Best Neighborhoods in Denver for House Hacking Opportunities

So, you’re interested in house hacking in Denver? Smart move! House hacking isn’t just a trendy investment term, it’s an accessible way to reduce housing costs, build wealth, and even kickstart a real estate portfolio, all while keeping a roof over your head. With Denver’s rising home prices and strong rental demand, house hacking can be an ideal strategy to offset living expenses and gain a foothold in a competitive market.

In this article, we’ll walk through the best neighborhoods in Denver for house hacking, pros and cons of house hacking, provide a few tried-and-true strategies

Top Neighborhoods for House Hacking in Denver

Here’s where it gets exciting. Let’s talk about neighborhoods! Denver’s unique blend of culture, accessibility, and variety offers several standout areas for house hacking. Here are some of the best neighborhoods for house hacking in Denver:

Sloan’s Lake

If you’re looking for great views, outdoor fun, and a thriving rental market, Sloan’s Lake is a fantastic option. This neighborhood has a mix of single-family homes, duplexes, and multi-family properties, making it versatile for different house hacking strategies. Proximity to downtown Denver and a beautiful lake make it a hot spot for renters.

House Hacking Potential: Convert basement units or consider renting rooms with lake views for added appeal.

Sunnyside

Sunnyside is just west of the Highlands, giving you all the Highland vibes without the Highland price tag. This neighborhood is known for a mix of charming older homes and new development, giving you a range of property types to choose from. Renters love its proximity to downtown, and recent growth has boosted demand for rentals here.

House Hacking Potential: Rent out an ADU, basement unit, or go for a room-rental model in one of the neighborhood’s classic bungalows.

Congress Park

Central and brimming with character, Congress Park offers charming architecture and easy access to downtown Denver, making it a hit with renters. Its historic vibe attracts those looking for a unique living experience, and with a range of property options, you can go small or aim for multi-unit rentals.

House Hacking Potential: This neighborhood has an array of single-family homes with extra rooms or basement units that could be rented out for steady income.

Five Points/RiNo

Artistic and always on-trend, Five Points/RiNo is one of the most popular areas for Denver’s younger crowd. Here, you’ll find attached properties and condos that appeal to young professionals looking to stay close to the arts and culture scene. Expect a higher price tag, but also potentially higher rental returns.

House Hacking Potential: Renting out a condo or attached unit in this area can bring premium rental rates, especially if you’re near public transportation or popular eateries.

South Park Hill

With tree-lined streets and historic charm, South Park Hill is a family-friendly spot with a strong sense of community. It’s like Wash Park without the hefty price tag, making it an appealing option for both house hackers and renters looking for a quiet, accessible neighborhood.

House Hacking Potential: Consider renting out basement units or extra rooms, especially to tenants looking for a quieter environment.

Rosedale

Often overlooked, Rosedale is a hidden gem with a slightly lower median home price compared to nearby neighborhoods like Wash Park. This spot has a family-friendly vibe, making it attractive to those seeking a peaceful environment within city limits.

House Hacking Potential: With slightly lower property prices, Rosedale is a great entry point for first-time house hackers who may want to rent out an ADU or extra rooms to cover mortgage costs.

Jefferson Park

Close to downtown, Jefferson Park has become popular for its modern builds and lively energy. You’re near sports venues, restaurants, and all that downtown Denver has to offer, which draws a younger crowd interested in convenient city living.

House Hacking Potential: Renting out rooms or investing in duplexes can yield high rental income due to the neighborhood’s central location and demand for rentals.

Cherry Creek

Yes, Cherry Creek is pricier, but hear us out! Cherry Creek’s upscale feel and demand for rentals could make it worthwhile if you’re aiming for a high-end house hack. Plus, appreciation here is solid, meaning a steady rise in property value over time.

House Hacking Potential: If your budget allows, consider properties with a detached ADU or multi-unit property here to maximize returns.

Unincorporated Adams County (Sherrylwood, Twin Lakes, Welby)

Looking for fewer restrictions on rentals? Unincorporated Adams County (Sherrylwood, Twin Lakes, Welby) may be your answer. With less red tape around short-term rentals, this area is appealing for Airbnb-style rentals, providing flexibility and a more affordable entry into Denver’s hot housing market.

House Hacking Potential: Short-term rental potential makes this area perfect for investors looking to capitalize on the Airbnb market without running afoul of regulations.

Why House Hack in Denver?

House hacking in Denver is popular for a reason: this city is booming, and so are property values. In a city with high housing costs, house hacking can ease the sting of mortgage payments and allow you to live for a fraction of the price (or even for free!). Here’s why it’s worth considering:

Passive Income: By renting out part of your property, you’re effectively building a passive income stream that can cover your mortgage or pad your bank account.

Property Appreciation: Denver’s real estate market is known for long-term growth. House hacking means you’re not only earning rental income but also benefiting from rising property values.

Portfolio Building: By cutting your living expenses, you can save more to reinvest in additional properties, setting up a long-term wealth-building cycle.

Let’s explore how to get started, the challenges you might face, and the top neighborhoods in Denver that are practically built for house hackers.

Getting Started with House Hacking

Whether you’re new to real estate or a seasoned investor, house hacking in Denver starts with some key steps:

Choose Your Neighborhood: In Denver, some neighborhoods are better suited to house hacking than others. You’ll want a spot with high rental demand, nearby amenities, and affordability.

Build Your Team: A real estate agent who knows the Denver market and understands house hacking is gold. Find a lender who knows how to structure financing for house hacking and a contractor who can help estimate renovation costs if needed.

Set a Budget and Financing Plan: Knowing how much you can spend, along with the best loan options (like FHA or VA loans), will help you move faster.

Find the Right Property: Multi-family homes, single-family homes with a basement unit, and properties zoned for accessory dwelling units (ADUs) are all prime choices for house hackers.

House Hacking Strategies: Pick Your Play

Not all house hacks look alike. Here are a few different ways to get the most out of your Denver property:

Rent by the Room: Perfect for single-family homes, this option maximizes rental income by renting out individual rooms. Expect a higher return, but remember, shared spaces mean more tenant interaction.

ADU Rentals: An accessory dwelling unit (like a detached garage or a separate backyard unit) offers the best of both worlds. Renters get privacy, and you get solid income without sharing your kitchen.

Basement Conversions: A lot of Denver homes have basements, and with the right setup, these can become ideal rental units. They’re private, often with separate entrances, and cheaper to convert than building new structures.

Multi-Family Properties (Duplexes, Triplexes, Fourplexes): A multi-family setup gives you the chance to live in one unit and rent out the rest. These properties are house hacking jackpots, letting you generate significant rental income while keeping your privacy intact.

Potential Risks and Downsides of House Hacking

House hacking isn’t all passive income and appreciation. Like any investment, it has its challenges. Here’s a heads-up on a few common hiccups:

Shared Living: If you go the rent-by-the-room route, remember that you’re sharing your space. It’s not for everyone, so consider how comfortable you are with the idea.

Tenant Troubles: Screening tenants is key. Miss this step, and you may end up with late payments, property damage, or even eviction issues. Background checks are your friend!

Maintenance Responsibilities: More units mean more repairs. Set up a maintenance fund for unexpected costs, and prepare for regular upkeep.

Market Fluctuations: Real estate is generally stable, but the market can shift. Make sure your investment can withstand economic ups and downs.

Related Article: How to Find the Best Denver Properties for House Hacking

FAQs on House Hacking in Denver

What exactly is house hacking, and how does it work in Denver? 

House hacking is a strategy where you buy a property, live in part of it, and rent out the rest to cover some (or all) of your living costs. In Denver, house hacking can mean renting out rooms in a single-family home, converting a basement, or investing in a multi-family property like a duplex or triplex. Since Denver has a high demand for rentals and rising property values, house hacking here can be particularly lucrative, giving you rental income while your property appreciates over time.

What are the best neighborhoods in Denver for house hacking? 

Some of the top neighborhoods for house hacking in Denver include Sloan’s Lake for lake views and high rental demand, Sunnyside for its affordability and access to downtown, South Park Hill for a family-friendly vibe, and Jefferson Park for its proximity to sports venues and downtown hotspots. Each neighborhood offers unique benefits, but overall, choosing areas with strong rental demand and high appreciation potential is key.

Is it legal to house hack in Denver? Are there any specific regulations? 

Yes, house hacking is legal in Denver, but regulations vary based on neighborhood and property type. For example, Denver has specific rules for short-term rentals, and not every area allows accessory dwelling units (ADUs). Properties with multiple units, like duplexes and triplexes, often have different zoning requirements than single-family homes. Always check local zoning laws, HOA rules, and short-term rental regulations before buying a property for house hacking.

How much does it cost to start house hacking in Denver? 

The cost to start house hacking in Denver depends on the property type and location. House hackers can use loans with low down payments, like FHA (3.5% down) or VA (0% down for eligible buyers), to reduce upfront costs. In high-demand neighborhoods, however, property prices are higher, so you may need a larger budget. It’s essential to factor in closing costs, maintenance reserves, and potential renovation costs for spaces like basements or ADUs.

What if I decide to move, can I still rent out the entire property?

Absolutely! Once you’ve lived in the property for a certain period (usually a year, per loan requirements), you can move and rent out the entire property. This way, the property transforms into a full rental, generating passive income. Many house hackers use this strategy to build a real estate portfolio: they house hack, then move on to the next property while holding on to previous ones as income-generating rentals.

The Bottom Line: Your House Hacking Journey in Denver Awaits

With the right neighborhood, strategy, and mindset, house hacking can turn a single property purchase into a stepping stone toward financial freedom. Denver’s strong rental market and variety of neighborhoods offer an incredible playground for house hackers at any level. Whether you’re eyeing a condo in Five Points or a duplex in Jefferson Park, Denver’s real estate landscape has something to help you kickstart your house hacking journey.

Ready to take the leap? FootHills Fine Homes has your back! From helping you find the right property to managing tenants and streamlining the process,  FootHills Fine Homes is your one-stop solution to simplify your house hacking journey in Denver. So, why wait? Dive into Denver house hacking and start building your dream real estate portfolio today!