t need a bathroom for every tenant. I have a 6bd 2 bath and have had zero problems with 5 tenants + my wife and I. Obviously the more the better, but the more important thing is parking. You want to have as much off street parking as possible. My home has a three car garage and 3 off street parking stalls. That’s total overkill, but it helps keep the neighbors eyes off of you if you aren’t following code (ie too many unrelated people in a house), and it is a very desirable thing for tenants.

@Brandon Itkin

I focused on 5-6 bedroom houses with lots of off street parking in the 400-500k price range in: Thornton, Arvada, Lakewood, Barnum, Barnum West, Villa Park, Englewood (near DU). Find something within those parameters with some good photo appeal and an updated/open layout you can reasonably expect $700-$800 per room. Finding homes with value-add potential is a plus if you have money for a small renno, but it’s possible to find a pretty turn key home. However, because Denver is so tight, do expect to put in at least $10K in light touch ups in order make attractive offers to sellers (ie fast closing, limited inspection objections).

@Jordan Copeland

Our home is in Barnum West. It’s an up and coming neighborhood about 10 min from downtown with a good inventory of affordable housing. There’s not many larger 5-6 bed homes there, but they occasionally pop up and can sometimes be a home run. Our home is larger and higher end, so as a result we are on the higher end for rents in our neighborhood. We charge 795 a room, and 825 for the larger bedroom. In all, we collect $4005 on a $2360 piti mortgage (including pmi).

Room rental rates surprisingly don’t vary as much from area to area, even when you get out into suburbs like Arvada, Lakewood, or Thornton. The range is anywhere from 650-900 all across the metro for a decent room. Just like you would run comps for the purchase of a home, the best way to find out rents in a particular neighborhood is to look on Facebook Marketplace and Craigslist at what similar homes are charging. A good general rule of thumb I used when looking for my house was to use $700/room as a quick and fast estimate to run numbers on a home. If it passes, it might merit doing some deeper analysis.

Hey Jordan! Congrats on taking the dive. I’m about a year into my first househack and it’s been the best financial decision I’ve made in my life, no question.

Looking for a lender and an agent are great first steps. In my experience, I think the most important thing you can do to househack successfully in Denver is focus on improving your financial position. I would make it a primary goal to get approved for 450-500K.

This sounds like a lot, but with interest rates bottomed out, it's very feasible, even for a single guy (I won't lie, it's a lot easier if you're married). Eliminate your debt, improve your credit, and land a 60K salaried W2 job and, congrats! You just got approved for $2750 worth of monthly mortgage payments under an FHA program, AKA a half a million dollar mortgage.

And believe me, the difference between getting approved for 400K vs 500K is HUGE in Denver. My goal was to land a 6bed house close to downtown Denver to keep a healthy supply of tenants. I managed to find a smokin deal at 480K and it allowed me to net $1500+ in monthly cash flow while living comfortably in my own house and having 0 vacancy with long term tenants.

None of that would have been possible if I had I only been approved for 400K. Not to say that it’s impossible, but you won’t have nearly as many options and will likely have to make some pretty significant compromises.

just some food for thought! Be happy to chat anytime if you’d like.

Thanks for posting, sounds like you learned a ton on this deal and still walked away with some good money!

@Nate Ziegler

1) Like James said, buy some real estate! Reach out to a lender, see how much you can get approved for & househack, househack, househack, HOUSEHACK. Banks are basically giving away free money, and Austin is an amazing market for rent by the room.

2) Build a network (an agent, a mentor, people with idle cash or equity, active investors in your market, contractors, PMs)

3) Analyze deals everyday, and understand your market in and out

3) Continue reading

Happy hunting!