In this section, Joe helps us to understand the basics of financing, which loan types are available for house hackers and why house hacking can be so attractive from a financing perspective.

This module covers:

* Owner-Occupied vs. Investment Property Loans* Types of Loans for Owner-Occupants* Paying Points to Buy Down Your Rate - Does it Make Sense?* Mortgage Insurance - Do I Have to Pay It?* Which Option is the Best?* How to Get Started

Four Learning Options!

* Order the book on Amazon or grab a copy from us

* Listen to episode "#205: UHHG - #2 Financing for House Hackers" on the Denver Real Estate Investing Podcast* Watch the YouTube video (at the bottom.) * Read this blog post, which is from the book. Start at the Ultimate House Hacking Guide for Denver Overview for a list of all the modules.

As we’ve mentioned in the previous chapter, house hacks are purchased as a primary residence and done with an owner-occupant loan. There are great benefits to the owner-occupied loans, and these benefits are some of the main reasons why house hacking is such a popular investing strategy. Joe will go over the differences and advantages of these owner-occupied loans compared to traditional investment loans.

Owner-Occupied vs. Investment Property Loans

The main differences between owner-occupied and investment property loans are:

* Down payment* Interest rate* How long you must occupy the property* Can I Combine Buying Down Points and Upfront Mortgage Insurance?*

For owner-occupied loans, you could put as little as 0%, 3.5%, or 5% down, depending on which loan type you have.

For an investment property loan, you will be required to put 15%, 20%, or 25% down, depending on which loan type you have.

Interest rates for owner-occupied financing are always going to be the lowest rates available. These are the rates you see advertised on TV, the radio and online.

Investment property interest rates will always be a little higher than owner-occupied rates. They typically range between 0.75%-1.5% or higher, depending on the down payment, property type and other various factors.

In summary, you will always have the most favorable rates and least money out of your pocket when you are living in the property, meaning you have used owner-occupied financing. What’s the reason for this? Historical data shows that during any major downturn, the rate of foreclosures on owner-occupied homes is far less than those of investment properties. During difficult economic times, people are much more likely to fall behind on an investment property, whereas they will do anything possible to stay current on the mortgage for their home that they live in every day and shelter their family with.

This emotional connection to the property allows banks to take more of a risk on you and offer you a better interest rate, along with lower down payment options and, thus,

What is house hacking, and who coined the term? While it’s a newer term and a great name, this investing strategy has been around for a long time. In Module 1 of the Ultimate House Hacking Guide for Denver, see how each of the authors define house hacking, the variations of it, and how it differs from traditional investing.

This module covers:

* House hacking variations

* House hacking vs. traditional investing

* A real-life example

* House hacking vs. Nomad

* What strategy is right for you?

* Answers to common questions

Four Learning Options!

* Order the book on Amazon or grab a copy from us

* Listen to episode "#204: UHHG - #1 House Hacking in the Denver Market" on the Denver Real Estate Investing Podcast* Watch the YouTube video (at the bottom.) * Read this blog post, which is from the book. Start at the Ultimate House Hacking Guide for Denver Overview for a list of all the modules.

What is House Hacking?

I believe BiggerPockets coined the term “house hacking.” While it’s a newer term and a great name that they coined, this investing strategy has been around for a long time. Here’s how each of us define it:

My definition: “Buying a property that you’ll live in while you’re renting out part of it to reduce your living expenses or live for free.”

Joe’s definition: “Living in a property and renting out a portion of it. The portion you’re renting out will generate rent for you that you can use to make mortgage payments and offset living expenses.”

Jeff’s definition: “House Hacking is purchasing a primary residence with a low down payment, renting out the other rooms or units to achieve the highest rental income to offset the mortgage costs, and aiming to live for free until the next property.”

House Hacking Variations

* Buy a duplex, triplex or fourplex; live in one unit and rent out the others.

* Buy a house, condo or townhouse; live in one room and rent out individual rooms.

* Use Airbnb or another service to rent out rooms or your property on a short-term basis. Make sure to follow the rules!

* Rent out the garage or RV parking pad for additional income.

* Have grandparents, parents and children all living in one property to save on living costs.

Ultimately, house hacking is a balancing act between your personal needs and your investing needs. Don’t get hyper focused on one property type or one way to generate income. There is no right or wrong way as there are several different versions of house hacking; it’s about what works best for your individual situation.

We’ve previously named Jeff White as the “poster child” for h...

Many aspiring house hackers understand the concept and long-term wealth-building potential of house hacking, but they lack the local knowledge on how to apply it to the Denver market.

If you know you want to get started, you can jump to the Guide Outline.

Every real estate market is local; Denver is no exception. A lot of the standard, national techniques that apply in other markets don't work here in Denver.

As many of you know, a lot of our clients are house hackers. I've noticed a very common pattern as I've talked to hundreds of them here in Denver. The vast majority of them have a high level of understanding about what house hacking is from diligently researching but don't necessarily have the knowledge of the detailed, specific steps it takes to put their plan into action here in the Denver market. This guide provides that detailed, specific action plan on how to buy house hacks and build a rental portfolio here in Denver.

We are releasing The Ultimate House Hacking Guide for Denver: A Technical Guide to Building a Denver Rental Portfolio Through House Hacking. Putting together a detailed guide has been on my todo list for almost a year now. When we had the lockdown for COVID in March and April, I had the time to really start working on it. I partnered with Joe Massey and Jeff White to put it together and publish a book!

This book is a collaborative effort between Chris Lopez, Joe Massey and Jeff White. The three of us share many common beliefs towards investing. You will quickly notice that we have our differing points of view as well. Guess what? There is no one “right” way to invest. This statement is even more true with house hacking, since you’re balancing your personal living needs with an investment property. One of the goals of this guide is to educate you to help you figure out the “right” way for you.

Read, Listen or Watch

Four Learning Options!

* Order the book on Amazon or grab a copy from us

* Listen to episode "#203: UHHG - House Hacking Denver: The Ultimate Guide Overview" on the Denver Real Estate Investing Podcast* Watch the YouTube video (at the bottom.) * Read this blog post, which is from the book.

About the Authors

Chris Lopez is an Investor-friendly agent at Your Castle Real Estate. He helps investors build a rental portfolio through Denver house hacking and buying traditional rental properties. He also helps investors create a real estate retirement plan to target a monthly cash flow in retirement. Chris is also an investor and is currently doing a multigenerational family house hack. You can reach Chris at 303-548-0846 or Chris@DenverInvestmentRealEsta...

We just kicked off a new series of podcasts tailored towards Denver investors interested in house hacking. The idea behind this series is chatting with local investors that are either on their first house hack, in the process of closing on their first house hack, or currently working with our team in search of their first house hack. This is the first episode in the series.

This is a great way to virtually network and find mentors who you can bounce ideas off of and learn from. They will tell you what works and what doesn't when it comes to house hacking.

We will be doing these House Hack Masterminds once a month, so if you would like to be a guest on a future episode, reach out to Ben Einspahr - [email protected].

Hosts of the House Hack Mastermind Series

Ben Einspahr

* Active Local House Hacker and Buy and Hold Investor* BiggerPockets - https://www.biggerpockets.com/users/BenE17* Airbnb - https://abnb.me/cfDBGIFd78* Email - [email protected]* Phone - 402-850-3003

Jeff White

* Active Local House Hacker (currently on #4 House Hack!)* BiggerPockets - https://www.biggerpockets.com/users/JeffWhite * Email - [email protected]* Phone - 720-951-6868

Chris Lopez

* Investor-friendly Realtor and Founder of the Denver Investment Real Estate Group* [email protected]* 303-548-0846

Guests for First Episode

Chris Poesch and Jesteny Pascual

* Chris and Jesteny have been living and renting in Denver since 2019. They were fortunate enough to buy their first house in February of 2020 and have been enjoying the house hacking experience. They currently Airbnb the garden level private one bedroom one bath suite below their home and enjoy gaining supplemental income as well as meeting those from all over.* [email protected]* Airbnb - https://www.airbnb.com/h/calming-colorado-oasis* Instagram - https://instagram.com/calming_colorado_oasis?r=nametag

Kendra Levy

* Kendra has been investing in real estate since 2017, but she got her first house hack in April 2020. She enjoys the versatility of real estate investing and is looking for her next investment opportunity!* BiggerPockets - https://www.biggerpockets.com/users/KendraJoy* Facebook - www.facebook.com/kendralevy* Airbnb - www.airbnb.com/h/bransonwaterfrontcondo * Instagram - https://www.instagram.com/kendra_joyyy/?hl=en

Karl Burkhart & Jenna Geatz

* Karl and Jenna have been living and renting in Denver for the past 8 years. They bought their first house in August 2019 as a house hack, renting the garden level in-law suite as a short term rental and now mid-term rentals (1-3mo). They enjoy the DIY experience of modern renovations, customer service and the supplemental income which they hope to reinvest in future house hacks.* Airbnb -

My interview with Terrance Doyle of The VareCo is part of our Book Contributor Interview Series. Terrance wrote chapters for both the 2019 and 2020 Guide to Denver Real Estate Investing Strategies books. Derek Marlin joins me as co-host as we talk about how Terrance transitioned from single family to multi family, flipping in Denver and apartment building syndication.

In the 2019 Guide to Denver Real Estate Investing Strategies book, Terrance set a goal for himself to focus more on multi family and close on two $3-5M buildings. He actually closed on 9 and blew past his $3-5M goal. He wanted to do fewer deals but larger transactions, and that's exactly what he did.

Terrance has found that multi family gives him more time to complete the steps involved in buying a property. When he started in 2008 buying single family properties at Trustee Sales, the process was stressful and rushed. He was often up against multiple bidders and decisions had to be made quickly, often without gathering all necessary information. With multi family, the closing timeline is typically 60-90 days with a 45 day due diligence period. If more time is needed to evaluate a property, 30 day extensions can be requested as well.

The more relaxed timeline allows Terrance to more fully investigate a property and evaluate the investment. He and his team now spend more time at a property which allows them to better understand maintenance issues, the tenant class, and their payment habits. He is also now preparing Phase I reports in order to bring on institutional investors. These reports require extensive due diligence. He's found that gathering more information makes him better at executing the business plan for the property.

As he's redirected his focus to multi family, he has been working with more traditional brokers instead of off market sellers. As they bring him more and more deals, the decision of when to pass on opportunities is one he struggles with. Derek and Terrance have both found this a difficult line to walk. Once you've put the time and effort into building your relationships and your pipeline, it's difficult to say no to an attractive deal.

This blog post is an abbreviated version of the complete interview. For all the details including insight from Derek, listen to the podcast or watch the video (links to both below).

Connect with Terrance Doyle

310-463-7727[email protected]https://thevareco.com/

Submit a Chapter for the 2021 Guide to Denver Real Estate Investing Strategies Book

To submit a chapter for consideration for the 2021 Guide to Denver Real Estate Investing Strategies book, bookmark this page.

Grab a copy of the 2020 Guide to Denver Investing Strategies book for yourself.

YouTube Video: 2020 Book Interview with Terrance Doyle

https://youtu.be/upJBd7A6dHA

Here is our latest property manager update on the Denver market.

Executive Summary:

* Leasing is still hot. If it's priced appropriately, it's leasing. * Property Managers are still reporting keeping rent stable and rent bumps (1-3%)* The high end, class A in downtown is hurting. Less demand and dropping rents. * Class B and C buildings around downtown are doing well.* Too early to see any direct impacts the $600/week extra unemployment benefits will have on people paying rents.* Rents collected for July 20 are similar to July 19, just more people on payment plans.

Interview with Ellie and Devin Reimer - Aerowood Property Management

Aerowood manages 300 doors in the Denver metro area. Their portfolio consists of mainly condos, townhomes, and single family homes. They also manage a few small multi family units.

Website: rentawpm.com

YouTube Video Interview with Ellie and Devin

https://youtu.be/7fUW70goY-Y

Interview with Marc Cunningham - Grace Property Management

Grace Property Management started in 1978 and has grown to manage just under 1,000 doors. They range from single family, to small multi family and also do some commercial property. North Denver to south Denver

Website: rentgrace.com

YouTube Video Interview with Marc

https://youtu.be/39QwrefoRVo

Interview with Gray Hall, GK Houses

GK Homes manages properties in 5 national markets and specifically in Colorado they manage properties in Denver, Boulder, and Fort Collins. They have a portfolio in Colorado of about 700 doors and range from single family homes, to small multi units, and apartment buildings up to 49 doors.

Website: GKHouses.com

YouTube Video Interview with Gray

https://youtu.be/fng2J_637lo

Interview with Annemarie Sunde - Legacy Property Management

Legacy Property Management has been in business for about 6 years and focuses on single family homes. They also have a few condos and small multi family units in their portfolio. They have properties as far south as Castle Rock and as far north as Broomfield and Thornton. The majority of their properties are located in Highlands Ranch, Parker, Littleton, and Golden. They offer leasing and full property management services.

Website: Legacypmco.com

There is no video interview with Annemarie available this month. You can listen to her full interview on the podcast.

This blog post is a summary. For all the details, listen to the podcast or watch the video!

In addition to the normal property manager market stats, check out these two great posts from Lon Welsh from attending four hours of webinars:

* Long Term Real Estate Trends and COVID Impact in Denver* Denver Apartment Market Trends - Q3 2020

The Denver MLS trends data for July 2020 is out. Comparing year over year (July 2019 to July 2020) is better than comparing the previous month, because we have defined seasonality trends.

In addition to the normal market stats, check out these two great posts from Lon Welsh from attending four hours of webinars:

* Long Term Real Estate Trends and COVID Impact in Denver* Denver Apartment Market Trends - Q3 2020

Denver MLS Market Stats

Inventory - We have a record low amount of inventory at the moment at 6,450 properties.  The average listing count for the last 35 years is 16,500. And that’s when Denver was a smaller place with less traffic.  We sold more homes in July than we have active in inventory.  That’s only happened a few times and shows how strong the seller's market is.

Under Contract - Under contract is at a near-record - 7,100 units.  August 2020 will outperform August 2019 almost as well as July 2020 did.  Due to lack of entry level inventory, expect to see the average home price at/near $600,000 again.

Showing Traffic - Showing traffic continues to be very strong, so I’m optimistic that sales count in September will be robust though probably down a bit from August (which would follow a normal historical pattern of seasonality).

When it’s all said and done, we won’t recover all of the lost sales from April / May, but we’ll get a lot of it made up by December.

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

Denver Housing Trends July 2020

This blog post is a summary. For all the details, listen to the podcast or watch the video!

Lon Welsh, founder of Your Castle, also recently provided a summary of Long Term Real Estate Trends and COVID Impact in Denver and a Denver Apartment Market Trends - Q3 2020 report. Check them out for valuable data on the Denver real estate market.

YouTube Video: Denver Real Estate Market Trends - July 2020

https://youtu.be/9PxiDaAFG5k

Property Deal Analysis Overview

This deal highlight shows a house hack opportunity on the MLS.  This property is centrally located, very close to downtown Colorado Springs.  It also already has a kitchenette and second entrance, lending itself to being an easy conversion to a second living space.  Further, it is zoned appropriately at R-4 (meaning multi-family units are authorized) to allow for a 2-family set-up.

This property is available.

Three Learning Options! * Listen to the podcast "#198: Deal Analysis - Colorado Springs House Hack Near Downtown" 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.

Read about the State of the Market for Colorado Springs real estate Q3 2020.

Deal Quadrant: MLS

Read about the deal quadrant and finding Denver Rental Properties.

Investment Property Details

* Type: 3 bed, 2 bath, ~1,500 square feet* Location: central Colorado Springs, very close to downtown* List Price: $315,000* Why we like it:* Location!* Zoned R-4, lots of opportunity* Already has a built-in kitchenette near the separate entrance- minimal work to get it ready for renters

Agent Property Description Remarks: Remodeled turn of the century home with a fresh and modern look that can be used as a single family home or a duplex, the property is zoned R4 which adds great possibilities for an investment and additional income, highly desirable location just a few blocks from the Center of Downtown Colorado Springs, lots of entertainment, restaurants, shopping, parks and much more. The property features an updated kitchen, dining area, 3/4 baths and 2 bedrooms, plus an additional living space with 1 bedroom, 1 full bath, a kitchenette and a separate entrance that would allow for the new owner to use this part of the house as a rental, new roof, upgraded vinyl windows, new flooring, new kitchen, new appliances, upgraded electric panel, gas stoves on main level and lower level.

Deal Analysis - Colorado Springs House Hack Near Downtown near N Nevada Ave and E Platte Ave

Spreadsheet Rental Analysis

Property Operating Expenses

First Year Returns

Conclusion

This property is ideal for a House Hack turned Nomad opportunity.  With only an assumed 5% down, conventional loan, it would be considered a breakeven cash flow opportunity.  There would be some upfront costs to partition off the separate living areas and to add to the already existing kitchenette.  Further, we assessed an 8% yearly repair/maintenance budget for this property which is very conservative since the home is recently fully-remodeled. If self-managed, the return would be even greater upon moving out.  Furthermore, the rents budgeted are on the very low end. Considering the proximity to downtown, each unit could easily get $100-150 more a month than budgeted.

YouTube Video: Rental Property Analysis Colorado Springs House Hack Near Downtown

Property Deal Analysis Overview

This deal highlight shows a traditional single family rental property opportunity on the MLS.  This home is centrally located close to Memorial Park.  This property has a little bit of immediate equity potential too with comps selling for up to $225,000 for very similar homes nearby.

Three Learning Options! * Listen to the podcast "#197: Deal Analysis - Colorado Springs Memorial Park Single Family Rental" 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.

Read about the State of the Market for Colorado Springs real estate Q3 2020.

Find other Deal Analyses of Denver and Colorado Springs properties.

Deal Quadrant: MLS

Read about the deal quadrant and finding Denver Rental Properties.

Investment Property Details

* Type: 2 bed, 1 bath, ~750 square feet* Location: Near Memorial Park, short commute to downtown* List Price: $195,000* Why we like it:* Location!* Very simple bread and butter small rental home, with some room for immediate equity* Jenny has a similar rental just down the street, it has been a solid rental property

Agent Property Description Remarks: Come see this cute little home in a great neighborhood that is quiet and tucked away. The home features a spacious living room and an eat in kitchen with a sliding glass door that opens up to the back yard. There are 2 bedrooms and a remodeled bathroom. There are likely hardwood floors under the current flooring but not confirmed. Come and see this home that is waiting for your updates and personal touches.

Deal Analysis - Colorado Springs Memorial Park Single Family Rental near the 24 and S Circle Dr.

Rehab Suggestions

* interior paint job* a little bit of landscaping tidying* spruce up the kitchen (possibly paint the cabinets, new laminate countertops, stainless steel appliances)

Spreadsheet Rental Analysis

Property Operating Expenses

First Year Returns

Conclusion

This property is ideal for a long term buy and hold rental opportunity, that already has room for equity potential.  This home sits on a good-sized lot central to town and is a detached single family home, something that is desirable to tenants.  We budgeted for an interior paint job, some landscape improvements, and to spruce up the kitchen (paint cabinets, new countertops, stainless steel appliances, etc.) with an estimated $10,000 budget to accomplish this.

YouTube Video: Rental Property Analysis Colorado Springs Memorial Park Single Family Rental

https://youtu.be/5q6I5YyvxdY

This deal highlight discusses a recently listed multi-family property on the MLS and gives an example of an "off-the-shelf” multi-family rental property for purchase.