The house hacking journey doesn’t end when life changes—it evolves. One investor’s third house hack shows how adapting your strategy for family needs can improve returns. This case study reveals how expanding your search radius from Denver to Colorado Springs might be the key to unlocking better investment opportunities in today’s market.

Episode Overview

In this episode, I’m joined by Jeff White and Troy Howell to discuss a client who purchased his third house hack. This time, a turnkey fourplex in Colorado Springs. The discussion tracks the investor’s evolution from a single tenant living in a house hack to a family man with multiple properties, highlighting how life changes and market conditions influenced his strategy. The team breaks down the numbers of this December 2024 purchase, revealing how the investor achieved an impressive 12% cash-on-cash return with minimal upfront investment.

https://youtu.be/mrfDJEJvtio

Timestamps

(00:17) Introduction
(03:03) Transitioning From Denver to Colorado Springs
(07:09) House Hacking Evolution With Growing Family
(11:40) Exploring Tenant Strategies in Colorado Springs
(15:35) Turnkey Property Features and American Appliances
(21:03) Financing Structure and Seller Credit Negotiation
(25:49) Cash Flow Analysis Before and After
(34:28) Adapting Investment Strategy to Market Changes

The Evolution of a House Hacker: From Single to Family Man

The investor’s journey represents the natural progression many house hackers experience as their lives change. Starting as a basement tenant, he bought his first Westminster property and implemented a rent-by-room strategy. Marriage and parenthood changed his housing needs, but his commitment to house hacking remained strong.

“He was my basement tenant, living in the smallest room in the corner, paying $750 a month,” Jeff explains. “I told him about the strategy. He saw me do the strategy… and he’s like, okay, how could I do this too?”

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• The investor began with a rent-by-room strategy in his first two properties while single, then adapted to accommodate his growing family
  
• His third house hack represents a strategic shift to provide private family space while still leveraging the financial benefits of house hacking
  

Jeff emphasizes the importance of flexibility: “The big takeaway is he was flexible. He wasn’t stuck in his ways… So it’s great to become an expert in one strategy to start for any beginner out there. And then you could add strategies as you grow as your investor.”

Why Colorado Springs Made Sense

When searching for his third house hack, the investor initially focused on Denver’s suburbs, looking at areas like Wheat Ridge and Westminster. However, the properties available in his price range typically featured significant deferred maintenance and below-market rents. By expanding his search radius to Colorado Springs, he discovered better quality properties at more favorable price points.

“We transitioned… where could we still do the fourplex, but find a little bit better product? That’s something that’s a little bit more updated,” Jeff explains. “Right down the way, an hour away in Colorado Springs, more inventory to choose from, newer inventory in general down there.”

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• Colorado Springs offered more fourplex inventory at lower price points (typically built in the 1960s-1980s versus 1940s-1960s in Denver)
  
• Cap rates in Colorado Springs ranged from 5-7%, compared to just 4-5% in Denver metro areas
  
• The investor’s work-from-home arrangement (requiring only one day per week in the Denver office) made the location shift feasible
  

Maximizing Seller Credits and Minimal Money Down

The fourplex purchase demonstrates the power of creative negotiation and financing strategies available in today’s market. The investor purchased a $610,000 fully renovated fourplex with just $30,500 out of pocket, utilizing a combination of low down payment financing and seller credits.

“We did a Troy house special here,” Jeff notes, referring to the lender’s strategy for structuring the deal. “We got more seller credits than allowed… the purchase price was 610, appraised for higher, which is always a plus for the buyer.”

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• The investor utilized Fannie Mae’s 5% down conventional loan program for multi-unit properties
  
• Through skillful negotiation, the investor secured $29,500 in seller credits—beyond the standard 3% limit—which covered rate buydowns and provided additional funds for property improvements
  
• The property was purchased at a discount after sitting on the market for 65+ days, demonstrating the value of targeting “seasoned listings”
  

Strategic Management and Impressive Returns

The investor implemented several smart strategies to maximize cash flow from day one. By pre-leasing the vacant units before closing, he ensured immediate income and a smoother transition into ownership.

“This is like one of the best cap rates I’ve seen in a multi for a while,” Jeff remarks about the 8% cap rate achieved on the property.

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• The investor is paying approximately $1,000 per month to live in one unit while renting out the other three
  
• Upon moving out, the property is projected to generate $600 monthly cash flow ($7,000 annually)
  
• The fully leased property will deliver a 12% cash-on-cash return with an 8% cap rate
  

Troy highlights another advantage: “He’s going in with fresh appliances, flooring, paint… The roof has been taken care of. It’s got a fresh property. It’s not going to have major issues.”

This case study demonstrates how house hackers can adapt their strategies as both life circumstances and market conditions evolve. By remaining flexible about both strategy and location, investors can continue to build wealth even as their personal needs change. The investor’s journey from basement tenant to owner of three house hack properties showcases the potential for long-term success in real estate investing when approached with adaptability and strategic thinking. Whether you’re just starting or looking to expand your portfolio, consider how expanding your search radius might unlock better opportunities. As this investor proved, sometimes the best deals are just an hour away.

Connect with our Guests

Troy Howell: troy.howell@novahomeloans.com

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• LinkedIn: Troy Howell
  

Jeff White: Jeff@envisionrea.com

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• LinkedIn: Jeff White
  

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