Deal Analysis: House Hacking in Colorado Springs

I’ll set the scene on this client’s mindset before I dive into the deal – maybe you’re somewhere along the same journey he was.  

JB first connected with The FI Team in March 2022. He was 3 months away from starting a new 6-figure job and wanted to purchase a 2–4-unit multi-family property by the end of the year. After a few conversations about other deal types, he was open to other investment strategies like STR, rent-by-the-room or a classic house hack.  He had big dreams to grow his portfolio and was ready to buy in the next 3 months.  

We introed JB to three lenders so he could set up introductory calls and find the right lender for him. Meeting with a lender is key to getting started. A lender will assess your financial situation and determine the loan amount you’ll qualify for. It’s also key to get a pre-approval letter from a lender before you start looking at properties so you’re able to put in offers when the right deal presents itself.  

In October of 2022 JB closed on his first investment. He purchased a 4 bed, 2 bath single family home for $430,000. His strategy on this unit was to convert the house into a duplex and STR the upstairs while he lives in the basement.  

Here’s a breakdown of the initial costs: 

Purchase Price  $430,000 
Down payment & Closing Costs  $13,000 
Duplex Conversion  $13,000 
STR Furnishing  $5,000 

At closing he got $15K in seller concessions that went to rate buy-down and closing costs.  

PITI: $3,007 

Total Investment: $24,410.86 (yes, to the cents!) 

And now for the good part, here’s the breakdown for his income and appreciation:  

Monthly Income  $3,500 ($42K annual) 
Reserves & Op. Expenses  15% 
Current Assessment  Increased to $446K in less than a year 
CoC w/65% vacancy   35% 

On the comfortability scale I’d say JB is at the COMFORTABLE end. He’s making $130K as a doctor plus $42K from his STR and living in a private unit of a pretty nice house. He’s planning for his next property. Likely, he’ll shift this to a rent-by-the-room and house hack again on property #2.  

Here’s what I LOVE about JB’s story. He didn’t house hack to live for free because he needed to make ends meet. He was making decent money and instead of blowing it on rent for an expensive condo to impress his friends he invested it into real estate.  

I also love that he’s buying properties that are flexible to multiple investing strategies. When he moves on to house hack #2 he won’t have the bandwidth to manage the STR in his first house hack, so buy turning it into a RBTR and renting both the top and bottom he’ll make about the same in earnings, but it’ll be way less work for him.  

So, stay tuned for part two of JB’s investing story, I hope to have an update on him real soon! 

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