Combining a Nomad and Room by Room Strategy in Colorado Springs
In this deal analysis, the client combined both a Nomad and room by room strategy to optimize his returns on a single family home in Colorado Springs. Now, he gets to enjoy living in a great house for a year and look forward to awesome returns when he moves out. Listen to the episode to hear how implementing these strategies is poised to pay off for him.

This is an exciting deal analysis because the client used a couple of different strategies to optimize his investment.  By using a Nomad approach to buy the home, he gets the benefits of better purchasing terms and the enjoyment of living in a nice house.  Once he moves out, using a room by room rental strategy will boost his returns significantly. 

Three Learning Options!
  1. Listen to the podcast “#77: Combining a Nomad and Room by Room Strategy in Colorado Springs” on the Colorado Springs Real Estate Investing Podcast
  2. Watch the YouTube video (at the bottom.)
  3. Read the blog post. Note, the blog is an executive summary. Get the in-depth breakdown from the podcast or video.

Investor Profile

This investor already has a couple of properties in Denver and a long term rental in the Springs.  He was living in Denver but really liked the Springs because of how close it is to nature and the affordability of homes.  He has a flexible job and decided he wanted his next primary residence to be down here. 

His original plan was to do a house hack with roommates, but he ultimately decided to take a Nomad approach and live in the home with only his girlfriend and dog for a year before moving onto the next property.

Investment Property Details

Appealing Features of the Property

This single family home is centrally located and has a nice yard.  It’s a 5 bedroom/2 bathroom ranch home with basement.  There are 3 bedrooms and a bathroom upstairs, plus 2 bedrooms and another bathroom in the basement.  Once he puts a little kitchenette in the basement rec room, it will be ideal for a room by room rental strategy.

How Was the Deal Sourced?

I found this deal on the MLS.

Property Contract Details

Contract

The property was listed at $380K, and my client offered $420K.  He was competing against an ibuyer, a corporation that purchases properties and rents them out.  The seller liked that my client was a person and not a business, but wanted a more generous offer.  They agreed to an appraisal gap of $12.5K and limited inspection objection.

Inspection Issues

The home was well-maintained and no major issues were found during inspection.  We estimate he won’t need to spend more than $1500 to take care of some small items.

Property Financing Details

I used our Rental Property Spreadsheet to analyze this deal.

Property Overview

Combining a Nomad and Room by Room Strategy in Colorado Springs: Property Overview Spreadsheet Screenshot

He’s using the property as a regular primary residence this year, so I’m fast forwarding to when he moves out.  We estimate that each bedroom will go for $650 with a total monthly rent of $3250. 

Property Operating Expenses

Combining a Nomad and Room by Room Strategy in Colorado Springs: Monthly Operating Expenses Spreadsheet Screenshot

Since he plans on staying for the Springs, he’s going to self-manage the property. 

Typically, landlords who implement a room by room rental strategy cover all of the utilities of the house.  These numbers are based on what other clients spend on utilities in this area.

First Year Returns

Combining a Nomad and Room by Room Strategy in Colorado Springs: First Year Returns Spreadsheet Screenshot

By using the room by room strategy, he’ll have an annual cash flow of just over $5K, a cash on cash return of 12.7%, and a cap rate of 6.5%.  It’s phenomenal to see a cash on cash return this high when the buyer only puts down $40K, which is about 10%.  It’s hard to cash flow in this market with so little down, but the room by room strategy really helps here.

Conclusion

This is a solid property in a convenient location that was in great shape when he bought it.  By using the Nomad strategy, he’s able to utilize the benefits of buying an owner-occupied property, namely less money down and a better interest rate.  Plus, he gets to enjoy living in such a nice home for the year. 

When he moves out, he can expect great returns from the room by room rental model.  If he repeats this strategy with his next property, he’ll be able to accumulate an impressive portfolio in just a few years.

Connect with Us

If you’re interested in figuring out how to implement this strategy yourself, reach out to me.  I’m happy to sit down with you and put together a plan. 

YouTube Video

Combining a Nomad and Room by Room Strategy in Colorado Springs

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Rental Property Spreadsheet • House Hacking Spreadsheet BRRRR Calculator Spreadsheet • Fix and Flip Deal Analyzer Investing Maps • Rehab Pricing Estimator
Authors
Jenny Bayless
Jenny Bayless is an investor-friendly agent with Envision Advisors, Colorado real estate investor, and the host of the Colorado Springs Real Estate Investing podcast.
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