Deal Analysis – Wheat Ridge Duplex House Hack

In this episode, I discuss a duplex house hack in Wheat Ridge, Colorado that closed in Q4 2019. In the current Denver market, we do not find many multi families that make sense for house hacking, but this one did! We found a duplex with a great layout that was sitting on the market, because it was overpriced.

In the current Denver market, we do not find many multi families that make sense for house hacking, but this one did! We found a duplex with a great layout that was sitting on the market, because it was overpriced. We were able to get the price down to where it made sense. The extra unit reduces their living expenses while they are living there. The great news is that they should be near a breakeven cash flow once they move out!

This property closed in Q4 2019.

Investor Profile

  • Out of state couple relocating to Denver for work and quality of life
  • Already owned a house hack where he lived and wanted to repeat the model
  • Really likes the long-term potential of the Denver market
  • Comfortable with rehab and construction projects
  • Preferred a duplex for total separate living space

Three Learning Options!
  1. Listen to the podcast “#149: Deal Analysis – Wheat Ridge Duplex House Hack” on the Denver 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.

Deal Quadrant: MLS

Real Estate Deal Analysis Quadrant
The majority of Nomad™ and House Hacks are found on the MLS.

Read about the deal quadrant and finding Denver Investment Properties.

Investment Property Details

  • Type: Duplex
    • Unit #1: 4 bed / 2 bath
    • Unit #2: 2 bed / 1 bath
  • Location: Wheatridge, I-70 & Kipling St
  • List Price: $590,000
  • Purchase Price: $545,000
  • Why we liked it:
    • Unit #1 is updated
    • Great location
    • Duplex that qualified for FHA!
    • Unit #2 had a long term tenant in place
    • Large lot
denver real estate map
Duplex house hack in Wheat Ridge near I70 and Kipling.

Property Contract Details

  • Finding the property: It was on the market for 75 days. Buyers were out of state, so we did virtual tours with Facetime and videos to get under contract. They came out during inspection to walk the property and make sure it fit their needs.
  • Under contract:  Under ask
  • Inspection concerns:
    • Roof damage
    • Electrical panels
    • Sewer line spot repair
  • Inspection negotiation outcome:
    • Roof repairs

Property Financing Details

  • Lender: Conventional
  • Loan Type: 3.5% FHA down at 3.5%
  • Appraisal: Above contract price!
  • Seller Concessions: 0
  • PMI: Monthly. No prepayment options since it’s FHA
  • Interest Rate Buy Down?: Yes

Spreadsheet Analysis – After Move Out

Home Deal Analysis spreadsheet - Move out
Home Deal Analysis spreadsheet - Move out
Home Deal Analysis spreadsheet - Move out

Property Operating Expenses

Property Operating Expenses analysis spreadsheet

First Year Returns

first-year returns on home sale

Conclusion

The house hackers are living in the bigger unit which allows them to use the $1,200/mo in rental income to offset their mortgage. If they lived in the smaller unit, the rent from the bigger unit should more than cover their mortgage payments. The analysis shows a negative cash flow around $100/mo. This includes a 10% property management fee. If they self-managed, then it would be a positive cash flowing rental which is great with a 3.5% down loan! Overall, this was a rare duplex that works for house hacking.

Video: Deal Analysis – Wheat Ridge Duplex House Hack

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Authors
Chris Lopez
Chris Lopez is a Denver area real estate entrepreneur and investor, as well as the host of Bigger Pockets’ House Hackerz and the Denver Real Estate Investing Podcast.
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