House Hacking in LoHi: Smart Ways to Live for Less
January 1, 2026
January 1, 2026
What if your LoHi home helped pay your mortgage every month? In a neighborhood with high demand and great access to downtown Denver, smart house hacking can lower your cost of living while building long-term equity. You want a clear plan that fits local rules and your comfort level with tenants. This guide walks you through practical strategies in Highlands and LoHi, what Denver requires, financing options, and a step-by-step checklist so you can move forward with confidence. Let’s dive in.
LoHi and the greater Highlands sit just northwest of downtown Denver. The area offers strong walkability, quick commutes, and a vibrant restaurant scene. That combination attracts renters who value location and lifestyle.
The housing mix is diverse. You will find historic rowhouses, single-family homes, duplexes and triplexes, carriage houses, walk-up multi-family buildings, and modern condos. This variety supports several house-hacking models, from roommate setups to legal multi-units and ADUs.
There are constraints to plan around. Smaller lots can limit parking and expansion plans, and parts of the neighborhood include historic districts that add design and permit steps. Tight street parking in some blocks calls for smart tenant selection and expectations.
You buy a 2 to 4 unit property, live in one unit, and rent the others. This approach often provides the strongest income relative to your mortgage. Inventory is tighter in LoHi, and older buildings may need updates, but the scale can be compelling.
Financing can be favorable for owner-occupants. Government-backed options like FHA financing and VA loans allow up to 4 units when you live in one unit, subject to program rules and underwriting. Confirm separate meters, legal unit status, fire separation, and the need for a local rental license before you buy.
Adding a detached ADU or converting a garage can create a private rental while preserving your own space. ADUs fit the small-lot pattern in many parts of Highlands.
Denver has specific zoning and permitting standards. Always verify your lot’s zoning, setbacks, height limits, and permit steps with the City and County of Denver. Budget for utility upgrades, inspections, and possible site plan review. Plan for separate entry, code-compliant egress, fire separation, insulation, ventilation, and parking compliance where required.
Converting a basement to a code-compliant unit is often cheaper than building an ADU. It uses your existing footprint and can pull strong rent if it has a private entrance and quality finishes.
Focus on habitability and safety. Bedrooms need egress windows, ceiling heights must meet minimums, and moisture control is key. Plan for ventilation, sound control, and utility capacity. Confirm if the unit requires a rental license or certificate of occupancy.
Renting individual bedrooms to roommates can deliver high total rent relative to a single lease. It is flexible and usually the easiest to start.
Check local occupancy rules and safety requirements like smoke and CO detectors. If you are in a condo or HOA, confirm subletting policies and limits on unrelated occupants before you list a room. Expect more tenant turnover and set clear house rules.
The nightly rates can look attractive in a restaurant and nightlife hub, but Denver regulates short-term rentals closely. You must follow licensing, safety, and tax rules, and many condo or HOA documents prohibit STRs.
Before you pursue this model, review requirements with the city’s licensing department and confirm HOA rules. Hosts must collect and remit lodging and sales taxes and maintain compliance with local occupancy and safety standards. Start with the City and County of Denver and confirm current short-term rental licensing details.
Zoning drives what you can do. Whether you can add an ADU, create a second unit, or rent rooms depends on your zone district, lot size, setbacks, and height limits. Confirm your property details and required approvals with Denver’s planning and development resources.
Permitting generally includes plan review, building permits, inspections for structural, electrical, plumbing, and fire, and a final certificate of occupancy for new dwelling units. Expect more steps if the home is in a historic district or has landmark status.
Rental licensing and inspections may apply. Denver requires certain rentals to be registered and inspected. Short-term rentals require a separate business or STR license, plus tax collection and remittance. Review current guidance with the City and County of Denver.
HOA and condo rules can be stricter than the city. Many communities limit or prohibit STRs and may cap long-term rentals. Always review bylaws before you buy or advertise a unit.
Owner-occupant loans can help you get in the door with lower down payments than pure investment loans. Conventional loans work for 1 to 4 units. Government-backed programs like FHA and VA finance up to 4 units when you occupy one unit, subject to program rules and property condition.
If you plan renovations, look at FHA 203(k) or other renovation options that can bundle purchase and rehab into one mortgage. For guidance on choosing a mortgage and budgeting, review consumer resources from the CFPB.
Keep your underwriting practical. Some lenders allow projected rental income to count toward qualifying. Policies vary on leases, market rent studies, and vacancy assumptions, so talk to a local lender early.
Use simple metrics to compare options:
For expenses, small multi-family owners often plan 25 to 50 percent of gross rent for operating costs before mortgage, depending on age and condition. In tighter rental markets, a 5 to 8 percent vacancy allowance is a common starting point. Adjust for LoHi’s property age, maintenance needs, and your management approach.
Rental income is taxable. You typically report income and expenses on Schedule E, while certain short-term rental scenarios can be treated differently. Review IRS guidance on rental income and deductions at the IRS, and consult a tax professional.
Short-term rental hosts must register and remit lodging and sales taxes as required by the city and state. Check procedures with the Colorado Department of Revenue and the City of Denver.
Tell your insurer about your plan. Standard homeowner policies often exclude rental activity. You may need a landlord policy for tenant-occupied units or specialized coverage for STRs. Confirm coverage to avoid gaps.
Target your product to likely renters in Highlands and LoHi. Many renters value walkability, proximity to downtown jobs, and access to restaurants. Private entrances, updated finishes, in-unit laundry, and parking where available can support higher rent.
Price with comps from similar unit types in the neighborhood and nearby areas. Highlight amenities tenants value most in your marketing.
House hacking in LoHi can reduce your monthly payment and speed up your wealth-building, but success comes from planning around Denver’s rules and the neighborhood’s unique layout. If you want a clear, disciplined path from property search to permits and pro forma, we are here to help. Connect with Kap|Lyons Premier Real Estate to map your strategy and run the numbers on homes that fit your goals.
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