My guest today is Ben Einspahr who our regular listeners will recognize as the co-host of the “House Hacking Masterminds” podcast. He previously joined me to talk about his first house hack, a three bedroom two bathroom home with a mother-in-law suite over the garage in Arvada. Recently, he and his wife Alyson closed on their second house hack, a new build townhome in Wheat Ridge. We sat down to discuss what the process of transitioning house hacks looks like and to go through the numbers on his new house.
- Listen to the podcast “#285: Transitioning from First to Second House Hack” on the Denver Real Estate Investing Podcast
- Watch the YouTube video (at the bottom.)
- Read the blog post. Note, the blog is an executive summary. Get the in-depth breakdown from the podcast or video.
Adjusting House Hack Plans for a Changing World
Ben and Alyson bought their 1960s Arvada home with the intention of renting out the one bedroom one bathroom mother-in-law suite to short term renters via Airbnb. This plan worked well until the pandemic hit in March 2020 and people stopped traveling. Realizing they needed to make a transition in order to salvage their business, they shifted to medium term rentals, 30 days or more, focused primarily on traveling nurses. They managed to keep their occupancy rate at 89% and learned some of the benefits of medium term rentals, such as quieter tenants who keep opposite work schedules as them.
Once they stabilized their Arvada home, they decided they were ready to find their second house hack. While the focus on their first house hack was maximizing income, their priorities shifted the second time around. Alyson is pregnant with their first child, so now privacy is their main concern. Our agents Preston Newberry and Walker Noon helped Ben and Alyson find a new build townhome in Wheat Ridge that fit all of their criteria: it has a well-sized studio to rent out that is separated from the rest of the home.
Finding the Perfect House Hack for New Priorities
Their original plan for their second house hack didn’t include a townhouse or a new build, but the competition for existing inventory in the current market is tough. Preston and Walker convinced Ben to take a look at the townhome, even though the pictures weren’t great and it had been on the market for a month. Once Ben walked inside, however, he knew he’d found the one. Since everything was brand new, there would be no electrical or plumbing issues to deal with unlike their first home, and the first floor studio has its own private entrance, ideal for Airbnb renters. The second floor of the home contains the main living area and kitchen, and the third floor has the bedrooms, complete with two master suites.
Ben and Alyson closed on the townhouse and got to work preparing the studio apartment and getting renters in place for their Arvada home. To make the studio more attractive to short term renters, they spent $5K on furnishings. The main expense came from a $3K Murphy bed, which looks great and makes the space more versatile. They were fortunate to find renters for the main house in Arvada who not only didn’t mind having Airbnb guests, but who also wanted to put down roots and signed a two year lease. Currently, they are making about $1400 a month from the mother-in-law suite and $2100 from the main house every month.
Looking at the Numbers
Now that they are settled into their new home, we can see what the numbers will look like when they’re house hacking and when they move and rent out the main living area in addition to the studio.
Rental Property Spreadsheet With Property as House Hack
Rental Property Spreadsheet With Property as Rental
After they move out of the townhouse, they plan on renting out the main living space as one long term lease and transitioning the studio from a short term to medium term rental. Medium term rentals will bring in a little less income, but the tradeoff is that there will be less work for Ben and Alyson. Short term rentals turn over more consistently and require cleaning and laundry after each stay, which is more difficult to coordinate when they live off-site.
Monthly Operating Expenses With Property as House Hack
Monthly Operating Expenses With Property as Rental
There is an HOA for their small community that covers landscaping, mowing, and snow removal. Because the entire community consists of only six townhouses, the owners have discussed taking on some of these responsibilities themselves to shore up their HOA reserves.
The new build townhouse is equipped with brand new, energy efficient appliances and doesn’t have any grass, so Ben is expecting fairly low utilities bills. This is a nice change from his older Arvada home that was less efficient and had a yard that required constant watering.
First Year Returns With Property as House Hack
First Year Returns With Property as Rental
While Ben and Alyson are living in the townhouse, their entire monthly expenses will be $1500. Without house hacking, it would be impossible to live in a new home in that area for so little. While some people think of house hacking as just living for free, it’s also a good tool to cut down expenses and build wealth for the future. Ben and Alyson are setting themselves up to have two great, income-generating properties.
Ben’s Advice for Wannabe House Hackers and Couples
Now that Ben has successfully transitioned from his first to his second house hack, he has some advice for others interested in the process. Being flexible and realizing that situations and priorities will change is key. No one planned for a pandemic, but once it hit, he and Alyson realized they had to rethink their business plan. Now that they are expecting their first child, they are realizing that the things most important to them are changing, so their plans are changing, too. He recommends not just looking at your bottom line but focusing on the big picture, too. He didn’t allow any time between closing on the new house and renting out the old one which caused a lot of unnecessary stress. If he could do it again, he’d give himself a week or two to take things at a slower pace, even though it would mean less income for a couple weeks.
Most importantly for house hacking couples is working as a team. Ben and Alyson have different strengths, so they assign themselves roles based on each person’s abilities. Ben sees Alyson as the CEO of their business: great at executing, paying attention to details, communication, and responsiveness. Ben is more of the CFO: he looks at numbers and is in charge of financials. By being clear about who is doing what, nothing is left undone and no one is blaming the other for not taking care of something. They treat each other as part of a team, and that’s why they’ve been so successful.
Connect With Ben Einspahr
If you’d like to connect with Ben, reach out to him via phone or email. He loves to network and learn from others and finds that he learns about himself when he talks to others.
- Active Local House Hacker (currently on HH#2!) and Short Term and Medium Term Rental Coach
- STR and MTR 1 Hour Coaching Secession
- Airbnb – Arvada Mother-in-Law
- Airbnb – Wheat Ridge Town House
Ultimate House Hacking Guide and Book
In addition to the House Hack Mastermind, we launched the Ultimate House Hacking Guide which provides a detailed, specific action plan on how to buy house hacks and build a rental portfolio in Denver.
If online learning isn’t your thing, the guide is also available in book form on Amazon.