- Listen to the podcast “#27: Deal Analysis – A Dedicated House Hacker in Colorado Springs” on the Colorado Springs Real Estate Investing Podcast
- Watch the YouTube video (at the bottom.)
- Read the blog post. Note, the blog is an executive summary. Get the in-depth breakdown from the podcast or video.
- First time real estate buyer and investor
- Wanted a property that would allow him to use the house hacking method
Long Term Real Estate Investing Goals
- $1500 a month cash flow by 2025
Strategy for Achieving Goals
- He will be using house hacking to purchase a second house hack in a couple of years.
Investment Property Details
- 4 bedroom 2 bathroom single family house
- Located in the Pinehurst area of Colorado Springs, close to the airport and new Amazon warehouse
Appealing Features of the Property
- Great house hacking opportunity that allows Jeremy to maximize his rental income.
- The house features a large downstairs family room that Jeremy is partitioning off with drywall to create a separate sleeping area for himself. This will allow him to rent out all 4 bedrooms.
- Denver MLS: the property fell out of contract, so we moved quickly and got a showing as soon as possible.
Property Contract Details
- The inspection found that the radon was high. We were able to negotiate a $1,500 seller concession initially, but during phase two negotiations, we amended this concession for a lower purchase price.
- This property was listed for $300K and had previously fallen out of contract at the financing stage, so we were able to get the recent appraisal from the listing agent. That appraisal came in at $311K, so that’s what we offered.
- When the appraisal was done the second time, it came in lower, at $307K. We were able to renegotiate by removing the concession from the inspection in exchange for lowering the purchase price to the appraisal value.
- The lender exuded a lot of confidence, which reassured the seller and listing agent that there wouldn’t be a repeat of the previous failed contract.
Property Financing Details
Plan vs Reality
- Jeremy’s original plan for repairing the home was to spend about $5K installing a radon system, AC, and some light rehabbing.
- However, he also wants to push the room rents and force equity, so he’s now spending about $13K to fix up the vacant rooms by painting, adding flooring, and redoing the bathrooms.
- Jeremy was able to immediately rent out two of the bedrooms to roommates from his previous living situation. After fixing up the other two bedrooms, he was able to find renters for those rooms, as well.
- He is self-managing the property and doesn’t have any HOA costs, so he’s estimating repairs and maintenance at 8%.
- His current monthly rental income is $2300, putting him at $300 a month positive cashflow after expenses.
Notes regarding monthly rents: 2 tenants brought with him. $500 x 2. Fixing up master = $700. Rent 4th bedroom = $600
Property Operating Expenses
First Year Returns
Immediate Goals and Plans for the Property
Continue rehabbing the home to push rents and force equity.
Exit Strategy/Long Term Plan
He’s going to continue to rehab the house little by little with the positive cash flow he’s getting from his rental income. In the next couple of years, he plans on renting out the entire home as either a single family or rent by room setup. He’s hoping to purchase another property he can similarly fix up and rent out using house hacking.
Jeremy was able to implement his investing plan by looking at different properties and figuring out exactly what he wanted. By fully committing to the house hacking method, he’s already cashflow positive and well on his way toward buying his next property. There were some hiccups throughout the process, but by being flexible and organized, we were able to get our client started on his house hacking journey.
If you are interested in investing in Colorado Springs, contact us to get you oriented and help create a strategy:
Jenny Bayless: Jenny@EnvisionREA.com, 719-649-4478
Interested in checking out more Colorado Springs rental properties? Find more Colorado Springs Rental Property Analyses here.