This case study was discussed in the December Monthly Roundup Podcast.
Property Details:
- 5 Bedrooms
- 3 Bathrooms
- Sold Price: $375,000
This unique home in North Denver presents a great opportunity for house hack and a long term cash flow investment. The new owner has the ability to have a tenant in the house while still maintaining their own private living space. The house is split into two levels much like a duplex would be with both floors having their own entrances and kitchens. The house features 3 bedrooms and 2 bathrooms on the first floor and the lower level has 2 bedrooms and 1 bathroom.
One of the previous owners converted the garage into a bedroom and did an excellent job on the remodel. The exterior brick that replaced the garage door matches with the rest of the house to give cohesive curbside appeal. The current basement layout could easily be modified to include a third bedroom. An interior wall with a door along with an egress window would need to be added to accomplish the lower addition. The new owner also plans on updating the lower kitchen to maximize potential monthly cash flow from the unit once he moves out of it.
The Numbers:
The new owner of the house has already rented out the top level and is currently living in the bottom half of the house. He had so much demand when he put the house on the market at $1750 per month that he decided to bump it up to $1825 and still go it rented out almost immediately. He also has a roommate with him on the lower level who pays an additional $500 per month. After all of the expenses, he is only paying about $176 per month, while this is not completely free it doesn’t include the benefits of owning the home. Tax incentives, depreciation schedule, and appreciation of the property value. After he moves out and is able to rent both units he should conservatively be able to get $2825 per month, which translate to a 15% cash on cash return. That’s with only 5% down! This property should make for an excellent long term investment for the new homeowner.
