All Forum Posts by: Kayla Davis

Hi All,

I'm purchasing a SFH where I'll be doing some "House Hacking", namely renting out all the spare bedrooms. I'm trying to find the best strategy for renting my rooms.

For any potential renters looking for a single bedroom, what is best?

A furnished room that comes with the basics: a bed, night stand and lamp.

An unfurnished room where you can move in all your own stuff. 

@Drew Fein - Oops, beat you to the punch - your questions, answered in my post above! 

@Robert Herrera I'm not interested in starting/hosting a grow operation or something crazy like that. Leave that to the professionals. My husband and I are marijuana users, and we're talking about renting out bedrooms and sharing living spaces. There's no way the hipocrisy of "Keep it off my property!" is going to stand up on a daily basis when a tenant/roommate notices me curled up in a blanket fort, totally baked and binge watching children's cartoons.  Having things like "keep your weed/pipe/special brownies/whatever in your room so it doesn't get stolen" and "if it does get stolen, it's your fault for leaving it out", but also "no live plants" and "smoking OK only in designated areas" is important to us. 

Mostly on this particular point, I like the blanket statement "No illegal activities, as defined by Colorado State or Federal Law, may take place on or inside the premises" for all other things, but with MJ being a grey area, that statement isn't really true. I'm not sure how to set the rules or what protections I can give myself. 

Hi All,

My husband and I are planning on breaking into the RE investment business with our first SFH purchase in the coming months. We're currently searching for the right house to get started in, but could use legal advice for starting and maintaining a legal business moving forward.

We're looking for someone who is familiar with the rental restrictions and tenant/landlord laws in Denver, Lakewood, Arvada, Broomfield, Westminster, Federal Heights and Thornton. This also includes unincorporated Adams and Jefferson counties. We could use someone to help us navigate occupancy laws (# of unrelated adults per dwelling, safety standards), as well as someone who can help us establish a solid business model. 

Additionally, we have a lease and roommate agreement drafted, but would like to have it reviewed. We could also use help with adding a marijuana agreement to the mix.20 No use having a legal agreement if it doesn't stand up in court.

I'd love to exchange emails/messages with anyone interested!

Thanks so much for your time!
Kayla

Kevin,

I've looked for multifamily properties on the MLS on and off for two years while we saved up our initial investment capital, but I've never seen one posted that was in "beginner's shape", so to speak; always large issues with the properties that would either require more starting capital to repair than we have or will be able to leverage, or otherwise have issues that prevent conventional financing. It really seems like the majority of the good multifamily deals are happening off the MLS...

So, if they're happening off the MLS, where are they happening?

Hi Denver Forum,

My husband and I are looking to do some house hacking in Denver to get ourselves started on the path of financial independence. Right now we're pre-approved for conventional financing by KeyBank, up to $300k. We'd really like to buy a duplex or triplex in the Arvada, Lakewood, Golden or western Westminster areas. It seems like duplexes etc don't really hit the MLS. How can I find these types of properties?

Would love any help!

@Suzette Parsons I understand that risk on a rental property as an asset - I also understand that if I buy a single family home for my first property, that's no longer a risk, but instead it's a personal liability with zero income, much less any cash flow. As a youth just starting out, with no assets, isn't the equity and net worth built up by a stable property value just as important, or more important at this point in my life?

@Account Closed The Denver & surrounding area is paying more because property values have remained very stable, even throughout the 'great recession' and because rents continue to go up, up, up. Part of the reason why I want to get out of the business of renting and into the business of owning. 

@Walt Payne Would you do something like it if you were in my position? Very little net worth and no assets, plenty of working years ahead to build up a portfolio, just trying to get my foot in the door in a way that breaks even... 

Given the circumstances, I would definitely be purchasing a property I'm comfortable living in, since that would be required by whatever first time buyer loan I use... Best I can tell, pretty much any multifamily would break even, allow me to live rent free... And then the money I am no longer putting into rent will continue to be paid forward into my current investment pot, along with the 50% of my income I've already been dumping there every month. The property may not cash flow, but it sure makes my day job more profitable, with the expectations that I turn those profits over into investment.

I don't think I'm confused about the 50% and 1-2% rule - I understand that one is costs and one is returns. I've been reading that the best deals will meet both rules, but I've also read that it's not so important for new investors ("Don't worry about that, just get your foot in the door"), and also read that they shouldn't be applied to multifamily properties ("Too confusing, doesn't consider all possibilities with multiple units"). This mixed advice is what I find confusing, especially when paired with my low income financial situation. I may also be confused as to where equity falls in with a buy and hold.

Thanks everyone for the answers!

Kayla

I think I know what the knee jerk reaction is going to be here: Absolutely not!  Hear me out...

The goal: Purchase a multifamily property as my first ever purchase with 3-4 units on an FHA loan with as little down as possible, make it cash flow and build the equity, baby. Escape the PMI within a few years with a refinance.

Problem is, I currently live in Arvada and I'm looking at the suburbs surrounding the west side of Denver, and a lot of multifamily properties are pushing a quarter to a half a million. I haven't found any that meet the 50% rule, and only handful that would eventually meet the 1% rule after updating and improving, but wouldn't cash flow for the first year or two while those improvements are being made. I could live rent free while breaking even for a while, but nothing in my pocket right away.

However, a lot of advice I've read around here on Bigger Pockets and around on other blogs and forums say that the real key to success and avoiding mistakes is to only invest in deals where the numbers meet the rules. I feel like there are very few properties in my area where the numbers are up to snuff, and those that do meet standards require somewhat tremendous rehab. 

So what's the professional opinion - should I buy a 'plex even if it doesn't currently cash flow? Should I count living without rent a cash flow? Or am I just being to cautious about risk? 

Hello! I debated between posting this here and in Conventional Financing, so here's to hoping I picked the right forum!

I'm toying with the idea of purchasing a less expensive property outside of my local area for buy and hold purposes, and also toying with the idea of putting an LLC in possession of the property for legal protection and to reap the other known benefits of having an LLC...

However, I don't want to ruin my personal chances of getting an FHA loan for a more expensive home in my local area with little down as a first time homebuyer, and I wondered what the word was.

Do I still qualify for an FHA loan even if an LLC in my name is in possession of habitable property?

I'm a fan of Lisa Phillips and her investment strategies, involving buying houses under 35k in stable low income neighborhoods, repairing them to last 15+ years and holding them.

Right now I live in Arvada, nearby to Denver, Colorado, and don't make incredible wages over my cost of living. That is to say, savings leftover from my day job are only about 50% of my income, and my pay is not all that high (30k/yr including overtime). I'm reluctant to put down 10k on a tiny town home for personal residence in my local area, I would much rather make a real investment in a house (no HOA) that can be treated more like a property I own professionally, and less like... Just buying a property for personal use.

However, there are pretty reasonably priced small houses in the Pueblo area, about three hours drive from where I live. In the right areas, it seems like the rental market is healthy there as well. I'm still doing research on property management in the area, and other bits of information as needed, but Pueblo is on the table for me for now. The biggest hurdle would be doing any initial property rehab from a distance, since I wouldn't be capable of driving down to Pueblo to supervise repairs.

So I'm wondering what the experienced opinion would be! Would it be better to almost fully finance a property in Denver, owner occupy and try to build a ton of equity, eventually liquidate and invest into multiple other properties? Or to purchase a less pricey small house in Pueblo, give more percentage down, and have cash flow to turn around into more future investments?