Deal Analysis – Room by Room House Hack in Aurora

This deal analysis discusses a room by room house hack in Aurora, CO. Our team helped the client successfully buy their first house hack and future rental property. While living there, our client will spend only about $300/mo in housing expenses. Once he moves out, he’ll cash flow close to $5,000 a year by renting it room by room.

This property closed in Q1 2020.

Investor Profile

• Single young professional
• Buying first rental to work towards FIRE
• Willing to have short inconveniences for long term wealth building
• Goal: Live for free while buying a good long term rental
• Will rent room by room while living there and after moving out

Deal Quadrant: MLS

Read about the deal quadrant and finding Denver Investment Properties.

Investment Property Details

• Type: Detached single family house
• 5 bedrooms, 2 bathrooms
• Location: North Aurora
• List Price: $375,000
• Purchase Price: $375,000
• Why we liked it:
  • Location – Anschutz medical campus
  • Perfect setup for house hacking and room by room rentals
  • Good condition
  • Above average finishes (granite countertops)
  • New HVAC

Property Contract Details

• Finding the property: Client knew what he wanted w/ realistic expectations. Normal walking and looking at properties to refine and find a property that was good enough.
• Under contract:  At ask and (not much) secret sauce
• Inspection Concerns:
  • Above average radon
• Inspection negotiation outcome:
  • $1,000 seller credit for client radon install

Property Financing Details

• Lender: Conventional
• Loan Type: 5% down conventional
• Appraisal: at value, no issues
• Seller Concessions: $1,000 towards closing costs
• PMI: Monthly
• Interest Rate Buy Down: Yes

Spreadsheet Analysis – After Move Out

Property Operating Expenses

First Year Returns

Conclusion

The numbers on this house hack are very impressive, but they are not a unicorn. We routinely help clients find places that make sense while they are living there and then once they move out. With a little more work on the property management side, the owner is able to have a positive cash flowing asset! $5,000/yr in positive cash flow is a good deal when you remember he put down less than $30,000 to buy the house!

Video: Deal Analysis – Room by Room House Hack in Aurora