How easy it to rent out rooms of your house? (Denver: real estate, renter)

[Therblig]

Originally Posted by Mbaune09

Has your house gone up in value quite a bit since you bought it also?

Well over 10% just sitting here, and that gives no account to a thorough interior remodel and some planned enhancements. Three fairly equivalent houses are for sale on the street at about 25% over what I paid. (Slightly larger yards and fresher remodels, otherwise identical.)

Hard to say how much of that will hold in the next few years, though. I bought well for investment/equity purposes, though, and don't expect a loss, much less losing all of the gains.

[HatchChile]

Originally Posted by Mbaune09

Being a teacher I’d obviously get hammered financially just renting, so if I bought one of these homes how easy is it to rent out a room or two? I’d guess it’s easy since the demand is so high but what, in your experience, have you seen regarding this? If my mortgage is $1700 and I can rent 2 rooms out for $800 a piece that’s $100 for me to pay which is obviously my ideal outcome. Then down the line I’d have an option to refinance if I settled down or sell and use that equity for something smaller if I wanted to live alone or cheaper with a significant other/family.

- Someone already mentioned the rental restrictions with such houses. Other things to remember: there are restrictions on selling such houses. You can't just cash in and move on. There are 10-15 year restrictions on selling the house for its market value - and it must be your primary residence for those 10-15 years. You can't just rent it out and move on. You buy an income restricted house, you sell it as an affordable house as well. Denver market may go crazy and appreciate 10% a year, but that won't apply to your house because when buying it you agree to certain restrictions.

- I think your calculations are a bit off in terms of rental $$. I think $800 per room in the areas you are looking at will be pretty hard. I would say check rentometer.com; put in the address to see the going rates. Also craiglist/zillow/hot pads to see what people can get for $800 in other parts of the city.

Good luck!

[Therblig]

Originally Posted by HatchChile

...there are restrictions on selling such houses.

What houses? AFAICT, the OP wants to buy a house on normal terms and rent part of it out. Does that change the covenant or laws somehow?

You seem to be referring to houses bought under special circumstances or programs. Not sure that applies here.

[Westerner92]

I'm not sure how teacher salaries compare to your part of Minnesota, but teachers on the Front Range aren't paid well at all when taking cost of housing into account. Assuming you make the average salary of the average school district in the Denver metro (~$55K/year), $300-350K is the absolute max you'd qualify for assuming 20% down. That pricetag within 10-15 minutes of Downtown will get you a 2/1 condo at best. The location will probably have to be the first expectation to let go to make the situation work, but there will be plenty in your price range in what I've heard called the Dayton Triangle, which is a neighborhood full of starter condos in SE Denver/W Aurora.

Depending on the neighborhood and condition of your place, I'd estimate you could rent out a full bed/bath for $900-1300. If two people share a bathroom, you could get away with charging $900 for a room in a luxury condo in the core, ~$500 if you were to buy somewhere like SE Aurora (which was at least a 60 minute commute to Downtown in pre-covid times). It depends on the economic fallout of shutdowns and graciousness of landlords, but my crystal ball says rent prices seem likely to go down over the next year while home prices stay relatively stable.

You're right that it's easy to find good roommates. Denver is full of young professionals who'd rather have roommates than live and buy a house wherever they came from. You still have to have a good read on people, but anecdotally speaking, I'd say it's pretty common for people to find good roommates even on craigslist. When I was renting in Denver, I found houseshares via craigslist twice with good results both times.

That said, buying your first home with maxed-out qualifications in a brand new place is a huge plunge. I'd be shocked if you could qualify for a loan without knowing your job situation first, and you really should find the job first if for no other reason than you don't want to be stuck with a huge commute. Aside from paying down student debt, your situation in Minnesota won't have any bearing on what you qualify for in Denver, and the lenders won't factor in expected rent income. Your salary, savings, and debt history are what matter to lenders. I'd suggest that you rent a room on month-to-month while you figure out commutes, get a feel for where you want to buy, and find people you trust to be roommates.

[hikernut]

I’ve done this, sometimes as the landlord, and at other times I was the tenant. All in all it worked pretty well, and it’s a good way to save money. But I personally wouldn’t want the stress of needing the rent to pay my bills. If you can’t afford your own place, it’s a lot safer to be the renter.

Some comments...

Always have a written lease. I prefer month-to-month tenancy. It’s best to give both parties an “out” if things aren’t working.

More roommates means more problems. More competition for fridge space, kitchen, laundry, parking, etc. It’s easiest to have just one roommate.

As a renter I always looked for a stand-alone house with the owner living there full time. No flop houses, no apartments.

[Mbaune09]

Originally Posted by Therblig

What houses? AFAICT, the OP wants to buy a house on normal terms and rent part of it out. Does that change the covenant or laws somehow?

You seem to be referring to houses bought under special circumstances or programs. Not sure that applies here.

This person is referring to the income restricted homes I mentioned being built in Stapleton area. There are currently a bunch of 3/2 townhouses going for $277k. But they have restrictions just not sure what they are

[Mbaune09]

Originally Posted by hikernut

I’ve done this, sometimes as the landlord, and at other times I was the tenant. All in all it worked pretty well, and it’s a good way to save money. But I personally wouldn’t want the stress of needing the rent to pay my bills. If you can’t afford your own place, it’s a lot safer to be the renter.

Some comments...

Always have a written lease. I prefer month-to-month tenancy. It’s best to give both parties an “out” if things aren’t working.

More roommates means more problems. More competition for fridge space, kitchen, laundry, parking, etc. It’s easiest to have just one roommate.

As a renter I always looked for a stand-alone house with the owner living there full time. No flop houses, no apartments.

Golden information thanks.

[Mbaune09]

Originally Posted by Westerner92

I'm not sure how teacher salaries compare to your part of Minnesota, but teachers on the Front Range aren't paid well at all when taking cost of housing into account. Assuming you make the average salary of the average school district in the Denver metro (~$55K/year), $300-350K is the absolute max you'd qualify for assuming 20% down. That pricetag within 10-15 minutes of Downtown will get you a 2/1 condo at best. The location will probably have to be the first expectation to let go to make the situation work, but there will be plenty in your price range in what I've heard called the Dayton Triangle, which is a neighborhood full of starter condos in SE Denver/W Aurora.

Depending on the neighborhood and condition of your place, I'd estimate you could rent out a full bed/bath for $900-1300. If two people share a bathroom, you could get away with charging $900 for a room in a luxury condo in the core, ~$500 if you were to buy somewhere like SE Aurora (which was at least a 60 minute commute to Downtown in pre-covid times). It depends on the economic fallout of shutdowns and graciousness of landlords, but my crystal ball says rent prices seem likely to go down over the next year while home prices stay relatively stable.

You're right that it's easy to find good roommates. Denver is full of young professionals who'd rather have roommates than live and buy a house wherever they came from. You still have to have a good read on people, but anecdotally speaking, I'd say it's pretty common for people to find good roommates even on craigslist. When I was renting in Denver, I found houseshares via craigslist twice with good results both times.

That said, buying your first home with maxed-out qualifications in a brand new place is a huge plunge. I'd be shocked if you could qualify for a loan without knowing your job situation first, and you really should find the job first if for no other reason than you don't want to be stuck with a huge commute. Aside from paying down student debt, your situation in Minnesota won't have any bearing on what you qualify for in Denver, and the lenders won't factor in expected rent income. Your salary, savings, and debt history are what matter to lenders. I'd suggest that you rent a room on month-to-month while you figure out commutes, get a feel for where you want to buy, and find people you trust to be roommates.

Thanks for all the info that helps. Idk I qualified for about $300k under these same circumstances in California and that was pending a job offer out there. It is prettt risky to do this though, but I’d talk to a lender and see what my options would be now (in a year I mean) vs after I was living in Denver for a few months/year.

[BlueAbiqua]

Don't go cheap on the background checks.

[Dreaming of Hawaii]

This sounds a bit risky as you are a first time home buyer. What would happen if you couldn't find good renters for a month or two.? Can you still make the mortgage payments? What is your renter moved out suddenly? Could you still make your mortgage payments?