HOUSE HACKING IN DENVER

House Hacking is hands down, the single most powerful way to build wealth. Many people think that it’s impossible in expensive cities like Denver.

Guess what? Expensive cities like Denver are actually the best places to house hack because not only will you get amazing cash flow, but you’ll also likely see hundreds of thousands of dollars of appreciation.

House Hacking is a real estate investing strategy where you purchase a one-to-four-unit property, live in one part and rent out the rest such that the rent covers your mortgage, and you can live rent free or close to it.

If you are buying a single-family home, you might rent out the rooms. If you’re buying a two to four unit, you’ll occupy one unit and rent out the others. House Hacking is an innovative and cost-effective way to become a homeowner and save money on living expenses at the same time.

The Benefits of House Hacking

Why the heck would anyone do this? Let’s take a look at some of the benefits below:

Reduced Living Expenses - House hacking allows you to offset your living expenses with rental income from the other units (or rooms) in the property. This means you can enjoy a lower monthly mortgage payment, or even live for free.
Passive Income - After one year, you can move out and increase your cash flow even more. Your tenants will continue to pay down your mortgage and provide cash flow. This is an excellent way to build wealth over time.
Appreciation - Throughout any 10-year period in history, real estate has always gone up. If you hold onto property it’s tough to lose. Appreciation is where most of your wealth will truly be built in real estate.

Low Down Payment - When you house hack, you can purchase a property with as little as 3% down and some loan programs require as little as 1%. The catch here is that you need to live in the property for a year.
Build a Portfolio - With a low down payment and savings on rent, your goal should be to purchase a second in a year. If you do this year after year you should generate enough passive income to live on.
Increased Flexibility - House hacking gives you the flexibility to move to another unit within the same property or rent out your unit and move to another location.

The Drawbacks and Risks to House Hackings:

Living in a crappy investment property – The most profitable house hacks are properties that need some work. There’s no rule on that, you can buy a nicer property, but you won’t cashflow as much.
Risks of market fluctuation - What if you throw all your money into an investment property and another Great Recession happens? Not much can be said about that, the market does what it does, it goes up and down and you’ll need to ride it out. Just make sure your income can cover your mortgage with 100% and 0% vacancy

Tying up a lot of money in a down payment – Compared to renting yes, it’s a chunk of change to buy the place. But the goal is through the cashflow of the property you can make back the sum of your down payment in the first year.
What if tenants don’t pay? - Yes, this is a risk! You are relying on someone else to make your investment property work. With proper screening you can drastically reduce this risk.

Get Educated on House Hacking:

There’s a lot of information on House Hacking out there.

One of the best is the book that The Founder of The FI Team, Craig Curelop wrote called The House Hacking Strategy.

This book is step by step guide that will guide you through the entire process and give you proven tips and tricks for a successful house hack!

Listen to Podcasts from Invest2FI –

Some key episodes to tune into are:

Run the numbers on properties:

Download our house hacking calculator to see how the numbers work.

HOUSE HACK CASE STUDY

Denver - Up /Down Duplex

4 Bed | 2 Bath
2,100 sq/ft
Purchase Price: $475,000
Cash Flow: $1,320/month
CoC Return: 39.55%
NWROI: 121.07%

Get Educated on House Hacking:

Getting started with house hacking is easy if you follow the right steps!

Determine where you want to house hack
Assemble your team: investor-friendly agent, find a lender, gather a list of contractors
Determine your budget and financing
Getting pre-approved
Find the right property
Secure financing, make the offer and go under contract

Ready to get started?