There are two different deal analyses discussed in this episode:
- Living at the house while AirBnBing the mother-in-law suite in Arvada, CO.
- A long term rental analysis for after they move out.
The clients purchased this house about one year before this deal analysis was published. That means we have almost a year’s worth of operating data to analyze.
This property closed in Q2 2019.
Investor Profile
- Young professional couple
- Relocated to Denver in 2018
- Want to house hack to reduce living expenses and build a rental portfolio
- Goal: Reduce mortgage to less than $1,000/mo
- Listen to the podcast “#148: Deal Analysis – Arvada AirBnB House Hack” on the Denver 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.
Deal Quadrant: MLS
Read about the deal quadrant and finding Denver Investment Properties.
Investment Property Details
- Type: Detached house w/ mother-in-law (MIL) suite
- 4 bedroom, 3 bath + MIL
- Location: Arvada near Ralston Park
- List Price: $424,900
- Purchase Price: $435,000
- Why we liked it:
- Location – Bike to Olde Town
- Perfect setup for house hacking
- Turnkey, except MIL updates
- Airbnb potential
- New Exterior Siding
- New Electrical
- New Paint
- New Carpet
Property Contract Details
- Finding the property: Springtime = competitive, multiple offers. Above asking. After losing out on others, clients knew what they wanted.
- Under contract: Above ask and secret sauce
- Inspection Concerns:
- Minor electrical
- Minor sewer settling, but typical for age of house.
- Inspection negotiation outcome:
- $2,000 seller credit
- Fixed minor electrical issues
- Routine HVAC service
Property Financing Details
- Lender: Conventional
- Loan Type: 5% down conventional
- Appraisal: at value, no issues.
- Seller Concessions: $2,000 towards closing costs
- PMI: Monthly
- Interest Rate Buy Down: Yes
Spreadsheet Analysis – While Living There
Property Operating Expenses
First Year Returns
Spreadsheet Analysis – After Move Out
Property Operating Expenses
First Year Returns
Conclusion
While they are living at the property, they are only paying about $300/mo in living expenses while maintaining a high quality of life. This is great! If they needed or wanted to, they could even reduce their living expenses more by charging their family member market rent. However, it’s a true win-win for them and their family member.
Anytime I see a positive cash flow number after they move out with a 5% down, I’m excited! It’s hard to get positive cash flow when you’re putting so little down.
Video: Deal Analysis – Arvada AirBnB House Hack
Podcast: Play in new window | Download | Embed
