Investment Info:
Single-family residence other investment in Denver.
Purchase price: $485,000
Cash invested: $25,000
This is our House Hack / Airbnb that we currently live in. We live in the front half and airbnb the private entrance 1 bedroom, 1 bath, living room (hotel suite style) back half that is separated by a door that we deadbolt. We launched the Airbnb Jan 31, 2022 and it has outperformed my goals already. We've had only 5 vacant nights from then to present (May 2022) and our income ranges between $2500-3000+ a month which more than covers our mortgage.
What made you interested in investing in this type of deal?
Our goal is to acquire 5 properties by age 35, and we want as many of them as possible to be in Denver. The best way for us to do that currently is to purchase new primaries with low down payments and rent our previous ones. We don't have kids yet, so we knew this would be the most comfortable/convenient time in our life to house hack. We know the benefits of house-hacking and how it can afford someone to get ahead in real estate, so we wanted our next purchase to pay for itself via Airbnb.
How did you find this deal and how did you negotiate it?
I was the agent on the deal and it was on the MLS. It was an i-buy that Open Door had purchased. It fell into the window of i-buyer purchases that were purchased for too much and slightly overpriced when put back on the market. It sat for a couple of weeks which is a long time in Denver, but interest rates were still low, so I went in at list price and wrote $5,000 in concessions into the offer to cover the majority of my closing costs, and I pocketed the buyer agent commission as well.
How did you finance this deal?
Conventional loan at 5% down since it was a primary residence, but being the agent, after getting paid commission and seller concessions, I only had to come with about $10,000 of my own money on a $485k property. We also had to get a lease signed on our old home before we closed on the house, but we had everything set up and ready to list as soon as we got under contract.
How did you add value to the deal?
It was a unique deal, a 2-2 single family that had a weird layout - but for our purposes it was perfect!
What was the outcome?
We have a great 1-1 with updated finishes that we currently live in, and a 1-1 unit that we Airbnb that has an income of $2500-3000 a month covers more than our mortgage!
Lessons learned? Challenges?
If you get creative you can find solutions. I wanted to rent out our previous home and get another property that we could afford, and that would essentially pay for itself via house-hacking - Searching through that lens as my goal helped me be creative to make the deal happen, and it kept me on track rather than being persuaded by any house on the market. It also taught me perseverance because there wasn't a ton of those deals just hanging out in Denver!
Did you work with any real estate professionals (agents, lenders, etc.) that you'd recommend to others?
I was the agent on the deal, and I worked with Dillon Evert and The Rueth Team at Fairway Mortgage who are great to work with, especially for investors. They knew and supported what I was trying to achieve, and worked to find solutions with me to make the financing work.
