All Forum Posts by: Scott Hibbert

@Leanna Mansour It seems interesting to me. Is it downtown Longmont or on the outskirts? I used to lived in Boulder for 9 years and went to Longmont a few times. It is far enough away from Boulder, Denver, Fort Collins that I think a good amount of the population live and work there or they commute to the areas listed above for work, but not if they don't have to. If I lived in Longmont, I wouldn't drive to Boulder or Denver to go out at night other than special occasions. Crime is relatively low. Especially compared to the Bay Area. I lived in Oakland and it is a lot different. I'm guessing you could get a better CoC return in the midwest but based on your numbers. Assuming it is in great shape, I would consider it while doing more research on the specifics(rent rates, vacancy, location in Longmont, property management company) as someone who could drive to it and self manage.

@Jesse Park I second @Chris Lopez advice about 5% down and pre-pay PMI (sometimes called Single Payment PMI). I am under contract on a turnkey 4bed/4bath and I will pay $4600 at closing for prepaid PMI. This is going to save me about $110/month. I plan to live in one room and rent the other 3 for one year. Then I will move out, buy another place and find another tenant to take over my room. I have a long term buy and hold plan for this house. My break-even point on the pre-paid PMI is 3 years when you include the cost of a new appraisal to try to remove PMI without refinancing. As long as I plan to hold longer than 3 years, pre-paid PMI is more cost effective.

I recommend going to Chris' website and downloading his house hacking spreadsheet.  I have been using it to run my numbers and when I found a property that aligned with my cash flow goals, I made an offer.  Chris is also the one that explained to me the power of quickly compounding properties instead of buying live-in fixers that take a few years to finish.

I agree with @Jeff White as well and will add that I enjoy getting my hands dirty with renovations but I can't wrap my head around how to rent out rooms and renovate at the same time.  My assumption is no one wants to live in someone else's reno project AND pay them rent.  The money I would lose renovating a house before renting rooms isn't worth it.

The new construction between Sloan Lake and Broncos stadium are nice.  I even have friends living there.  I can't find any scenario where those new townhouses cash flow with 5% down.  My friends(married or couples) bought there because they wanted a nice place to live and believe they will appreciate over the long term.

@Christian Albright welcome to BP. It’s a great community and I have learned a lot from it. Denver doesn’t have as many small multi-family units as some other cities but every now and again you might find one that will work for your plan.

Have you considered buying a single family house and renting out the extra rooms?

Checkout the bigger pockets events page for meetups. I always enjoy connecting with other investors in person.

Do you have a timeline for when you hope to purchase your first property?

Best of luck and feel free to reach out anytime.

Scott

@Craig Curelop Ya I moved back in May.  The Bay Area was fun but unaffordable.  Happy to be back in CO.  Thanks for your insights and idea of going short term month to month rental to start.  As of right now I am set to close on a 4 bed/4bath half duplex 1.5 miles north of Olde Town Arvada in mid February and planning to start renting rooms March 1.

@Account Closed I'm actually apart of the VF relocation from the Bay area.  This summer should bring a few more people to Denver but the bulk of the relocation took place Summer 2019.

@John Mayer I haven't made any room for rent postings yet to test the interest which is good because I backed out of the property after the inspection and reviewing the HOA minutes where they are in the middle of a vote to not allow long term rental other than owner occupied. They have already added a bylaw that doesn't allow short term rentals and investor purchases.

I am however under contract on another place that I think will be smoother since there isn't an HOA and it was built at the end of 2016.

I agree with long term positive outlook on Denver which is why I am trying to buy now.  I think it will be interesting to revisit this topic in a few months to see if the average rents have changed due to seasonality, similar to home prices where there is less competition in December and January than there is in May and June.

Assuming I close on this new property that I have under contract, I will update this thread with the outcome of rents.

@Andrea Trbovich If you live there for 2 years while you renovate and then sell, then you can take advantage of the capital gains exclusion for primary residence as long as you meet all of the requirements.   Here's a link that explains it.

https://www.irs.gov/taxtopics/tc701

@Russell Brazil Very good point. I know from personal experience that when I first started looking at rentals, it was a very one dimensional approach of analyzing properties on the MLS and still is my primary process. But I'm now looking at selling my first rental property that I originally purchased as my primary residence in 2010, buying a multi-unit and increasing the return on my equity by 400-500%. Even though my friend was telling me to do this a year ago, I just couldn't see the opportunity right in front of me. I'm guessing this is the same for other new investors that can't see the opportunities right in front of them while others are making a killing.

@Masud Khan I have never used the dealcheck app but I have used the BP rental property calculator.  I found that most of the properties I ran through it came up with negative cash flow using listing price.  Try playing with your numbers and adjust the purchase price until the numbers work.  You might also want to sign up for the webinar on January 8th "How to evaluate and offer on rental properties".  They will most likely include tips and tricks to adjust the numbers to create cash flow.  

@Andrea Trbovich IMO You are buying a primary residence that happens to be a live in flip.  I did this with my first house that ended up taking me longer to renovate than planned since I was doing all of the work on weekends.  The way I evaluated my purchase was comparing it to how much fully renovated comps were selling for at my time of purchase.  Then I estimated my renovation costs, added them to the purchase price and when I thought there was a enough potential profit I purchase the home.  I didn't factor in any taxes or carrying costs because I needed a place to live.

For example the house I bought was $391k, renovations estimate was $60k.  Fully renovated comps were $510k.  This was in 2010.  I no longer live there and it is now a rental property since my plan changed after a while.

@Masud Khan Is the place newly renovated or outdated?

I think the BP rental calculator says a good estimate is 5-10% for vacancy, 5% for maintenance and 5% for Cap Ex.  If its outdated then it should be closer to 10%.  Yes you will want to include them in your monthly expenses against cashflow.  It spreads the expected cost out over every month, even though when they happen, it usually is just one larger cost for that one month.  You'll want to set them aside in savings until your reserves are high enough to cover an unexpected costs.