Is it possible to achieve financial freedom in just two years? If you ask this week’s guest, it certainly is!
In this episode, Ian is joined by fellow-Fi Team member Orion Enfield. With his investor mindset, strong financial analysis skills, and burning passion for real estate, Orion “house-hacked” his way into the life of his dreams.
College students, aspiring real estate investors, and disillusioned renters will find this episode both interesting and inspiring. Join us and learn how house-hacking can change your life too!
PODCAST HIGHLIGHTS:
[00:08] Orion’s Café Recommendation “Radiates” Pinterest Vibes
[02:47] How Orion Found His Way to Denver
[11:51] From Investment Analysis to Real Estate: Orion Shifts Careers
[13:22] Commercial vs. Residential Real Estate: What Ties Them Together
[16:06] Fresh Out of College, Orion Secures His First Property
[19:30] Orion Explains the House Hacking Process
[24:12] Tips on How to Get Your Significant Other on Board With House Hacking
[31:34] Orion “Hacks” His Way Into the Airbnb Scene With His 2nd Property
[34:22] A Strategy to Make Basement Units More Enticing
[37:35] Tips and Thoughts on Optimizing Properties for Airbnb Guests
[44:05] Financially Free in Two Years: How House Hacking Changed Orion’s Life
[52:02] Mortgage Rates, 2023 Predictions, and Leverage Points: Orion Turns the Tables and Interviews Ian
Resources:
Keep in touch! Follow Ian Jimeno and Orion Enfield on social media for more real estate with a dash of lifestyle goodness.
Orion Enfield:
Orion’s Instagram
Email: orion@thefiteam.com
The FI Team:
Ian Jimeno:
Is it possible to achieve financial freedom in just two years? If you ask this week’s guest, it certainly is!
In this episode, Ian is joined by fellow-Fi Team member Orion Enfield. With his investor mindset, strong financial analysis skills, and burning passion for real estate, Orion “house-hacked” his way into the life of his dreams.
College students, aspiring real estate investors, and disillusioned renters will find this episode both interesting and inspiring. Join us and learn how house-hacking can change your life too!
PODCAST HIGHLIGHTS:
[00:08] Orion’s Café Recommendation “Radiates” Pinterest Vibes
[02:47] How Orion Found His Way to Denver
[11:51] From Investment Analysis to Real Estate: Orion Shifts Careers
[13:22] Commercial vs. Residential Real Estate: What Ties Them Together
[16:06] Fresh Out of College, Orion Secures His First Property
[19:30] Orion Explains the House Hacking Process
[24:12] Tips on How to Get Your Significant Other on Board With House Hacking
[31:34] Orion “Hacks” His Way Into the Airbnb Scene With His 2nd Property
[34:22] A Strategy to Make Basement Units More Enticing
[37:35] Tips and Thoughts on Optimizing Properties for Airbnb Guests
[44:05] Financially Free in Two Years: How House Hacking Changed Orion’s Life
[52:02] Mortgage Rates, 2023 Predictions, and Leverage Points: Orion Turns the Tables and Interviews Ian
Resources:
Keep in touch! Follow Ian Jimeno and Orion Enfield on social media for more real estate with a dash of lifestyle goodness.
Orion Enfield:
Orion’s Instagram
Email: orion@thefiteam.com
The FI Team:
Ian Jimeno:
Orion: Welcome to the Invest in Denver Podcast. I'm Orion Enfield, a real estate investor and agent on the FI Team, with Ian here. My favorite coffee spot to go to is Radiator Cafe in Sunnyside, Denver.
Ian: Radiator Cafe, that is a place I've never heard of. No one has brought it up yet, to be honest. What draws you to radiator?
Orion: I got an invite to coffee there, maybe like a couple months back. It's just the most Pinterest-y coffee shop I've ever been to in my life, and I loved it.
Ian: I'll be honest. A lot of these coffee shops, there's only so many minute details that you can get with coffee. I'll be honest. I'm not considered a coffee aficionado or anything like that, but I enjoy coffee. But you can only have some really good coffee, and the only thing that can really set it apart is the ambiance. It's the environment. It's the people there. So, I think you're onto something here where there's a little bit more to the consumption of goods and beverages over there. It's also just the vibe of it, yeah? Is it like maybe a workable place with good Wi-Fi and all that good stuff?
Orion: Yeah, actually, I go there to do some works and bootcamp stuff, some trainings here and there. It's like a super good spot to relax. It's like a 50-50 indoor/outdoor. Then the outdoor space has a super good Wi-Fi. It's like there's some covered spots. There's a pergola situation that has lights underneath it with a bunch of flowers everywhere. It's really cool.
Ian: It screams Pinterest the more you describe it.
Orion: It screams Pinterest. I got invited there by another agent, actually. She loves that spot, and now it's going to be my go-to coffee spot.
Ian: One last thing. Where is it?
Orion: It's in Sunnyside. I'm trying to remember what the cross streets are. But it's on a little strip of a couple of restaurants, coffee shops and little boutique retail spots. There's a lot of really cute, really small houses around it that are now selling for a lot of money.
Ian: All because of that coffee shop, I bet.
Orion: Yeah, right next to the Highlands.
Ian: So good. Radiator Cafe over in Sunnyside. Orion, thank you so much for even hanging out with me on the Invest in Denver Podcast. There's so much to cover here. I've already had the genuine pleasure of meeting you in person several times now. You're an agent on the FI Team. You're a house hacker and an investor. But we'll get through all those details further on in the interview.
Just really stoked to even hear about your story. Because after hanging out with you for a little bit and seeing how you're managing these house hacks and properties, it just gets me really excited to talk about the nitty gritty details that we weren't able to talk about before. So, really excited about that. But before we talk about present times, I want to talk about how you even came to Denver. Where did you grow up, and maybe a quick series of events that led you to the Denver area?
Orion: Sure. So, I grew up in a small town called Kirkland, Washington. I think it was ranked as the number two fastest growing city in the United States a few years back, because it just blew up really quickly. It turned from this small sort of old town feeling, place was like a lot of small as every kind of houses, like very traditional American to now think like super bougie. Everything is boutique. A sweater costs $500. A meal is like $50, and it's ridiculous.
I lived there my entire life, so I've been there from forever. Then I went to high school there. I graduated, and then I came to Colorado to check out schools. I checked out Metro University of Denver, Boulder, and then CSU in that order. Then CSU, Colorado State University, is the one I fell in love with. It was like a perfect 70-degree day. There's a thousand people on the rec center and on the field playing soccer and baseball and football. I was like, oh my god. I'm in love. Then I took a tour of their business school and ended up applying to go in as — I'm originally a marketing major at Colorado State, and then I ended up graduating with a finance degree.
Ian: Nice. Why Colorado of all places? I mean, did you have family here or friends here already? Did you just like, "I kind of like the state. I'm going to try it"?
Orion: Just the state. I was choosing places that I thought would be similar to Washington as far as like a mix of outdoorsy, the kind of people that you meet. Generally, places that would be similar to what I grew up with but not necessarily the same state that I grew up with. So, I went to California, I went to Oregon, I went to Colorado, and then I was checking out schools all around there. Colorado State is the one that just really hit the mark as far as everything I've said before.
Ian: I dig it. Then you said you were going initially into the marketing side, but you ended up graduating with business administration, investment analysis, all that good stuff. Right?
Orion: Yep.
Ian: What made you even make that switch even from marketing? Me, myself, I graduated as a geologist. That's pretty far from the whole finance industry. So, I'm curious even what those differences are. If someone were to even look at CSU as a college, what would you recommend to them to really check out? Or for those newbies out there, what's good out there?
Orion: Colorado state is really cool. It's kind of centralized amongst a bunch of — it's a really cool college town but centralized to Old Town, Fort Collins. Then everything around it is built around the campus to be supporting to the student environment. There are a ton of restaurants. I think it actually has the most or the second most restaurants per capita, as far as like any college town in the United States. Just going out to eat at really cool places was really fun.
The business school is actually pretty highly ranked amongst other Colorado business schools. So, that was actually a pretty big driving factor for why I went there also. I will say, I didn't go too far down the marketing route. I only took one class and hated it. Then I was also taking my first finance class at the same time. I loved it, so I just made a quick switch. I can speak to the finance and accounting schools. While I didn't like accounting, finance was fantastic. Especially, I did a double concentration in corporate finance and investment analysis. I just sort of really — I was dead set on. Like, I'm going to go down the hedge fund or private equity route right after college. I did. I did everything I possibly could. All of my electives were financed-based, mostly investment-based.
I ran simulated portfolios, as well as a real portfolio as part of Summit Fund, which is a cool program that CSU. You have to apply to be essentially part of a team that invests. I think they're at probably $500,000 right now. You just invest in school's money. So, I was in that first semester. It's sort of a class team, sort of club thing. Then my second semester, senior year, I was actually a managing director so I left that class.
Ian: Interesting. What year did you graduate?
Orion: I graduated in May of 2020. I didn't get a graduation because of COVID. I sort of just walked into real life. I had a job lined up. I was going into being a fund admin at a private equity consulting group. I hated it. I did that for a year. It was essentially just glorified journal entries and accounting, but I thought it'd be my entrance into private equity. Then I switched into commercial real estate a year after being there. I did that for a year before coming onto the FI Team.
Ian: Nice. That's right. There's a little bit of details in there that you skimmed over that I want to address a little bit more just to give that 3D person of Orion Enfield. I saw that you did an internship over in Hong Kong with Computershare, yeah?
Orion: Yeah.
Ian: What made you pull the trigger? The whole China aspect or going across the world — sure, Hong Kong or China in general is the next big country, the big economy. I don't want to say we're neck and neck, but China is definitely growing. The amount of scale compared to the US, for us, 100 years ago, 50 years ago, or something like that, they're becoming a superpower. I guess, what was your experience like working with Computershare? What even made you pull the trigger with them?
Orion: I was looking for an internship at the time. There was actually a built-in internship program that you could apply for at CSU. You have to pay for it. You essentially just pay for the travel and everything, and then you go to wherever. It's an internship abroad program. There were like eight options for places I could go. I thought that Hong Kong would be the most finance heavy, so I chose Hong Kong.
They sort of align you with a company based off of what your studies have been and what your trajectory is looking like. They actually put me with Computershare. It was more administration than anything, like communications, data entry, a lot of the grunt work that is like just not fun stuff. That internship experience actually wasn't very indicative of what I—
Ian: Fruitful, maybe.
Orion: Yeah, fruitful. That was a pretty bad experience as far as the internship goes, but we had tons of time outside of the internship to just explore Hong Kong. I had a good time in Hong Kong just traveling around, getting to know it.
Ian: Maybe it was the travel aspect that you got more out of than the actual work or internship, what you could have gotten out of that business portion of it. Speaking of which, I mean, maybe we could touch on that a little bit more. What was it about China that like — I don't know. Maybe there were certain culture shocks, food. Was there anything in particular that you really enjoyed about staying there for a couple months?
Orion: Yeah, I would say the thing that struck me the most was the transportation and the infrastructure. It was just so much different than the United States. We were taking the subway everywhere, like absolutely everywhere. Nothing was not on the subway. Then the infrastructure, you would go into a 20-storey, 30-storey, 40-storey skyscraper, and then there would be — just the mall is on storeys 17 through 28.
Ian: No way.
Orion: Yeah, you would never know. Because on the first nine floors, it's like a supermarket, and then businesses, and then residential. It's like, what? What is going on here? But you have access to floors 17 through 28. That's the mall, and you'd go shopping at just standard Nike.
Ian: That is so interesting. I realized, too, that there's maybe just not enough room to go outwards so they have to build up. So, your malls have to go in the middle of these skyscrapers. It sounds crazy to me. Then you were mentioning too, going from the investment analysis portfolio, managing portfolios even for your school, that sounds like such an interesting group. You were mentioning that you were going into the commercial real estate space. Was it with Tributary Real Estate from what I gathered?
Orion: Yep.
Ian: What exactly were you doing in that position?
Orion: Sure. Tributary Real Estate is a tenant rep brokerage. Think of your standard real estate agent for residential just getting people in the houses. On the commercial side, they were getting people into offices. Think like if Google needs five storeys somewhere centralized downtown, but they want to be by a bunch of restaurants, we would essentially be the brokers for Google to get office space downtown instead of a traditional buyer getting a house. Then you just make a standard commission on that.
The structure is a little different because it's not a percentage. At the time, it was a 1.25 a square foot. Then multiply that out by the number of years for the lease. If it's like a 10-year lease for 10,000 square feet, you're going to make a $125,000 commission. Then you split that 50-50 with the firm. But at the time, I wasn't a broker. I was actually the one analyst for the office underneath all of the brokers doing all the support tasks. Whenever we get investors or people who are looking to get in commercial real estate in a different avenue than just office leasing, I was like the go-to guy for running analyses for them.
Ian: I see. Then going into the commercial real estate space first before you hop into the residential space, was there any sort of big differences knowing what you know now in the residential space compared to commercial? I know there's a lot of back-end things. It's a lot more cut and dried, especially when people want to invest or analyze certain properties in the commercial space. Hey, if the numbers don't work out, I am not purchasing this property versus residential, and maybe a little bit more emotional. Is that something you also saw, or what else did you see within the commercial space?
Orion: Absolutely. I think you're totally 100% right. I have a tough time actually seeing things from more of an emotional lens. The commercial real estate side seemed to be a better fit for me originally, because I look at properties as an income source and an investment avenue. I figured that was the route.
But taking that into residential real estate was actually probably — it was probably good to go down that route first because I got really good at analyzing properties. I got really comfortable with the numbers. Now when I'm analyzing properties, just say on the MLS for either buyers or for myself, it's super simple for me to tell if something is a good deal right away based off of just basic math, like simple numbers that I'm seeing myself, market data.
I will say I have a lot more fun with residential which is why I love commercial. I don't see necessarily houses as like a home. I do look at them from the investment side. That sort of drove my want to join the FI Team as opposed to another brokerage.
Ian: I dig it. Spoiler alert, Orion is on the FI Team.
Orion: I am on the FI Team.
Ian: Honestly, it's funny. You coming into the commercial space, and then leaving to go into residential but you still have that commercial mindset of analyzing properties, investing and things like that. It's funny how many people we work with that have that investor mindset that would be great for commercial space, but they need a place to live as well. Residential is so necessary for the common person in America. You need shelter. It's one of the three basic things of living — water, food, shelter.
With that shelter, with that being a general necessity for humans to live, why not mitigate that expense as much as possible? I guess, before we get into that whole specific portion of it, I'm curious what that transition was like going from commercial and going into residential. It sounds like maybe you even got your first house hack while you were with Tributary or maybe a little bit after. What was that timeline like?
Orion: We can go back a little bit. Right after graduating college, I had lined up my job in private equity admin. Essentially, I was making 55k. I had already come across Bigger Pockets and sort of fell in love with the concepts during my senior year of college. I was thinking to myself, like, okay, I just have to save up some money and get that 3% to 5% down payment on my first house hack.
I ran out of patience at some point. Then I asked my dad if he would go on it with me. He lended me some money. Then I had about 15 grand in my own saved up. Then I think it was about four months after graduating college and being four months into my first job, I went and met Craig Curelop, the leader of the FI Team, and bought a house within a few days of meeting him actually. At least, I went under contract on a house within a few days of meeting him. I think it was at his first meetup ever actually.
Ian: Oh, no way. Heck yeah. What year was that at the time?
Orion: I graduated May 2020, and then I closed on the house October of 2020. I think meeting him like four months after graduating in September and then closed within 30 days. October was when I closed.
Ian: I wasn't around as a real estate agent in 2020. But what was the market like then compared to what it's like right now? I guess, to brief everyone how it is right now, if you haven't heard already, the sky is falling. No, just kidding. Mortgage rates are pretty high compared to what we've seen in the past couple years. There's a little bit more supply. Things are staying in the market a little bit longer than usual. Let's say, like 30 days versus what we were so used to when I first started back in 2021, where it was maybe 14 to 10 days on the market. That's about the average in the greater Metro Denver area. When you were purchasing in late 2020, was it kind of similar? What was the market like at that time?
Orion: I think the average days on market was seven. Things were flying off the shelves. Any good properties were getting scooped up immediately. We'd taken a small downturn because of the start of COVID. But then, things ramped up really quickly once people sort of got the hang of it and got used to COVID a little bit. Then I was sort of in that ramp up period again. Things tanked for a few months after COVID started, and then things started blowing up again.
Because you can think of like the 20% annualized year over year appreciation that we saw. That was very much happening. I was right in the middle of it, and then I just happened to be fortunate enough to not buy at the tail end of that rapid appreciation. I was right in the middle. Still, I bought my house at 510. Then I think at the peak of the market, I had it appraised actually. It appraised at 720.
Ian: Nice. I love to see it, man. It's the whole, "Don't wait to buy real estate. Buy a real estate and wait." That whole appreciation is a big factor. You can't really factor it into your analysis or anything like that, but you know it's sort of working in the background to your advantage. It's nice to know that you had that same mentality. Like, "Hey, this stuff works. I'm looking to house hack." I guess, before I continue on that thought, do you mind explaining what house hacking is and maybe what you did for house hacking with this first property that you bought?
Orion: Sure. House hacking is when you buy a house with probably a low percent down payment. If you're a first-time homebuyer, it's probably 3%. So, you buy a house for 3% down. You live in one space, and then you rent out the rest. So, you could either buy a duplex. You live in one half and rent out the other.
What I did was I rented out all the bedrooms, except for the bedroom that I was living in. I originally started off actually just living in the living room, and then renting out all the bedrooms separately. So, I was pulling the Craig Curelop and living behind the curtain but minus the curtain, and renting out all the bedrooms to live for free and cashflow a little bit. Then my girlfriend moved in after she graduated a few months later. Then we took the master bedroom and rented out all the bedrooms, the other bedrooms. At that point, we're just breakeven, like cover the mortgage, cover the utilities. Girlfriend and I are both living for free.
Ian: What's great is that you own the place. Now you have the master bedroom. You're renting out all the other bedrooms, and you're living for free. For a lot of people that are, I guess, first purchasing a home, that's the biggest expense. Your mortgage is like 30% to 50% of your paycheck. That's insane to me.
How do you even level up your own financial security if you're paying or dedicating so much of your income just to living expenses? I don't understand that. But I guess, what initially really triggered that for you? Was Taylor onboard? Taylor, being your significant other, was she on board at first? What was that like as far as transitioning?
Orion: Very supportive but not necessarily into the concept herself. I was definitely the driving force. So, I bought the house before she had graduated college. The plan was, she would graduate and either just find a place to rent. But the likelihood was going to be that she was going to move in with me, because we've been together for three years at that point.
The idea was that she was going to move in, and then we'd live together in the master bedroom or wherever in that house for as long as necessary, and then buy the next house hack because it would be close to that one-year mark where you can own or occupy, purchase another property.
The stipulation for, anybody who doesn't know, is you can buy with 3% to 5% down on an owner-occupied property. If you're house hacking, you can put $15,000 down on a $500,000 house, move in, rent out all the bedrooms, live for free for one year. Then the idea is to, after that one year, on the dot, buy another house and do it again. That way you can rent out the bedroom that you were in, cash flow whatever that number is, and then you're living at a new place where you're living for free again. Then that's how it scales. It's property by property, year over year as a baseline. It's how you build up a cash flow and portfolio.
Ian: Love it, dude. That's great synopsis of what people should do in general, this stuff that we're trying to educate the population of even in Denver or even nationwide. You could do this anywhere. To be honest, I did it at a high cost of living area like San Diego. People are like, "Whoa, you can't buy a house there." Yeah, I did. This is literally what I did. Now I'm seeing the benefits like what you did with the appreciation factor of it, like with general markets and the sentiment, and people wanting to live in these areas that are beautiful like Denver or San Diego.
That appreciation comes up because the demand is really high as well. People are willing to pay that extra premium to live in a place like that. So, rents go up. Appreciation goes up. Hopefully, we don't have COVID 2.0. But nonetheless, this is all situations where this is tried and true. So many people have been doing this even before house hacking was even considered a buzz term at the time.
But nonetheless, man, I'm really glad that you even started it. I guess, for those people, it sounded like that you weren't — I guess, it sounds like that you didn't have really a problem with Taylor understanding the house hacking thought process or things like that. Sure, you moved a little bit further from that continuum of comfortability versus profitability. You moved a little bit more towards comfortability now that you have the master bedroom. But that's usually when you have another person coming to play with this investing, you can't live on the living room anymore. You know what I mean?
Orion: Yeah, exactly.
Ian: With those people that have that significant other, I guess, what would you recommend to them if they're trying to convince their significant other to do this whole house hacking thing, live with tenants, and all that good stuff? Any words of advice for starting that conversation?
Orion: Depending on where you are, I would say, try to buy a property that has the ability to create multiple units. It doesn't necessarily have to be a functioning legal-zoned duplex but something that you can split up, say with like a mother-in-law suite or a separate entrance where you could simply just add a wall or a door, and it's essentially two units.
That's a super easy pitch. Because you can tell your partner, like, hey, we're not going to have to deal face to face with any other tenants or roommates. We don't have to live with roommates anymore. We're going to have an entire unit to ourselves. I will take care of all the management if you don't want to do anything, and we're both going to live for free. You don't have to pay rent. I don't have to pay rent. We don't have to pay a mortgage. Then even if that was it and we just bought this one property, after 30 years, if we own it outright — just make our payments and never refinance — we're going to own a house outright in 30 years and have never pay a mortgage payment or rent ever.
Ian: It's so good.
Orion: And never have to have roommates again either.
Ian: Yeah, it's funny how — I know you're a little bit younger than me. I'm 33. Here I am doing my third house hack. I'm starting to get to the point where I don't want to do this anymore, the whole house hacking thing. There's some sort of comfortability portion of it. Now, okay, I'm getting some more income from my previous properties now. Now I can invest that money with actual investment property rather than on my next house hack. So, I don't have to deal with anyone living with me or anything like that.
I'm at that point, that cusp, where it's like, okay, now I can live how I want but I can use that money or capital that I'm getting from my previous properties — the refinance, HELOCs, cash flow, what have you — to actually invest in a place where I don't have to make myself super uncomfortable, especially if I'm trying to start a family. So, that makes a lot of sense going forward. Make the sacrifices now in your 20s to live the life you want in your 30s. It makes a lot of sense. You're living proof of it, too, Orion.
Orion: I hate to ask a question already. But are you stopping house hacking entirely, or would you just buy a different kind of house hack? Say, like something with a detached ADU so it just acts as its own separate rental property.
Ian: Totally. That's a good question. Yes to your situation. Let's say, I think the biggest thing is like where do we want to live. If it's in an area that we actually want to be in, let's say, it is in the city of Denver, and there's a way to have a side-by-side duplex rather than an up-down where you have to deal with footsteps or something like that, because they're older homes in city of Denver. You know what I mean? So, there's a lot of things that now I'm a realtor, now that I've house hacked a couple times, I have some standards at which I want to live in.
I'm fine with it. I think the biggest thing is how separate is that going to be, and I'm leaning more towards the comfortability part of that house hacking spectrum. So, if the numbers work out, and it's in a place that we want to live in, then I will 100% go for it.
Orion: Yeah, I was just curious because you've seen my place. My place is essentially a side-by-side duplex, where there's an attached unit on the back, not under me. If you wanted to, you could buy a house like that and never have to deal with them. You'll never hear them. They won't ever hear you. You'll never crossed paths. All you do is you'd like they have their separate driveway. I was just curious if you'll go that route, or if you're just done.
Ian: Yeah, it's something that I will be open to it. If I find the right property and all that good stuff, it makes total sense to me.
Orion: For sure.
Ian: I guess, you're alluding to your second house hack, which is the one you've purchased pretty recently. But I guess, to give a quick summary of the numbers behind your first house hack, how many beds, how many baths? What are you operating it as right now? Is it cash flowing? What's the mortgage like versus rent?
Orion: Sure. Gross rent between five bedrooms — it's a five-bed, four bath, or, it's a five-bed, three-and-a-half bath. The master bedroom has its own bathroom. Then there's two upstairs bedrooms that share a bathroom, and then there's two basement bedrooms that share a bathroom. Then there's a middle floor that has a half bath, sort of like the on-the-go bathroom by the kitchen and living room and everything.
I rent out all five bedrooms — three upstairs, and then two in the basement — for a gross income, cumulative income of $4,370. Then the mortgage payment is $2,700 on the dot. That's including PMI, which is that extra insurance payment if you made less than 20% down. So, $4,370 income, $2,700 mortgage. Round out the utilities at like $500 a month. The monthly expenses combined are like $3,200. Set aside a little bit for reserves. But if you're just taking just straight up the gross rents minus just the flat expenses, we're coming out to — let's see, 4,378 minus 3,200 is 1,170 — $1,170 of cash flow before reserves.
Then after reserves, if you take out like $400 a month, it'd be like $770. Roughly, $800. $770 to $800 of cash flow after not living there. That's having all of the bedrooms rented out, with me hitting the road to house hack number two.
Ian: I dig it, man. I followed along with my paper math. You're great at mental math. That's why you got those analyst positions. But yeah, man, even those numbers, even without the reserve portion of it — because that extra $400 is just like a cushion for you to take care of any sort of water heaters, roof leaks, what have you. With the hard expenses that you have to have every month, you're still coming out with almost $1,200 per month on that single property now that you moved out.
If you look at that cash-on-cash return, you're looking at what? $15,000 of your own money. You partnered up with your dad. Looking at that $15,000, over the course of one year, that's almost 100% year over year, cash-on-cash return. It's kind of insane, man. Not many people can actually get that kind of asset returns in the stock market or maybe with call and put options. But it's no joke how much benefits you can get with the whole real estate space with tax benefits, the loan pay down, getting tenants in there. You're running a business.
I think that's something that people don't really take into account, too. You're learning how to run a business in your own home. So, it's very close to home, and you're understanding how this all works. You can translate that into other ventures that you're trying to do in the meantime. I love it, man. I love the numbers on this.
Orion: Thanks, man.
Ian: With this next property, I know it's over in the Cheryl Wood area because we actually did a YouTube video on it. We went through the whole place. It's a six-bed, three-bath. It's three units on one property. I only heard very certain snippets of it from Craig where he was trying to buy the property as well, but he was seeing some things are wishy washy. He got cold feet on the property. But you took advantage of it and got this property.
This is a story I haven't heard myself. But before we get into that story of why Craig didn't pull the trigger, tell us a little bit about the property. For people that want to get an in-depth look, there's a YouTube video on it. Send me a DM or write a comment below, and I'll send it over to you. With that being said, Orion, what is the property, and how are you operating it right now?
Orion: Quick clarification. He didn't go for the same property. He was going for a property about two blocks away, similar structure. I think it was also a six-bed, three-bath. Almost identical. He was going to do the exact same thing, where he was going to turn it into essentially a triplex. Because of foundation issues, it turned into a crapshoot for him. He had to get out of that deal. So, his was just a couple blocks away. It didn't work out. But this one worked out how he was planning, so far.
Ian: Thanks for that clarification. I thought you guys were fighting, jousting for that position of the place.
Orion: That'd be hilarious. But about the property. Okay. Six bed, three baths, 3,000 square feet. Let's see. It's in Cheryl Wood, so about 10 minutes north of downtown Denver just I-25. Then if you get off I-25 on the left, just go a couple blocks, and that's my house.
It is a four-bed, two-bath single family house with an attached two-bed, one-bath apartment. That used to be a gunsmithing shop, but the old owner was really DIY. He put in like an Ikea kitchen, turned the open space into a couple bedrooms and a living space. Now it's a two-bed, one-bath, 1,000-square-foot apartment that he was renting out. Essentially, a duplex operating as a duplex from day one.
But then, as I was walking in, I realized it'd be super easy to turn the basement of the main house — the four-bed, two bath — into a separate unit. Because all you'd have to do is put up one quick wall between the garage entry and then the main unit. Then boom, it's a separate unit. People can go into the garage and straight down into the basement, and it's a two-bed, one-bath but no kitchen. I put in a little mini fridge kitchenette situation because it's an Airbnb, but no full kitchen down there. On the property, two kitchens amongst total of six-bed, three-bath house.
Ian: Awesome. A lot of people have their reservations with basements. With Coloradans, you can see some really decked out basements or just some basements that are just used for storage, where it's not finished, you don't have much drywall, not much insulation or things like that.
But I guess, explain to the people out there who haven't seen the video, because you should definitely check out the video. For those people that don't know exactly what a good furnished and finished basement looks like, how do you make it not feel like a basement?
Orion: Do get the egress windows. For people who don't know, egress windows are escapable windows. In basements, you'll often see at the ceiling line, there's a small cutout of just a little bit of light in, maybe a little bit of air. There's like a sliding window. Tiny, can't escape that at all, not something legally escapable. But egress windows are when they dig out a certain dimension of window where you can, from a bedroom or from the living room, crawl out in a ladder and escape in case of a fire.
Adding those windows lets in a ton of light. It makes it no longer feel like a basement at all. It's just like an extra living space in a regular house. What I did was I added egress windows to the two bedrooms downstairs that didn't have windows before. Now it just doesn't feel like a basement. I furnished it with beds and couches and made it just a whole separate living space. It feels like a small apartment.
Ian: Love it, man. Also, just the living area as well, the living room portion of it, you got a TV. Like you said, you got a mini fridge. You got a microwave, everything that — it almost operates as a hotel, but it feels like a home. You just have these smaller accommodations that accommodate like a hotel. But you're going into your own space. You got your own two bedrooms down there, and then you also have your own bathroom as well. So, it's nice that, I guess, that whole hotel versus Airbnb situation, a lot of people are leaning towards the Airbnb because it just feels like a home.
Having this basement feel like a home, you can charge that premium. You can have people be a little bit more accommodating towards, or not accommodating but I guess accepting of a basement rental versus charging a little bit more for something that's on surface level. So, you're still trying to make the most out of your property, but it's not like you're getting people into a dungeon. You know what I mean? I like that aspect of it.
Orion: Yeah, I would hate putting people into a dungeon. I wanted to make sure that it was good from day one. So, it feels really nice. As soon as you go downstairs, it's as bright as all hell. You walk in, and as long as it's daytime, it just looks like just any ground-level apartment.
Ian: Cool. Then that transformation — going from the gunsmithing shop to two units operating as an Airbnb while you live on the property as well. I guess, as far as units go, I know each of them is a two-one and a two-one. Was there anything that you've done to the property that, I guess, made it available to operate as an Airbnb in all regards?
Orion: I mean, you could even have an Airbnb where there isn't like their own private entrance. But what I wanted to do was make sure that all the units had a private entrance, had security. So, there's multiple Ring doorbells and Ring cameras, multiple keypad entries, a keypad entry for every unit, and then separating things with walls or doors to make sure that each unit is completely separate, and nobody's going to have to cross paths with each other.
Then on top of that, making sure that there's enough parking and designated parking for each unit. So, there's a two-car garage in the front that my girlfriend and I park in. We have the main unit here. There is a driveway with two spots coming out from that garage. Then off to the side is like a long driveway that leads to that attached back apartment, like the fully finished one with the kitchen. Then there's tons of street parking also in front of our house just in front of the front yard. There's really designated two spots for street parking, where people can park for the the basement unit is what I designate it. Garage spot is for me and my girlfriend, side driveway for the attached department, and then street parking for the basement unit.
Ian: Yeah, I was curious about that, too. With all these people living in your place, where do they park? But it does seem like there's ample street parking when I was driving by there. You have a long driveway as well, which really helps out with that.
Something that I'm thinking about too, and I have to deal with this on my own property is like a carport. Because I don't have a garage for even my own cars. So, having that longer driveway, I'm considering of putting in more carport just to have that blockage from the elements — whether that's from the sun, wind, rain, hail, snow. Is that something that you've thought about as well, or are you sort of leaving it be until you actually fill out your Airbnb spots?
Orion: I'm leaving it be for now. The parking hasn't caused any issues so far. I haven't done Airbnb through snowy Colorado weather yet. So, we'll see how that goes especially as people, they're probably going to be coming in during the winter months for skiing because we're pretty close to the mountains.
So, we'll probably have to put a carport over that side driveway eventually. But the street parking is always going to be street parking, so I can't do anything there. But it is funny that you mentioned that. Parking is one of the top three things I look for when I'm looking at properties.
Ian: Yeah, it's something that not many people really take advantage of, or at least not take advantage of but really keep that in mind. It's like, wow, this is a great setup, but there's only street parking. That's something that you definitely have to take into consideration.
With that being said, the place itself is an awesome place. Definitely check out the YouTube video, like I said, because Orion goes through each and every part of it. There's even some minute details that might help you in your next house hack with our own tour, as far as like putting up doors, what the binders say as far as like the guest check in and all that good stuff. There are some really good details for setting up your own Airbnb in your house hack. But with that being said, Orion, what are the numbers behind it? I know you mentioned on your first one, you had some really solid numbers. But what do you remember from this current house hack that you're doing?
Orion: Sure. The strategy on this one is, it's a live-in house hack. So, I'm living in one unit with my girlfriend, and the other two units are both on Airbnb. The numbers come out to be roughly gross revenue. So, cumulative income of $4,500 a month between the two Airbnbs. That's assuming a combined $200 a night at roughly 21, 22 days a month booked. So, 70%. At 70% occupancy, $200 a night between the units, it comes out to about $4,500 gross revenue. The monthly mortgage is $3,365, and then the utilities are coming out to roughly about $400 to $500 a month. The combined expenses are $3,865. The gross income is $4,500. So, that means the net income is $600— you could tell me. You're doing it. You're doing the paper math. It's $600 and something.
Ian: Yep, just about $700 on the highest 600 side for sure. That's amazing. Even with your current deal, you're living for free, and you are cash flowing a little bit on it. Then having your first investment property now fully rented out, sure, you might have some vacancies in the middle of it. But with expenses and cap or reserves also tacked on, you're looking at $700 to $800 from cash flow on that property.
It's nice just having this cushion and also saving so much money from living for free. A lot of people forget that there's that aspect of it. Sure, you might try to cash flow, but the biggest part of it is not having to pay that full mortgage every single month. Because with these interest rates, that's the biggest thing. You don't really want to pay that full $3,000, $3,500 per month. How do you do that by renting out certain rooms, or just living a little bit more uncomfortable so you can hit that profitable stage in your early investing career?
I love it, man. I guess, the final phase, which is where you are currently, is you're a current agent on the FI Team. Yeah, let's go. I know, with a lot of people on the FI Team, they've been house hacking or just started house hacking. They want to help other people do the same thing. It's astonishing how many people just don't understand how this works.
I want to say that it's a necessity, in order to join the FI Team, to have an investment property already. Whether that is a house hack or something out of state, it doesn't matter. You need to help out investors with that mindset. In order to do that, you need to do it yourself. So, you've gone through the process already and all that good stuff. What's your experience been like, Orion? Why did you even choose the FI Team in the first place?
Orion: Sure. House hacking, I'll just say, has changed my life since graduating college and getting into a career path that I absolutely hated. Buying one house, that allowed me the freedom to quit that job and take three months off and look for the next one and decide what I want to do. That got me down the path to commercial real estate. I was like, okay, this whole combination of real estate and finance, my experience and my passion seem okay.
Then buying my second house hack gave me the freedom to leave that job and leave the W2 life entirely. After two properties, I'm financially independent. Baseline, it covered my living expenses. I don't pay rent, and I have about $2,000 a month of cash flow coming in to pay off all of the bills and everything, all the necessities. I'm baseline financially independent. Two properties have changed my life entirely. It's just been insane.
I'm 24 years old. I'm out of the W2 life. I have committed to the 1099 life for the rest of my life. All I want to do is help other people get more house hacks or get into their first house hack. I've talked to you about potentially going to colleges around Colorado and talking to juniors and seniors who are going to graduate and get into this W2 lifestyle. I know a lot of people just default to that, because that's just what they've been told by their parents. That's all we've seen.
But just buying one house hack gave me the freedom to quit a job and a career path that I hate. I just want to help other people at least have the freedom to have some choice in their life. Maybe they're not in a career path that they hate, but maybe they have something in mind that's better. Like, oh my gosh, I would love to do that. But how the heck could I leave a job that's paying $70,000 a year? That one is going to pay $30,000 a year? House hack. Never pay rent again. Never pay a mortgage again and save. Then even just with one house hack, it just gives you so much freedom.
Ian: Yeah, dude. That's huge. I'm starting to realize more and more how much people pay in rent. Let's say, for a typical two-bedroom, one-bath and whatever general area, let's say it is $2,000 a month. $2,000 a month for the year is $24,000. If you're getting paid $50,000 right out of college, that is half of your income. That is even before taxes. There's so much to consider with all this stuff.
Let's say, you are renting right now. There are still options for you to still live a little bit more uncomfortably by renting out the other bedroom. Just live as minimally as possible, and you're setting yourself up for success for the 10 years, even 5 years, even 3 years down the road, where you're like, "Wow. I thank you so much past Ian for even doing this. I would have never assumed that I would have gotten to this place in the first place."
I find it to be generally awesome, the whole house hacking thing. I'm trying to teach my little cousins too of, like, hey, you guys are already used to renting by the room in some place that someone else owns. Why not own the place and keep that same standard of living — living frugally, renting out the rooms? Now you can get the loan pay down. You can get the tax benefits, and you can ride the wave of appreciation at the same time too.
With all that being said, too, Orion, I know you're trying to gear yourself towards that ideal client of college students fresh out of college. Sure, they're starting with their W2 or getting that salary. But how are you actually implementing that? What do you foresee yourself really speaking to?
Orion: Sure. Coming to a college near you, I will be starting meetups around Colorado just talking to just anybody who would be willing to come. It's geared towards seniors in college. So, I'm going to be hosting meetups at, say, like breweries and bars, where people can come and learn about house hacking and how to live for free right after they graduate. But if anybody in that college town wants to come, I'd love to talk to anybody who's interested in house hacking. I'm sorry, Ian. Could you repeat the question? I feel like I'm not answering it.
Ian: No, that's pretty much it. How are you really speaking to these people, or how are you attracting them? Because you're a new agent. That's the biggest thing of starting your whole lead funnel, right? Your lead generation, how many people can you get into that funnel? The amount of people that you help close with house hacks is directly proportional to how many people you get into the lead funnel, right? I mean, you pretty much answered it. But is there anything else you wanted to speak on as far as coming to a college near you? I got to meet them.
Orion: No, that's pretty much it. I'm not a cold caller, I'm not a door knocker. I don't want to honestly just waste my time with buyers that aren't going to be interested in real estate investing as a concept. Like I said, I'm not much of an emotional buyer myself. The people I want to help are people like me, who see real estate as an avenue of investment even if it's just as like a baseline living for free right after college and not paying rent anymore. Like you said, instead of paying $2,000 a month for rent and paying accumulative $24,000 over the course of a year to live somewhere, what could you do with that extra $24,000? Invest it in more house hacks or invest it in your 401k. You could just spend that on your living expenses and make life amazing for you just by having one property under your belt and living for free.
I will say, the benefits just greatly outweigh the sacrifice that you're making by either living with roommates or playing a small role as a landlord and managing something for like an hour a month. If you live in a duplex, you're not going to come across your tenants at all. But you're going to be living free, if not really close to free, and saving at least $24,000 a year. Then on top of that, you're writing appreciation. If you assume like 3% appreciation standard on a $500,000 house, that's an extra $15,000 a year. Then you take into account cash flow, if you're actually cash flowing on your property. Say, that's an extra $5,000 a year.
$15,000 of appreciation, $5,000 bucks of cash flow, $24,000 saved on rent. You're already at $44,000 return on year one. Then you think of your initial investment, which was probably 3% on, let's just hypothetically say, a $500,000 house. $44,000 of income on a $15,000 investment is more than a 200% ROI. I can't think of another investment vehicle that does that and gives you that amount of freedom for your life. It's insane.
Then we're not even taking into account the tax benefits and then the debt pay down. Debt pay down is the one I'm totally spacing on. With every monthly payment that you're making using that rental income, you pay the mortgage, and then you're making an extra $1,000 a month just adding to your net worth. Sure, it's not liquid, but it's adding $12,000 over the course of every year. We're at $56,000. $56,000 annually on a $15,000 investment that you have to manage for one to two hours a month. It's ridiculous.
Ian: 100%, man. I want to say you're preaching to the choir. But at the same time, as a choir boy listening, this is exactly why we got into the game. This is exactly what we want to preach to people. This is so good, man. So good, Orion.
With that being said, I feel like there's so much more to you, but we're running out of time here. But I do want to turn the tables and give you the mic as the interviewer. Orion, I'm going to give you the mic. Is there anything that you want to ask me under the stars? I will be more than willing to answer it.
Orion: Okay, well, you already answered the question about what's next for you to house-hacking wise. So, I'll ask you something about the market. With the interest rates rising, we're like at 7.5% right now. What do you see in 2023? As far as interest rates, do you think they're going to go up? Go down? How do you think that's going to conflict with the low supply that we're still seeing in the market? Do you think that the upwards pressure of low supply and high demand is still going to outweigh the rising interest rates? Or, do you think the rising interest rates and the affordability problems are going to take over and push demand so far down that we start seeing dramatic price decreases?
Ian: Yeah, very valid question and very time sensitive as well. 2023, I do not have that crystal ball just to put in that little asterisk before my whole answer. But at the same time, I have been hearing rumors that Fannie Mae is planning on bringing down the interest rate pretty significantly four-ish percent. I don't know how true that is. But I just saw an article on CNBC and various other platforms where, hey, they're rethinking this whole supply is now — I guess, supply is still going in a linear trend, but demand has significantly dropped almost at a logarithmic scale.
It's pretty significant how much demand dropped just because interest rates rose significantly. It's funny how that sentiment quickly changed buyers, and sellers are trying to accommodate for that. The Fed did exactly what they wanted to do. They wanted to decrease demand while supply was trying to catch up. So, if they were to bring down the interest rates going into 2023, I think it's going to cause another frenzy. Because the supply has not kept up.
Even right now, in my opinion, demand is still really high. Because when we were in the 2020, 2021 phase, or even early 2022, we were in such a hot seller's market. Like on a scale of 1 to 100, we were looking at 95, 90% the whole time. But now with interest rates going that much higher, demand has brought that sentiment down to maybe like 60% to 70%. But in my opinion, it is still a seller's market just based on how much supply is in the market right now.
So, if you look at any sort of Denver market analyses or Denver market trends report or something like that, you're still seeing 30 days on market, which is still really quick compared to like a healthy market where you should be seeing like two to three months on the market. So, that would be like 60 days to 90 days on the market on average in the greater Metro Denver area.
Like I said, I guess, to summarize everything that I've said, if we were to see the interest rates decrease next year, I think we're going to go into a whole another frenzy again. Because supply just hasn't kept up. Supply chain shortages, labor shortages, things like that have just not caught up to the demand yet.
Orion: Awesome. Thanks, man.
Ian: Yeah, for sure. Anything else you got?
Orion: Let's see. I sort of asked both my questions in one, but let's see. Okay. As a new agent on the FI Team, what are you seeing mainly as your primary leverage points for the buyers that you have under your belt right now against when you're making offers to sellers?
Ian: Yeah, for sure. I am asking for anything under the moon. At this point in time, it really does depend on the property, whether its price. Well, if the listing agent is corresponding with me, if they're giving me the time of day, great. I already know that, hey, certain sellers are looking to get rid of the property as soon as possible depending on how long it's been on the market already, the condition of the property as well. But the thing is that certain homes and certain neighborhoods, if they're priced well, they are still selling very quickly, which brings me back to what I said earlier. There's still a really high demand if it's priced appropriately.
Going back to what you were saying or asking of, what am I asking for, what am I leveraging as a buyer agent, common things that a lot of sellers don't necessarily see from a house hacker's point of view is that, yeah, we need egress windows in basements. Those are some really big price points of like, you're saying maybe $4,000 to $5,000 per window. As of right now, windows are pretty expensive. The timeline is pushed back pretty far, like four weeks to six weeks before it actually gets installed. So, that's something I'm constantly asking for if it's not already implemented or installed in the basement.
Water heater is another really good one. Anything that's big-ticket item, I would highly suggest any sort of buyer that's looking to house hack, try to do the work yourself. But any high-ticket item, I will try to negotiate for you at the closing table. I think there's a little bit to be said about, put in some elbow grease, learn the property. The more you uncover, the more you understand, like, okay, this is what a house is like. This is how you actually improve on it.
If everything's already done for you, you're not going to be learning. You're just going to be winning. That's it. So, there's a lot that I could leverage on at the past two or three closings in September and October. We've gotten $5,000 in seller credits, egress windows installed, water heaters replaced, new electrical panel. I've gotten everything under the stars. It's funny how like going from a buyer's agent in early 2022 into late 2022 right now, they are now giving me the time of day and want to negotiate with me, which is fascinating. I absolutely love it, because I look like a godsend to my buyers.
Orion: It's great to hear. The shifting from a pure seller's market to more of a buyer's market is pretty nice.
Ian: Yeah, dude, for sure. This is something that I learned, that experienced agents have that quality about them that you really can't see in any other agents that is newer. Because, I mean, sure, you get the more experienced agents that have been in the business for 20 years, but they don't know how to work an online contract system. That's a debilitating factor of it.
But the experience of going through several different types of markets is so important. Us, as newer agents, we just got to understand the market and understand what it was like previous. Sure, on paper. Then we'll experience it the longer that we're in this business. Us working with investor-minded buyers, I guess, we don't have that much convincing to do because they see the numbers in it, and it makes a lot of sense to them.
To bring it all home, the only thing, the only drawback with the newer agents is that we don't have the experience. However, we've done this work ourselves. We've house hacked ourselves. We understand the numbers, and we're living proof of this concept. So, I would definitely leverage that experience going into your conversations with buyers and other people going forward. Yeah, man. I feel like you got the experience. It's just a matter of implementing it or getting other people under your belt to live that same life that you are so gracious of. I find it to be a really fun place to be in, as far as being a realtor and an investor at the same time.
Orion: It's a super easy pitch being like, hey, I'm living for free. I have been ever since I graduated college. Now you get to do the same as like the bare minimum. It's so fun to talk to people about house hacking.
Ian: Yeah, totally, man. Well, thank you so much, Orion. I feel like this is already so much gold in one episode in a lot of people that are trying to house hack. This is something that, I'll definitely look at your YouTube video as far as like doing these tours, what is a house hackable property, what does it look like, and what are the numbers behind it all? It's all on my YouTube channel. But nonetheless, before I get into that, Orion, how can people even reach out to you if they wanted to work out with you or work with you? Not just work out.
Orion: Sure. You can reach out to me on any social media platform. Instagram is @orionenfield, just my name. Or, you can email me at orion@thefiteam.com. Give me a call. I think my phone number is on the FI Team website. So, just reach out. I would love to talk to you. I love talking about house hacking.
Ian: Excellent. We can definitely see that. We've really talked about house hacking. We pretty much talked about it for an hour straight. I got so much more to ask already. But with that being said, I myself, I'm Ian Jimeno. ian.realestateagent on Instagram, on YouTube, and TikTok. I guess, I'm not too much on TikTok. I just repurpose that stuff. But nonetheless, I got some weekly content with house hacking and tours inside other people's house hacks, including Orion himself. That's a really good video. If I do say so myself, it's really good.
Be sure to leave a like, follow, a five-star review, comment, subscribe or whatever people are doing these days if you found this content beneficial. Of course, thank you so much, Orion, for being on the Invest in Denver Podcast. I'll see you later, man. I'll see you.
Orion: See you really soon.