Colorado Springs Real Estate Investing Podcast

The Colorado Springs MLS trends data for September 2021 is out.  New listings went down a bit compared to last month, but we’re still ahead of where we were this time last year.  Active listings are up to 961 compared to last month’s 844, which shows that things are staying on the market longer and providing a little more breathing room.  The average per unit price of multi family properties is up 27% compared to September 2020, and rent has gone up 22% since the start of the pandemic.  People are taking advantage of cheap debt and trading up into bigger assets.  

With inventory so low, it’s hard to find an amazing deal, so you have to adapt to what the market is giving you.  Right now, the market is giving you cheap debt, so that’s where you should pivot.

Source: The above executive summary is from Lon Welsh of Your Castle Real Estate.

Colorado Springs in September was pretty close to August performance.  At 10 showings per active listing, it was a bit above the historical average (around 7-8) but a bit below the super-heated performance in 2020 (11 showings).  About as expected and consistent with the impression that the market is gradually slowing down a little.

Normally the best time to list a house is in the spring, and the fall is a slower time (so it’s better for buyers).  This season that is true, but the slowdown is less than we’d historically expect.

For information on how to get started investing in Colorado Springs, check out our free 2021 Colorado Springs Real Estate Investing Guide.

We’re back with another episode of Ask an Investor, the series that gives investors the opportunity to ask their real estate related questions to Jenny and Chris.  Our guest this week is Greg who’s currently stationed in Germany but is planning on buying a property when he moves back to Colorado Springs this winter. 

He lived in the Springs before moving overseas and still owns a house there that he’s been renting out.  He initially planned on moving back in when he returned but has since learned more about real estate investing and now wants to add to his portfolio.  He’s also purchased two turnkey properties in Kansas City, MO.  

He’s looking for a small multi family property he can use to house hack.  We had a great conversation about the process of buying a multi family property, how to get his offer accepted, and what to expect once he’s under contract.

Greg has been following the real estate market in the Springs and notices that every time a small multi family property comes on the market, it’s gone almost instantly.  While he’d prefer to buy a property off the MLS, he’s wondering if finding something off-market is his best option.  

Jenny says: I’m seeing the same thing with good fourplexes; they’re only on the market for a few days, and even that’s just to collect the most offers.  It’s highly competitive because of low interest rates.  Leah and I are both working on off-market fourplexes that we were able to source ourselves.  We keep our ears to the ground to find these opportunities and pass them along to our clients.

When buying an off-market property, there’s no real difference in the way the process works; we bring the properties to our buyers and ask what they think about them.  In terms of commission, we typically write into the contract that the seller is to pay the buyer’s fee since that’s usually put in the MLS.  

It is not impossible to find an off-market unit yourself, but I recommend bringing an agent on board to help walk you through everything.  Agents have experience with the sales and closing process and can help coordinate the title and inspection, as well as give you access to our network of professionals.  

Chris says: Trying to find an off-market property for a primary residence seems challenging.  If you’re trying to source the deal yourself, you’re going into competition against people who spend 40 hours a week on the phone, have teams behind them, and spend resources on things like direct mailing.  You have the opportunity to network with people, talk to neighbors about selling, but think about how much time and money you’ll be spending.

Often, the deals you find off-market aren’t that different from the MLS deals, except there are fewer competitors.  

Jenny says: Investment properties like multis don’t tend to be as cyclical as standard real estate.  Because the buyers and sellers typically aren’t living in them, they aren’t tied to things like the school year which makes them less seasonal.  That said, it’s been such a weird year that I can’t make a guarantee of what to expect this winter.  

Jenny says: Everyone.  I’ve seen a lot of people who want to expand their portfolio and take advantage of cheap debt.  After looking at the agent notes in the MLS, I’ve noticed that most people are touching on 1031 exchanges in one way or another.  It’s an attractive area, and multi families are attractive products.  

Greg has the ability to use a VA loan for this property.  VA loans are great for those who qualify because they require zero down.  The drawbacks of using them are that they need to go through their own appraisal process and the user must move into the property within 60 days.  

Jenny says: It depends on the other competition and how it fits into the seller’s timeline.  If the seller is doing a 1031 exchange, they’d prefer the deal to fall apart on the front end and not 45 days in.  

Chris says: It’s not a major hurdle, just a different aspect to the buying process.  We’ve helped people with VA loans buy multi family units before, and we can find something that works well for you.  

We’ve even had situations where the clients used VA loans and it pulled the heartstrings of the seller.  Clients have gotten the property not because they had the highest or best offer but because the seller wanted to help out a service member.  Greg, you’re a young guy serving the country who wants to get into investing, so they may want to help you.  

Greg listened to our podcast on rent trends in Colorado Springs and wants to know how that data is applied to multi family units.  

Jenny says: I like to analyze small multis more in line with apartments.  Of course, apartments that don’t have gyms, pools, or other similar amenities.  Rents have been going up significantly for small multis, single family homes (SFH), and large apartments.  I’m constantly seeing news articles about rents jumping astronomically.  On a personal level, tenant turnovers have allowed me to command much higher rents than I was previously getting.  

You’ll need to consider the legacy of the multi that you’re buying.  As a rule, most landlords don’t raise rents on good tenants.  If you buy a multi where three of the tenants are great and have been there for ten years, you’re probably not going to see those rents in line with market rate.  You’re faced with the situation of buying something at pro forma rates and when the actuals are much lower.  You aren’t going to win with an offer based on actual rents because people are selling and valuing based on the pro forma rents.

It’s a balancing act.  I have a client who just bought a fourplex that had two vacant units and two legacy tenants.  He kept the tenants at legacy pricing and is able to rent out the other two units at market value.  

Chris says: The Denver Post recently ran an article “Rising Front Range rents are widespread and will keep climbing”.  Colorado Springs rates are up 22% since the start of the pandemic, which is the biggest increase nationally.  This ties back into your earlier question about who’s buying multis.  People are seeing this data and rushing to scoop up these properties. 

Chris says: Personally, I’m fine with it. And I’m fine with it in your situation since you’re putting so little down.  With a VA loan, you’ll have a good spread between the interest rate and cap rate. 

Otherwise, someone who is putting $150-200K into a property probably wants to keep more cash on hand or at least have neutral cash flow.  I see the economic indicators that we don’t have enough supply, so values are probably going up.  In the worst case, it’ll be flat for a few years which is why it’s important to have healthy cash reserves.  Tenants can subsidize your down payment which can delay your cash out of pocket.  

Some people refuse to do that which is valid.  Of course, the people who told me that three years ago still have yet to buy a property.  Keep in mind that you can’t change the market, so you need to be realistic about it.  

Jenny says: Taxes and insurance will both vary based on what part of town you’re in.  Utilities can vary widely and will depend on how the unit is metered.  In a very general sense, multis are usually individually metered for electric and gas but not water and sewer.  For a fourplex, $2600 a year for water and sewer seems to be the going rate.  Property management is usually 10%; for multis it’s often 8% with another 2% in additional costs.  I tend to budget 8% for repairs and maintenance and 5% for vacancy, but both will vary depending on the area and condition of the property.  $600 for snow removal and landscaping is usually a safe estimate. 

Pay attention to whether the multi is part of an HOA or covenant.  While that might add an extra cost, it usually also covers something else, like trash or snow removal.  

Jenny says: It depends, but I’ve seen $2500 or more for fourplexes.  If you want to be conservative, estimate in the high $2000s.  

Chris says: Insurance isn’t going to vary that much from property to property.  You might get different estimates depending on the company or how you structure the deductibles.  

The biggest thing I’ve seen that can affect the rate is whether or not the property is in a flood zone.  In Denver, this is very rare, but occasionally properties that back up to a gulch require additional flood insurance.  You can use a rough ballpark estimate; $200 at the end of the year isn’t that big of a deal. 

Property insurance is part of due diligence, so get a quote ASAP once you go under contract.  You can use that quote as a reason to cancel the contract if you don’t like what you get. 

Jenny says: Most fully occupied multis don’t allow showings prior to an accepted offer.  You don’t want to jump on a property without thinking it through, but if it fits the general ballpark of where and what you’re looking for, you’ll want to get an offer in quickly.  We can write into the contract that there will be a separate viewing period that’s within the inspection period.  Before that, the best we can usually offer is to drive by it with you.

Jenny says: It depends.  Earlier this summer, we had to do limited inspection objections and appraisal gaps to get our offer accepted, though that’s starting to change.  To show that we’re more serious, we’ve had to limit some objections and draw the line at anything less than $1K to fix.  If an outlet is broken, we won’t object to it, but if the boiler is about to die or the roof is shot, then we’ll object.  

Some people waive everything, which I don’t recommend.  This is a large investment, so you need as much information on the property as you can get.  This means that sometimes the seller will go with the buyer who waives the inspection, which is a risk for the buyer.  

Chris says: There’s a balance between how much due diligence to do upfront and what to do when you’re under contract.  Since contracts in Colorado are so buyer-friendly, if a property passes the sniff test, it’s best to get under contract and then do a deep dive.  Once you get the inspection reports, lending numbers, title reports, and rent comps, you can underwrite the property.  If it still makes sense at that point, that’s when you’ll really move forward.   

Don’t stress about fully underwriting a property before going under contract.  Because of how fast the market is moving, get good at identifying the basic rules of thumb and then do a deeper dive.  If you need to terminate a contract, you’ll only be out a few hundred dollars.

Jenny says: It’s negotiable, but generally due diligence is the first week to week and a half, with the inspection on the later end.  Your first round is getting the rent rolls, utility verification, lease review, and all other necessary paperwork.  After that, you do the inspection.  There are smaller events in between, like getting the insurance quote and estoppel certificate, so we’re constantly working the whole time you’re under contract.   I like to think of each step as a mini finish line to get through.  Usually, contracts fall out from due diligence documents or the inspection. 

Our team likes to schedule the inspection ASAP so you have time to get other tradespeople into the property.  If an issue comes up with a specific part of the property, it’s useful to have an expert, like a roofer or HVAC technician, give you a better idea of the big picture so you can make the best decision.  

Jenny says: The biggest difference is how the heating system is set up, whether you have one boiler or multiple furnaces.  Otherwise, think of it as a really large house, since it has one roof, one crawl space, etc.  It’ll take longer because it’s bigger, but there aren’t any more intricacies to it than that.

Jenny says: Assessments occur every two years, and I’ve seen them go up on the most recent go-round.  They’ve jumped up a lot and are tied to what properties are selling for, so I imagine that will be the trend over the next couple of years, as well.  

If you would like to connect with Greg, you can email him at [email protected].  

A good way to network with other investors is to volunteer to help out at investor-centric gatherings.  Be the person who sets up chairs, helps with registration, or runs the mic.  That way, you’re getting your name out there and connecting with the organizers instead of just being a passive participant.  

If you would like to be on the show, reach out to us and we’d be happy to answer your questions!

Welcome back to the second episode in our new series “Ask an Investor.”  We’ve found that a lot of people have the same questions, so the goal of this series is to bring in other investors to have conversations and answer those questions in real time.  

Our guest today is Catie Lawrence who recently left her W2 job to be a full-time real estate agent and pursue investing.  She and her husband, a general contractor, live in Arvada and specialize in flips and BRRRRs.  She has a lot of questions about partnerships and lending that we explored in-depth.  

Catie and her husband use their own capital to invest, usually with a HELOC or cash out refinance.  They typically only do one project at a time because all of their capital is wrapped into one project.  Often, she’ll see a good opportunity but doesn’t feel she can act on it, because hard money lending is her only option.  She would like the opportunity to be able to jump on something quickly and having an established partnership seems like the best way to scale.   

She’s hesitant about hard money lending, because she thinks a partnership could be mutually beneficial and that having a relationship with someone would be more appealing.  Since her husband is a contractor, she’s an agent, and they’ve established a track record through their flips and BRRRRs, they bring a lot to a potential partnership.  They could help someone new get into the real estate investment space and help better the community by providing a nice place to live.

Jenny says: We could go in a million different directions here.  Something that comes to my mind is that there are short term relationships (a flip) and long-term relationships (a BRRRR).  There are also debt partners and equity partners.  In an equity partnership, all partners are equity owners.

The only person I partner with from an equity standpoint is my husband, but I have partnered with someone from a debt standpoint, who was a family member.  I identified a BRRRR property, and the debt partner brought all of the financing for the purchase and rehab.  I oversaw the rehab, and I paid them points and interest but for better terms than a hard money lender.  We trusted each other, because this was my 10th property and my track record was solid.  

Chris says: Catie, you and your husband bring a lot to the table, and a partner would be getting something out of it.  It’s worthwhile to create a portfolio to show people what you’ve accomplished.  

Jenny says: My advice is to always get a lawyer, though admittedly I didn’t in the case of my family member partnership.  I did tweak a contract that I’ve used with a hard money lender to ensure there was a contract in place.  I also filed the note with the county and did everything to the letter, because the last thing I would want to happen is to have a disagreement when family or friends are involved. 

Chris says: I would always involve a lawyer, because I’m not that detail oriented.  A lawyer can go through the contract and make sure everything is considered and covered.  Talk to someone sooner rather than later to draw up the documents.  It’s kind of like figuring out the lending before you find the deal.  

Jenny says: I like hard money lenders because they provide a second set of eyes, and they won’t lend if it’s a bad deal.  The first time I went to a hard money lender I was nervous because I was pretty sure I had a good deal on my hands, but I wasn’t positive.  They approved the paperwork right away, and I know they wouldn’t lend me $100K if they didn’t think they would benefit.  You don’t need to have a specific property in mind, but you can tell them what you’re looking for, get pre-approved, and then submit the proposal when you find the right property.

Chris says: I’ve gotten fixated on finding a partner, too.  But the more I thought about it, the more I realized that I didn’t need a partner—I needed a hard money lender.  Lenders have done these transactions multiple times; it’s harder to find a good partner than it is a lender, and the relationship remains strictly transactional.  They have all the lawyers and liens in place from the start, and their underwriting is really good.  With today’s market, it’s easier to find a lender than it is to find a deal.

Jenny says: The skillset you and your husband have is far more valuable than money at this time. 

Chris says: I see an opportunity with you and your husband to do partnerships with investors who are inexperienced and may not have the capital. A lot of new investors don’t have experience, but they find properties because they’re hustling and then realize they don’t want to run it by themselves.  These investors won’t know general contractors, and the experience you bring is equity-worthy, not just debt-worthy.  This is a good way to do projects within your skillsets and find deals.  

Jenny says: Look into non-qualified mortgage, or non-QM, loans.  These loans are based on the deal as opposed to the person.  You’ll have to Google to find a few, but since you’ve got such a good track record and portfolio, you can probably find something.  The terms are generally not as favorable as a conventional lender, but it’s an option.  There are a lot of different products: rehab loans, flip loans, and 30-year fixed loans.

Chris says: Go with a local lender for hard money.  Talk to them and show them your portfolio, investing business, and your husband’s GC business.  Local banks can give you loans you wouldn’t get with a conventional lender.  

Jenny says: I’ve heard that in syndications people will pay very lendable individuals a fee to take out a loan in lieu of equity.

Chris says: That’s common in syndications, especially if you get into bigger properties and non-recourse loans.  There are different ways to structure them, and they get tricky when you get into 30-year loans.  Syndications are generally used for bigger deals, like a commercial building or retail space with a $15M sales price.  There is a general partner running it and investors who are limited partners with equity but no say in the operational stuff.  For smaller deals, you don’t need to worry about syndications.

Jenny says: I made a mistake on my very first hard money loan because I didn’t understand the concept of seasoning.  There is a requirement with the bank that you hold and operate a property for a certain period of time before refinancing.  Two days before closing on what was supposed to a cash out refi, I was told that I could only do a rate and term refi because I only had the loan for three months.  At six months, I would be able to do a cash out refi.  

This meant that I had all my rehab and equity stuck in the property for six months.  Luckily, I was able to get a renter in there and cover the costs, but it meant I had to pass on a couple of projects.  It was very disappointing, but a good lesson learned to have a lender in place first and understand all of the terms.

Chris says: I’ve partnered with people in business and real estate deals; my view on partnerships is that they’re as serious as a marriage.  I’ve had some bad partnerships where assumptions were made on both ends, and life changes happened to my partner that left him unable to continue.  

The lesson I’ve learned is to limit partnerships, and when I do enter into them, make sure they’re synergistic.  There needs to be a big value add—1 plus 1 has to equal 3.  If each person brings a different skillset to the table and you can’t do the project without someone’s help, then it’s probably a good idea to partner.  Everything needs to be written with clear expectations of responsibilities, how decisions are made, and what to do in the event of death or disability.  

If you’re interested in partnering with Catie or learning more about her work, you can connect with her here

Do you have your own questions for us?  Reach out to us to be on the show! Record a selfie video and upload it to this folder. In the video, let us know:

For information on how to get started investing in Colorado Springs, check out our free 2021 Colorado Springs Real Estate Investing Guide. For Denver, 2021 Denver Real Estate Investing Guide

You can also check out our real estate investing toolkit which has free investment property spreadsheets you can download to analyze rental properties.

Since we’re getting ready to start making goals for 2022, now is a good time for an update on where I am with the goals I wrote for the 2021 Guide to Colorado Real Estate Investing Strategies.  It’s fun to think about all of the things it would be cool to do in a year, and then look back at the end of it and see where I landed.  

While I had specific goals laid out for this year, I also got some curveballs that caused me to alter my plans slightly.   

Earlier this year, Chris and I did an episode titled Deal Analysis: Return on Equity on a 3 bed 1 bath Single Family Rental in Colorado Springs using our Return on Equity calculator to analyze one of my properties.  We looked at my options for keeping it as is, refinancing, or selling.  At the time, I said I would keep it as is unless there was tenant turnover.  As luck would have it, that tenant did end up moving; fortunately, I had a roadmap of what to do perfectly laid out.  

I decided that doing a rehab and refinancing would make the most sense financially.  During the rehab, I fantasized about selling the property multiple times, since it was in worse condition than I remembered and needed a lot of work.  Luckily, my husband talked some sense into me and we saw the project through.  The home needed an updated bathroom and kitchen, new floor and paint, plumbing, and a complete yard overhaul.  I made sure not to over-improve the property by looking at the house in the context of the neighborhood.  Since I’m not going to single-handedly change the neighborhood, I followed the market trends.  My contractors did an amazing job, and the house is now in great shape.

In all, I spent $32K on everything.  I didn’t create a budget beforehand because the renovations had to get done regardless of cost.  I’d been hoping to spend $20K, but that wasn’t even close.  My assumption was that the house would appraise at $280K once it was fixed up, but to my surprise the appraisal came in at $295K. I was able to get a 3.625% interest rate with a cash out refinance, which is a really good rate for an investment property.  I was extra excited about this because it was the first loan I got by myself after quitting my W2 job and not relying on my husband’s W2 to get approved.  Self-employed people will understand how great it feels to be respected by a lender.  

I expected to list this house for $1450 a month, but I was able to rent it out at $1625.  I was hesitant to try for that rate at first, but the market showed that that was reasonable for a 3 bed 1 bath 1 car garage single family home.  The demand for the property was so high I had to turn off the ad after a couple of days and got it rented within a week.  

Now, I have a $100 better spread than I started with, and I walked away with $82K in cash, net of closing costs from the refi.  After taking out closing costs and paying myself back for renovations, I netted $50K and am getting much more in rent.  

I didn’t expect to do anything with this property this year, but life happens and I needed to deal with it.  This became an opportunity to come away with a nest egg I can use to reinvest.  Real estate varies from other investments because you have the opportunity to add value to your investment yourself.  By fixing up this property and doing the refi, I came away with more than I started with, which helped me with some of my other goals.

This is still accurate.  I closed on property number nine in January, a townhouse I’m very pleased with.  I planned on paying off one home this year, but I ended up paying off two and doing a cash out refi on another one.  Even though mathematically it would have made more sense to use that money to buy something more valuable, my goal is to own a handful of well performing properties.  

I’m starting to feel that I’m at the point where I’m very happy with what we have.  Since we generally keep tenanted properties at the same rates, it was nice to be able to get substantial bumps with tenant turnover this summer.  We’ve gotten into a good groove, but I would like to get to ten properties because that feels like a nice number for me.  My plan is to go with what I know and look for a single-family rental.   The only difference between that and my previous properties will be looking for something turnkey.  

This goal applies to both my time and energy as well as finances.  I was tested when I bought a dog of a property earlier this year that was filled with flooding and sewer issues.  After spending a small car’s worth of money to fix the sewer—twice—my husband I decided to sell it.  When I think about all of my other properties, I feel happy, but when I thought about that one, it felt like a dark cloud.   Even though it doesn’t quantify on the spreadsheet, it felt heavy and became a mental burden.  We realized the stress of worrying about it wasn’t worth it, so we sold it and were able to make a small profit off of it.  The mantra in real estate is to hold onto the property for the long term, but sometimes you need to find the balance between the spreadsheet and your feelings.  

When people hear that I paid off two properties, they may wonder why I did a cash out refi on another, but this was the right choice given the circumstances.  Looking at the overall equity position of my portfolio, the low interest rate environment, and the “high” (low 4s) interest rate on the refi property, I decided not to overleverage my portfolio.  Instead, I cherry picked and moved in a good direction debt-wise.  

Time is where I’m a little guilty of overextending myself.  This summer I renovated two properties, and between managing the rehab and doing some of the demo myself, I probably spent too much time on them.  This was another case where real life got in the way of my plans—for one of my renovations, I had to either rip up the carpet myself or call everyone to reschedule the work, creating a ripple effect I didn’t want.  I may have personally spent too much time on these projects, but that saved future headaches.  

My husband and I used to have more involved conversations about our expenses, but now we talk more about big picture projects.  Because of where we are in our investing career, those day-to-day expenses don’t have as big an impact as they did in the beginning.  As we focus on wealth creation, high level plans like renovations are what make the major difference.

Looking back on it now, this was both the best and the scariest move I could make.  Between buying a new house and leaving my career of ten years, I was nervous about this move.  But real estate is what I’m passionate about, and even though last year was a little slow going, that’s to be expected when you start in a new field and are self-employed.  I didn’t expect to make an income last year, and anything I did make was the cherry on top.  

Leah has been an amazing addition to the team, and we were able to hit the ground running in January.  I’m excited about what we’re building in the Springs, and appreciate everything Chris has created that allowed me to have this opportunity.  Even though it wasn’t in the book for 2021, we’ve started expanding down to Pueblo.  For next year, I’m looking forward to taking off the training wheels and moving into that area at full force.  

We publish this book every year and have an open invitation for anyone who invests here or lives here to contribute.  To write your own chapter, reach out to us and we’ll send you the very basic writing guidelines.  The due date is sometime in January.  

If you are a “brand new investor” who thinks they don’t have anything to contribute, you’re wrong.  This is a great opportunity to write down your goals and hold yourself accountable.  We’re all at different points in our investing journey, so don’t be shy about your perceived value add—write your chapter and achieve your goals!

For information on how to get started investing in Colorado Springs, check out our free 2021 Colorado Springs Real Estate Investing Guide.

You can also check out our real estate investing toolkit which has free investment property spreadsheets you can download to analyze rental properties.

The Colorado Springs MLS trends data for August 2021 is out.

The data changed slightly this month as things are finally starting to stabilize and go back toward seasonality and normal market trends.  For the first time this year, monthly showings dropped and even dipped below 2020’s showings per unit.  The number of listings is down nearly 200 units, and the median sales price went down $10K compared to the previous month, from $450K to $440K. 

If we compare year over year instead of month over month, you can see that the trends are leveling off.  While some people might see these numbers and feel concerned, this is to be expected because the rising prices were unsustainable in the long run.  This is a sign that the buying frenzy is dying down and we’re returning to normal sales.

In Colorado Springs, the year started at about 2x the historical average.  After peaking in February, it’s been slowing down every month.  We had 10 showings / active listing in August.  That’s a little above the historical norm (2017-2019) of 8 but not bad.  It’s a little less than the very hot market (for August!) we had in 2020.  Overall, I see this trend as very healthy; the market is continuing to cool down in a controlled and orderly fashion.

For information on how to get started investing in Colorado Springs, check out our free 2021 Colorado Springs Real Estate Investing Guide.

This summer, I undertook some pretty major renovations on two properties I own.  One of these was partially planned, and the other one wasn’t.  Although I’ve renovated in the past, it was good to brush off the cobwebs and add to my knowledge.  Here are five tips I’ve learned from my experiences this summer. 

This is a before and after shot of the same bathroom.  You can see the old bathtub had scalloped edges, which I assume were in style at the time it was installed, as well as some tile that was showing its age.  I decided to replace both the tub and the tile to give the bathroom a complete update. 

When you go behind the walls in any renovation, you’re going to find a surprise.  Once the contractor removed the old tiles and tub, they discovered there was no backer board on which the old tiles were installed.  Backer board prevents moisture from seeping through, and without it, the contractor had to replace everything that was affected by years of water damage.

It’s important to peel back all of the layers, especially in older homes.  Things may have been done correctly back then, but times change and it’s necessary to make repairs in line with today’s standards.  If something was done incorrectly or there’s a leak in one place, chances are you’ll find more in other parts of the house.  Take the time to step back, look at everything, and do things the right way. 

These are two pictures of the same yard; it used to look like a jungle and now it looks much nicer.  In tackling the project of turning the jungle into a functional yard, I learned the difference between mowing and cleanup versus a complete overhaul.  

Mowing and cleanup are pretty reasonable in terms of price and effort, but an overhaul is different. This property is 120 years old which means there is 120 years’ worth of debris hidden beneath the surface.  To replace the yard with packed rocks, we needed to remove the debris and level the ground first.  Leveling the ground consisted of rototilling and digging up the yard which unearthed lots of old brick, trash, wires, and all sorts of other things that had been buried for years.  Once the landscaper scooped all of the debris, I was left with three giant piles of dirt.

It turns out that not all trash is created equally, and there are different disposal rules for different types.  Once it’s all mixed together, it becomes even more complicated.  It was very difficult to find anyone willing to take on the task of removing the dirt piles, both because of the equipment required and needing space to put it in.  

At first, I paid someone to take out all three piles, but I never heard from them again after they removed the first pile.  I then found someone who said they would take care of the rest; they ended up only taking the interior pile but at least gave me direction on steps to take for the last pile.  Finally, I found someone who did infill for land they own which meant they could take the last pile and put it in their own land with no issues of trash or disposal.  

This whole ordeal turned into a saga I didn’t anticipate, and I never knew piles of dirt could get under my skin so much.  There may have been a better way to approach this, but once I got too far down the path of doing it this way, I had to see it through.  In the future, I would just do a cleanup instead of an overhaul.

This photo of the same home emphasizes what a difference new paint and flooring can make.  Originally, the wall was blood red, and I found all sorts of strange things on it.  Once I painted the walls and added laminate floors, it had a completely different look and feel.  Even though nothing of substance changed, the home had an entirely new aesthetic.  

If you’re on a budget but still need to update your home, consider prioritizing these projects.  

The backsplash in this picture is a beautiful white hexagon pattern with dark gray grout.  At first, I thought I was smart for finding such a sleek, modern tile that was relatively cheap at $2 a sheet.  It seemed like it would make the perfect backsplash.  I failed to consider that while it was a good deal on the materials side of things, there’s a cost for labor, too.  

The tile is extremely small and intricate, which meant the contractor had to saw each and every one of those pieces to fit.  This tacked on quite a bit extra to the kitchen budget, because it took three days longer than expected to complete.  I failed to consider labor and materials as a package.  

Next time, I’ll pick out some subway tile and be done with it.  

This last tip is for those who are self-managed—get a 3D tour of the property.  After a couple of turnovers this year, I decided to bite the bullet and get professional photos for my properties.  For a small upcharge of less than $100, the photographer offered to add on the 3D tour feature.  

This feature allows tenants to walk through the home virtually to see how it’s laid out.  There’s even a measurement tool so they can see exactly how big the rooms are.  

In these times, you don’t want a lot of people in your properties if they’re not really interested, and this feature allows them to figure out their level of interest without leaving their home.  It also cut down on basic questions I’m often asked over and over because the answers became self-evident through the tour.  

I’ll probably do this for every turnover from now on, and tell people to check out the 3D tour before scheduling a visit to the property.

I hope these tips will save you some future headaches when doing your own renovations.  If you have any questions about these tips, feel free to reach out.

For information on how to get started investing in Colorado Springs, check out our free 2021 Colorado Springs Real Estate Investing Guide.

You can also check out our real estate investing toolkit which has free investment property spreadsheets you can download to analyze rental properties.

This deal analysis looks at a duplex my clients closed on a few weeks ago.  These are sophisticated, out of state investors who know what they’re looking for and found the right property to add to their portfolio.  By using an escalation clause, they were able to beat out other interested buyers. And they paid in cash with the intent to refinance, and are now close to being able to pull out their funds. 

This property popped up on the MLS and caught my attention.  I immediately sent it to my clients, they liked it, and we acted quickly.  

This is a duplex on the west side of Colorado Springs.  This is a desirable location for investors and renters alike, thanks to its proximity to shopping, restaurants, and the mountains.  It’s an up/down duplex with a 2 bedroom/2 bath unit on top, and a 2 bedroom/1 bath unit on the bottom.

The list price for this property was $450K, and my clients’ offer included an escalation clause.  The seller was overseas and required a 48-hour acceptance deadline, but this offer was so strong they responded the next day.  My clients went under contract at 481.1K.  

They paid in cash with the intent to refinance and are now close to being able to pull out their funds.  This was a great opportunity for them to use cash on hand and quickly re-leverage the property by placing a note on it to pull the cash back out.  They hope to keep using this strategy again and again.  

The property was built in 1895 but was renovated a couple of years ago.  The renovation was well done and looked great cosmetically.  The inspector found only minor electrical and plumbing issues and a gutter system that was worse for wear with some cracks and misalignment.  We negotiated to repair the gutter system and got a seller credit of $1500.  I estimate initial repair costs to be $2K in addition to that.

The upstairs unit was recently renovated and looks great.  One of the bathrooms even has a rain showerhead.  The downstairs unit was also renovated well but looks more like a typical rental.  Both units are currently being rented at $1500, but I think my clients have an opportunity to raise the rent on the top unit once there’s turnover.  

You might notice that there’s no utility cost listed in the spreadsheet.  That’s because the person who originally set up the lease did a great job of keeping everything simple.  Most older units are not separately metered, and this is no exception.  The property owner receives a monthly bill from Colorado Springs Utilities and simply cuts it in half and charges both units the same rate.  

The expectations are understood by the tenants, and I got a chance to ask them what they thought about this system.  They said they had no issues with it and like that it’s simple.   Many investors want to separate out the meters to make billing utilities easier, but this is another option that works just as well.

My clients can expect around $5500 in cashflow annually, with a cash-on-cash return of 4.3% and a 5.4% cap rate.  This is a solid property that performs really well, and I’m happy for my clients.  With the opportunity to raise rents on the top unit, they have the chance to see even better returns once there’s turnover.  

We closed on this property in August which shows that there are still deals out there.  They may be few and far between and take a little longer to find, but with patience and aggressive offers, we can find the right property for our clients.  

Not everyone is able to take advantage of cash on hand to pay for a property, but reach out to us and we can analyze the resources you do have and use them to your advantage.  We tailor our strategies to each client to help them get closer to achieving their goals.  

If you’re interested in creating a strategy or finding a property, reach out to us and we’d be happy to help.

For information on how to get started investing in Colorado Springs, check out our free 2021 Colorado Springs Real Estate Investing Guide.

You can also check out our real estate investing toolkit which has free spreadsheets you can download to analyze rental properties.

This deal analysis looks at a single family home in Colorado Springs recently purchased by an investor who specializes in room by room rentals.  He joined us to talk about how he got started in this strategy and his method that makes it work, even from out of state.  He has a unique outlook that helped him nail down his system.

Although he focuses on room by room rentals, Neil is not a house hacker.  In fact, he lives in California and originally started investing in New Mexico where his brother lives.  After watching his home values plummet during 2008, he vowed to never invest in real estate again.  However, once he got married and had kids, he knew he needed to supplement his income and started researching real estate again.  

Armed with more knowledge than when he originally began investing, he started buying foreclosures in New Mexico and doing BRRRRs to build his portfolio.  The problem he ran into is that BRRRRs take time, and the market was drying up by the time he was ready to buy his next property.  

He expanded his search to Colorado and decided to buy a house near the UCCS campus with the plan of renting out individual rooms to students.  His worst-case scenario would be renting out the whole house on one lease which would still bring in more than the mortgage.  He was pleasantly surprised when he quickly received applications from not just students but nearby professionals, too. 

Neil worked with agent Leah to find a house that would fit his room by room rental strategy.  His original strategy was to just rent to students, but the number of professionals who applied gave him the confidence to widen his search to other parts of town.  As long as the home is in a central location, he knew he would be able to find good tenants to fill the rooms.  Leah found this property, and Neil liked both the location and configuration.   

This was originally a 4 bedroom/3 bathroom single family home in central Colorado Springs.  There was office space that Neil easily converted into a fifth bedroom.  He liked the split of bedrooms on both the main floor and basement as well as the number of bathrooms.  

The property was listed at $355K, and based on comps and the number of other offers, Leah decided that $370K was a strong offer.  He beat out four other offers and went under contract at his offer price.  

Neil isn’t daunted by cosmetic issues—he’s had a lot of experience fixing up homes to make them nice for tenants.  Overall, this property was in pretty good shape: the roof is new, the structure is in great condition, and the flooring had been recently replaced.  The Federal Pacific Stab-Lok electrical panel, commonly found in the Springs, required replacement, and the furnace also needed upgrading.  

The only major issue that came out of the inspection was the sewer line.  I always encourage my clients to get a sewer scope during the due diligence phase of contract negotiations, because sewer repairs can quickly become costly.  The inspector found corrosion in the sewer line caused by trees, but luckily it just needed some cleanup.  

They got a quote from the plumber and took it back to the listing agent who agreed to $7,200 in seller credits to cover the cost of all needed repairs and replacements. 

Neil purchased this property with the proceeds of a 1031 exchange done on a home he sold in New Mexico.  He put all of the money from that sale into this property with a 25% down payment.  

This is Neil’s sixth rental in the Springs, so he knows well how to price rent.  He usually checks Facebook Marketplace and Craig’s List to get an idea of rates in a particular area.  He rents out four of the bedrooms for $600 and the master for $750.  While the regular bedrooms are on a six-month lease, the master bedroom lease is for a year, since the tenant pool for that is a little smaller and he prefers to lock it in for longer.  

All of the leases require 30-day notice before moveout, so he has plenty of time to fill the room.  While he runs the vacancy rate at 5% to be conservative, he’s never actually had a vacancy.  

Even though Neil lives out of state, he doesn’t pay for property management.  Instead, he has a system he’s created that takes care of all aspects of running the property.  He pays for hourly helpers who assist him in showing the property and interviewing prospective tenants.  In addition, he’s found a trusted person who can perform basic handyman work on his properties, such as cleaning and repairing holes in the wall.  

He buys a home warranty to cover big items that require more technical skills.  He tried a few different companies and did some research to find one that meets his needs; for $450 a year, he has a warranty that is cost effective has a quick turnaround time for repairs.  Instead of having to find someone to repair specific items, such as a furnace or appliance, he can simply call the company, pay $80, and they company does the legwork of finding and scheduling the technician.  If the item can’t be fixed, they reimburse him for the cost of the replacement.

He has basic landlord insurance for all of his properties.  Even though he’s doing a room by room strategy, all of his leases are considered long term and therefore don’t require any special type of commercial insurance.  

The cashflow on this property is a little over $12K annually, and he has a cap rate of 7.4%.  Thanks to Neil’s system, he is getting solid returns on his investment.  

Neil’s advice to anyone who wants to replicate this system is to make sure you have the right team to get started.  He loved working with us as agents and appreciates our knowledge of this area to help him make the right decisions.  He encourages everyone to go out and get properties now, because the interest rates are so low.  It’s also important to want to visit the places where you invest.  When Neil comes to Colorado Springs to check on his properties, he loves making the trip and having the chance to spend more time in the area.  

Pursuing a room by room strategy from out of state may seem daunting, but Neil knows how to find tenants who will be a good fit.  He’s lived with roommates for large portions of his life, so it’s easy for him to put himself in the shoes of potential tenants and ask himself if he could live in that situation.  

He got a lot of calls about issues between tenants in his first two properties, so he’s learned over time what expectations to set and what questions to ask prospective tenants.  He created house rules that all of the tenants understand before moving in, and they can call house meetings to resolves any issues among themselves.  His tenants are either students or working professionals, so they have busy lives and mostly just want to rest when they’re at home.    

 If you’d like to reach out to Neil, email him at [email protected].  He’s happy to answer any questions and enjoys being a part of this community of real estate investors. He can even provide you with the “house rules” he created for his tenants.

For information on how to get started investing in Colorado Springs, check out our free 2021 Colorado Springs Real Estate Investing Guide.

You can also check out our real estate investing toolkit which has free spreadsheets you can download to analyze rental properties.

Our guest this week is Bill Rodriguez, a local lender in Colorado.  We picked his brain about general lending information, as well as how he thinks current events and new regulations will affect the industry.  

Bill came out to Colorado back in 1999 to work in the telecom industry with his father.  After watching the dotcom bubble burst and seeing his father forced into early retirement, he decided to go into something more stable.  He’s been working in real estate for the last 17 years, witnessing the wild ride of 2008 and all of the big changes that came with it.  After trying out different roles, he decided to stay with mortgage banking, because he wanted to stick with what he does well.  Now, he’s a loan officer with Cornerstone Home Lending, helping people get loans to buy their personal and investment properties.  

Bill says that if you’re willing to live in the property for two or more years, you’ll give yourself a distinct advantage.  That way, you’re escaping capital gains taxes and can schedule any updates to the property over time. 

It’s hard to say because there’s a lot happening in the markets right now.  Rates can depend on the time of day, and people’s appetites for risk vary.  Bill generally believes that if you’ve got the cash, 20-25% down is best for holding the property over the long term.  However, if you’re just trying to get into the game, and it still makes sense, you might look at putting less cash down.  He personalizes it for every client depending on their individual circumstances.  Regardless, Bill agrees with my mantra: find the lender first and the deal second. 

Cornerstone’s 10 Day Ready Program allows clients to close 10 days after they find a home.  A standard contract is 30 days, and a fast close in this market is 20 days, so 10 days puts clients at an advantage.  The reason they have to keep it at 10 days is due to the regulatory rule that customers need at least 7 days to review documents.  Appraisals are turned within 24-48 hours thanks to Cornerstone’s own appraisal management company.  This program gives clients a leg up in a competitive market because the seller and listing agent know that the lending won’t fall through.  

While this is a more expensive process, it gives clients a distinct advantage, especially for investors putting in offers on vacant properties.  The program only applies to conventional loans; VA loans require their own processes and use their own appraisers.   

Clients interested in this program have to provide documentation ahead of time in order to complete underwriting.  They’ll be given a list of documentation to provide, and they’ll be approved for a loan within 72 hours of them submitting everything.

Without bashing the competition, having a great local brand helps the dynamic with the listing agent and seller.  Cornerstone has an impressive brand in Colorado; in Longmont and north, they have 73% market penetration.  People have experience working with Cornerstone Retail or with one of their joint ventures, such as with Oakwood Homes and The Group.  This name recognition and reputation puts agents at ease, because they know Cornerstone can get the job done.  

In this market, you have to vet everything upfront.  It’s critical to talk to a good local lender ahead of time to get their expertise.  Many investors are self-employed and are encouraged by their CPAs to write off business expenses for tax purposes.  Mortgage officers, on the other hand, are going to squeeze every dime out of your return to help you qualify for a loan.  

It’s important to think of CPAs and mortgage officers as a panel of financial advisors who you consult jointly to figure out how to maximize write offs while still having what you need to execute on a mortgage.  Get engaged with a lender early in the process so you can scale up income if necessary.  

Documentation concerning sourcing funds to close can drive people crazy, especially if that money is coming from a multitude of sources.  The sooner you talk to a lender the better in order to review tax returns.  Most people know their credit score, so the lender won’t need to pull it until later in the process.  However, lenders can help clients figure out how to maximize their FICO score to better qualify.  

The Federal Housing Finance Agency (FHFA) recently passed a rule that if mortgage lenders deliver over 7% of their loans to the secondary market (investment loans and second homes), they will need to factor in additional costs. 

There’s a lot of misinformation out there.  People think that there’s a cap at 7% and Fannie and Freddie won’t accept any more loans, but that’s not true.  These restrictions mean that there will probably be higher rates and fees to investors.  Once mortgage companies are over the 7% limit, there will likely be an additional charge or may mean a higher rate or higher fees on the same rate.  

In June, rates were all over the place depending on the lender.  These differences come down to the cost of doing business for each lender.  Now that things have settled down and there’s a leadership change with the Consumer Financial Protection Bureau (CFPB), we’re seeing things calm down in terms of cost.  The impact of this rule doesn’t seem to be as strong as people initially feared.  

Forbearance occurs when mortgage payments are deferred; delinquency means someone has gone through the forbearance period and is still not making payments. 

During the pandemic, forbearance numbers got really high and caused a lot of concern.  Since then, the numbers have come down pretty significantly.  A big marker of homeowners being in trouble and not making payments is the delinquency stat.  Looking at that stat from January 2008 to 2020 gives us an idea of where we are now compared to the last big financial issue.  In Colorado, that number is less than 1%.  

In all of Colorado, there are 2.4M homes.  If all of the homes that are delinquent came on the market at once, that’s less than two months of inventory.  A balanced market has six months of inventory, so that wouldn’t make a dent.  In Colorado Springs, there is currently two weeks of inventory; if two months’ worth came on the market, it wouldn’t affect pricing.  People are waiting for a wave of foreclosures that we’re not seeing.  

There’s more equity than ever, with a 30% average nationally.  The majority of people in forbearance have options to tack on loan modifications, or sell and still walk away with money.  

Many mortgage companies contract out loan servicing.  The companies are still the noteholder, but the administrative piece is done by another entity.  When the government decided that people didn’t need to make mortgage payments to stay in their homes it was a good idea, but the note holder still needed to be paid, which was the responsibility of the loan servicers.

Cornerstone did a presentation at the time to help people understand loan servicing platforms and why things dry up.  Many servicers purchase a servicing platform for a fixed percentage, but if people aren’t making payments, it gets devalued.  Servicers were getting margin calls that forced them to raise capital overnight, which created a lot of tumult at the time.  Even with the extension of the foreclosure moratorium and forbearance, though, Bill says the market is calming down and he isn’t hearing as much about it these days.  

Cornerstone is happy to announce they are building their own servicing facility in Denver, which will bring in 200 jobs in January of next year. 

Bill calls inflation the archenemy of interest rates.  With the market downturns, there’s an opportunity to keep rates low in order to ensure people continue moving and buying properties.  The Federal Reserve is stepping in and massaging things to keep rates low; there’s so much market manipulation that it’s hard to gauge where we should be.  

Bill thinks there are realistic scenarios in which rates could go lower, but doesn’t see them going negative like in parts of Europe.  He listens to experts on the subject who say that once all of the inflationary pressures of the stimulus work their way through the economy and people go back to work, it’s possible to see lower rates.  There is a chance of a coming recession, and rates typically trend lower during those times.  It’s hard to say for sure because we’re in uncharted territory.  

Clients are getting rates in the mid-3’s on investment properties, locking in that rate over 30 years on an appreciating asset.  From a long term perspective, lower interest rates now become less burdensome over time as rates go back up.  

When looking at traditional financing from Fannie and Freddie, they don’t allow LLCs.  The loan has to be in someone’s personal name because they don’t do commercial loans.  If you use one of those loans and decide to transfer it into your business name, Bill says you need to make sure beforehand to review the terms of the loan.  Such a move could be considered a sale to the business, which would activate a due on sale clause.  While he hasn’t personally seen this happen, it’s part of the equation when making this kind of decision.  

Bill encourages people to reach out early in the process.  His consultation comes with no obligation because he’s focused on helping people understand what they need to do and answer any questions.  He hopes to earn their trust and their business.  

To connect with Bill:

For information on how to get started investing in Colorado Springs, check out our free 2021 Colorado Springs Real Estate Investing Guide. You can also sign up for our Real Estate Investing Newsletter and download free real estate spreadsheets and toolkits.

Welcome to our new “Ask an Investor” series!  We’re inviting clients onto the podcast and giving them the opportunity to ask questions about their plans and properties; Chris and I will weigh in with our opinions based on our years of investing experience.  This podcast will mirror a lot of great conversations we have with our clients that go into deep nuance on a variety of topics. 

Our first guests are Will and Dianna, who you may remember from episode #274 House Hacking In Denver for Less than $5,000 Down (Not a VA Loan!) a couple of months ago.  They bought their first house hack in Aurora and got a great deal on financing.  

Will and Dianna targeted Aurora, since it was in their price range.  About halfway through their home search, agent Lauren Valinoti figured out they could use a Bank of America grant program, which narrowed their sites to low and moderate income track housing.  They found some neighborhoods they liked and one in particular that has farmhouse style homes.  They bought a 5 bedroom/2 bathroom house in February 2021 and have been renovating it ever since.  They came to us with questions about their best options for house hacking, buying their next property, and how they should approach the rest of their renovations.    

The layout of the property is unique with 3 bedrooms and a bathroom on the main floor and 2 more bedrooms and another bathroom in the basement.  There’s a living area off of each bedroom in the basement which has a lot of potential for future renters.  They plan on pursuing a room-by-room strategy once they move out, but their immediate concern is the best ROI while they’re living there.  They hope to move out either the summer of 2022 or 2023, based on when they have enough money for a down payment and reserves for their next home.  

The grant program enabled them to save a lot of capital, and they have an account with $10K for reserves and CapEx projects that they haven’t touched yet.  Another account is set aside for renovations; they started with $15K in it and are now down to $8K.  So far, they’ve tackled a lot of yardwork, renovated the bathrooms, and repainted the whole house.  The home doesn’t have air conditioning which they’re considering putting in, and the kitchen still needs to be renovated.  

The Bank of America grant program can be used repeatedly until the money runs out, so that is a possibility for their next home.  They bought the house they’re in now for $350K, and nearby comps put the current value between $420-450K, giving them about $50-70K in equity.  

Chris and Jenny say: You can do a cash out refinance or HELOC to get money now.  An owner-occupied refinance will give you the better interest rate, probably around low-3%, but that’s higher than your current interest rate.  You can pull out as much as 80% equity, but check with a lender to explore this option because it depends on the appraisal and mortgage balance, and it resets the clock on occupancy requirement timelines.  The HELOC will have a higher interest rate but would enable you to move out.  You can usually go up to 95% on the cash you can pull out, but it’s essentially a credit card with an interest rate that can go up at any time.  

They talked to another couple who do house hacking in Aurora and have done well with Airbnb.  That couple charges $95 a night, which is pretty low.  Will and Dianna have more space in their basement and think they could allow up to 6 people, thanks to 2 bedrooms and a pullout couch.  But do they actually want that many people in their basement? 

They also estimate that it would cost $3-4K to furnish the basement for Airbnb.  It would probably take about a month or two to get their investment back, but that creates the issue of what to do with the furniture when they move out.  Since Aurora has rules that Airbnb hosts must live in the residence, they can only pursue this strategy while they’re living there.  

Their main hesitancy with Airbnb is their comfort level.  The amount of time it takes isn’t an issue so much as constantly having new people around.  They have a dog who likes to spend a lot of time in the backyard, which would be a shared space.  Another concern is how much wear and tear the house will sustain from all of the people coming and going.

Chris says: For Airbnb, you would want to cap occupancy at 4 to make sure you don’t have any parties or extra people.  That way, your renters are either a couple who rents out the whole area, or two couples vacationing together.  We can run an AirDNA report to see how much they could get, but $125 with 65-80% occupancy rates seems reasonable.  It’s all about finding the sweet spot.  

However, my gut says to do medium term rentals instead because you’re in the middle of renovations and planning on getting married, both of which are time consuming.  You know you want to move out soon and don’t want to deal with extra furniture, so keep it simple.  

Jenny says: Comfort level and the amount of time devoted to managing a rental are just as valid as the numbers.  Since it’s the house you’re living in, your comfort level matters more than a pure investment property.  Crunch the basic numbers to get an idea but remember to take into account how you feel.  Either option will cover the cost of the mortgage, so you can do the math on how many months of having your mortgage covered will it take to get to your next property.  You’ll get there either way by the middle of next year.  

One of the bedrooms has an egress window but the other one doesn’t.  They can’t decide whether they should rent out the whole basement to one tenant, or if they should look into putting an egress window into the other room to make it a legal bedroom. 

Chris says: Absolutely put an egress window in there if you plan on renting out that room.  The risk vs reward is not worth it.  If something were to happen to the person renting that room, the lawsuit would wipe you out entirely.  Put the window in there now, since you have $8K in reserves for renovations.  The summer will end soon, so you don’t need to worry about AC right now.  You can get someone in the room ASAP and make back the money. 

Jenny says: Start by renting out the room with the egress window already installed and see how that goes.  Use the proceeds from their rent to pay for the second egress window and then rent out the bedroom. 

Chris says: You can drive screws through the floor to make the floorboards quieter, but that will ruin the floor.  The only time I’ve done that is when I put new flooring overtop it.  

Jenny says: Everyone who will be renting a room knows it’s a temporary living arrangement and thin walls and hearing noises is to be expected.  If it were your forever home, it would be worth doing something about it, but not in this situation.  

Chris says: As with everything, it depends.  If it’s electrical or plumbing, definitely hire it out since you’ll be held liable as an unlicensed person.  Bring in licensed people to do that work.  It takes me five times longer to do my own work and the quality isn’t as good, so is it worth it? There’s a tradeoff of doing the work yourself or paying someone who can do it faster.  You’ll get more rental income faster to make up for it.  

Jenny says: My rule of thumb is I hire out anything that requires technical knowledge.  I only do paint, landscaping, any tiny things that won’t hurt someone if they’re messed up. 

For more of our advice, watch the YouTube video (link below) to see pictures and videos of the house and hear our ideas for how they should renovate the kitchen and basement.

If you have your own feedback for Will and Dianna, connect with them on social media to share your ideas.  Their

We’ll have them back on the show as they make more progress and get closer to purchasing their second investment property.

For information on how to get started investing in Colorado Springs, check out our free 2021 Colorado Springs Real Estate Investing Guide. You can also sign up for our Real Estate Investing Newsletter and download free real estate spreadsheets and toolkits.

If you’re interested in house hacking, check out our free Ultimate Guide to House Hacking online course.