We always encourage our investors to buy properties with multiple exit strategies and multiple investing strategies. We’re not into trendy investing, but rather cash flowing investing. That’s why when last year we started buying more co-living investment homes we got excited for our clients and the future of investing in high appreciating markets, like Denver.
Last year we were buying 2,400 square foot homes with 4-5 bedrooms and adding a 6th room. Our clients who were house hacking the co-living homes had their mortgage covered and investors who were buying with 20% down and using full-service property management were cash flowing $500-$1K/month after expenses and reserves.
Everyone was happy.
But, something shifted. We learned. And now, our clients are able to cash flow as house hackers and investors are seeing $2,000/month in income.
How?
Bigger Homes. More Rooms. & with that, happier tenants.
In the past year we’ve expanded our property management offerings with HomeCrew, and with over 500 units in management, we’ve learned some of the “happiest” homes are ones with 8-12 tenants. If you told me this a year ago, I would have looked at you side eyed, but co-living tenants are seeking community. More tenants equals a larger community and more housemates to contribute to household chores.
Right? Crazy. Check out this case study to see the numbers.
Property Overview: Dakota Ave. Lakewood, CO
Located just west of Denver and across Alameda from The Denver Federal Center, which employs 6,200 federal employee) and Colorado Christian University (total enrollment of over 10,500 graduate and undergraduate students).
4,146 square feet, true three-story home, purchased as a 6 bedroom, 5 bath single family, after simple renovations will be an 8 bedroom, 5 bathroom home. The top floor has a primary suite, and three other bedrooms with a shared bath, the main level has a primary suite and shared half bath, and the basement has three bedrooms with a shared bath.
The kitchen has tons of storage, room for an additional refrigerator, and a huge island in the center.
Bonus spaces in the house are the detached 2 car garage and an office space on the main level.
The Deal Analysis: Let’s look at it 3-ways
Constants
Purchase Price: $750,000
Estimated Rehab: $25,000
Rental Income: $7,450
Primary x2= $1,150
Larger Bedrooms x3= $950
Medium Bedrooms x2 = $850
Small Bedroom x1 = $700
Vacancy, Capex, & Maintenance: $729
Scenario One: Cash
The house was bought in cash from an out of state investor, so their monthly income will be the total profits after reserves and expenses which will come out to about $5,425
Scenario Two: 20% Investor
If you want to invest in Denver in 2025, it’s going to be hard to find a single family home that you can operate as a long-term rental to a single tenant. With Co-Living our investors are seeing the 1% rule (monthly income is equal to or above the purchase price of the house).
Check out the numbers if you were to invest with 20% down.
| Purchase Price | $750,000 |
| Est. Rehab | $25,000 |
| Downpayment (20%) | $150,000 |
| PITI (7% IR) | $4,553 |
| Rental Income | $7,450 |
| Vacancy, CapEx & Maintenance | $729 |
| Property Management | $1,296 |
| Monthly Cash Flow | $1,034 |
| CoC Return | 7.3% |
| NWROI | 39% |
Scenario Three: House Hacker 5% Down
A $750,000 home will be on the higher end of the purchase price for a house hacker, but if you’re able to swing a slightly higher down payment ($37,500 in this case), then you can likely not just live for free, but get some cash flow and then really see the benefits after year one when you move out to your next investment.
This house also has two ample sized primary suites, so this could be a great strategy for couples who want more privacy and space in their home, but want to see the benefits of house hacking.
Check out the numbers if you were to house hack:
| Purchase Price | $750,000 |
| Est. Rehab | $25,000 |
| Downpayment (20%) | $37,500 |
| PITI (6.5% +PMI) | $5,500 |
| Rental Income | $5,500 |
| Vacancy, CapEx & Maintenance | $729 |
| Property Management | $0 |
| Monthly Cash Flow | $551 |
| CoC Return | 11.3% |
| NWROI | 106% |
The above numbers assume the owners stay in the “cheapest” room, but there’s still room in the monthly cash flow to break even in the nicest room. If after year one you move out and self manage, then you’re able to see $1,200 in cash flow.
Takeaway
So, no matter which way you slice it, if you want to invest in Denver, you’re able to see cash flow in a co-living home.
What’s great about this strategy if you’ve got multiple exit strategies if you want to sell. Once you have it established as a co-living home, there is potential to see it as an operating business to another investor. Or, with simple reverse renovations, you could convert back to a single family home and live in it, or sell it.
If you want to learn more about how to invest in co-living homes – reach out! We’d love to share more about how our investors are growing their wealth in Denver real estate.
