Denver Colorado

19 Replies

Hello Everyone, 

My partner and I are looking at buying our first home in the Denver area. Right now we are sick of Denver's rising rental rates and we think buying a house would be a smart idea right now. We've talked to a lender and I am currently qualified for 190k, 3.5% down FHA loan. Mortgage with taxes and insurance would be around $1350/month. Currently we are looking in the Broomfield/Westminster/Thornton/Arvada area but are open to other areas. Some concerns I have been thinking about:

1. I currently have a job in Denver, so I plan to be here for the next 3 - 5 years at least. However I do plan to move out of state eventually. After 3 - 5 years I would plan to either sell the house or hold onto the property and rent it out long term. Since I am only qualified for 190k the availability for single family homes in that price range is slim. On top of this, many homes in the Denver area do not cash flow well due to rising property costs. 

Current Denver area investors, what wisdom can you share about buying a home in the area at this time? 

Hello @Shawn McMahon

In the area you've mentioned, $190 will get you a nice 2-3 bedroom condo or townhouse in Arvada or Westminster or a small house in pretty poor shape.  It won't get you all that much in Broomfield, but might get you a small 3 bedroom house in Thornton in relatively decent shape.

Buying for personal use is a lot different than buying for investment, in my opinion.  Because you want to live in this property, don't worry about cash flow right now.  If you try to buy for cash flow in 3-5 years while still getting a property you like, you're going to go into analysis paralysis and will likely find yourself second guessing every property to the point where you won't be able to take action on anything.

In my opinion, the Denver market simply cannot continue on as it has been.  But if it does, cash flow will be a walk in the park in 3-5 years.  Rents will be so crazy high, that anything you buy at $190 will cash flow no problem.

My advice will be to buy what you like (and can afford).  This market will either continue as it has been and cash flow will be easy in 3years.  Or we'll have had a correction, and prices will fall, but probably from something higher than where they are today and will stabilize somewhere around today's prices.  If that's the case, you'll still be able to cash flow, but not excessively.

Good luck!

I know a great agent and mortgage broker if you need them.  Let me know and I'll pass their names along.

Hi Shawn,

I'm in the same boat you are in right now. I moved from Boulder to Denver about a year ago and have been renting but decided start looking to buy because my rents were going up. I've found that around your price point (mine is similar), about the only things avail are condos and town homes in my price range. Anything in the Denver metro area is super high, so you may be better off looking around the Westminster/Broomfield area like you said. You get more for your dollar and the commute on 36 really isn't that bad. I lived in Superior for a while and commuted downtown every day (get satellite radio ha).

I'm a realtor, so fortunately I have instant access to what is hitting the market and it's still very hard to find something before 50 other people have found it as soon as it hits the MLS. Best of luck. Shoot me a message if you have a question or anything that I may be able to help on.

The houses are out there, they just get snatched up quick so be patient and keep up on the MLS. If you are just looking at Zillow it is often out dated. I bought a house less than a year ago in the 160's that was a completely remodeled 2bd/1bath that turned into a rental when I moved. My mortgage is less than $1000 and I get $1500 in rent, when realistically I could get $1600+.

If you can manage to put 5% down and get a traditional loan, your PMI and fees will be less than going the FHA route which will reduce your costs.

I don't have a ton of properties, but this is what my experience has been.  Just keep looking because things go off market real quick.  A lot of places I wanted to look at were gone before I could schedule a showing.  Hope that helps!


I am not an agent so I don't have immediate access to the MLS. I am currently looking into becoming an agent but I don't want to wait the amount of time it requires to obtain the education to purchase a home. What other ways to find homes that have just hit the market?

I do agree with you Linda, I think Denver is close to the peak of its run with prices. If this is the case I run the risk of becoming underwater on the mortgage and getting myself essentially stuck in a property I don't want to be in long term. Also if rent has hit its peak it might negatively cash flow if I try to rent it out. I don't want to be stuck in a property but I also don't want to keep paying these outrageous 1BR/2BR apartment rental prices when I can have a home of my own for $100 - $200 more a month and actually own the asset in the long run. 

Originally posted by @Shawn McMahon :

I am not an agent so I don't have immediate access to the MLS. I am currently looking into becoming an agent but I don't want to wait the amount of time it requires to obtain the education to purchase a home. What other ways to find homes that have just hit the market?

Start working with an agent. Tell them what you're looking for and they'll set you up on an MLS auto search such that everything matching your criteria will be automatically emailed to you every morning.

Just the economics of this market show there is room for prices to continue to rise - supply and demand. Still record low inventory, low rates and a ton of demand. Of course it has to level off at some point - but the data shows the net migration increases out paces the housing units in both for rent and for sale. Affordability or lack there of has the best chance of slowing this market but there appear to be plenty of buyers in all price ranges.

Hey Shawn,

I agree that Denver has to have some change soon. Prices can't continue to go up the way they have been forever. I can understand the hesitance about buying and then being stuck with a high mortgage payment and no cash flow. But, if you're planning on staying in it for a few years I wouldn't worry about the cash flow aspect as much at this point. I'm in a 900 sq ft apartment for 1400 a month that's set to go up soon, so definitely trying my best to get out of that situation and feel your pain.

In regards to finding a home as soon as it hits, I'm sure you know but I can't stress enough to simply avoid Zillow and Trulia etc. They are usually outdated and not always accurate. Best way locally is to get hooked up with an agent who can set you up with auto alerts from the MLS so you'll be notified as soon as something hits. Aside form that, just go on to look on your own. That's all from the MLS so should be accurate.

@Shawn McMahon

I will echo that getting connected with a good real estate broker will make things easier, but meanwhile the app gives you the next best access to MLS listings, and is a little more user friendly than the MLS Portal. You can set up searches and get instant alerts, as well as open the app to see what's for sale around you using GPS.

Keep that investor mindset when buying your primary residence and make sure if you want or have to move sooner than expected you have exit strategies in place such as buying something that will rent and cover it's own mortgage.

@Shawn McMahon I agree with @Travis Sperr that the data says that there is no relief in sight for the next couple of years. The cost of waiting is huge with the appreciation and rent growth we've seen the past few years. Even if it levels off a bit (which I don't think it will) you are still money ahead to own. 

Have you considered a housing hack by purchasing a duplex (assuming you have the money down)? 

The data says we have at least 3-4 more years before we could return to a balanced market. People are still moving here and there are jobs when they get here so those drivers appear to be strong.

@Seth Todd there is absolutely nothing the requires price appreciation and rent growth to stop simply because they have been ongoing for any period of time. So Cal hit a 20 year growth spurt where there was no letup in appreciation and rent growth. It can happen so be careful about assuming it can't. At the same time in most cases you would be right and it goes in cycles but there is no guarantee either way.

We met with an agent yesterday. As we already stated, given the amount I am approved for the inventory selection at the moment is already really low. Pretty much the only options available are Condos/townhouses or a poor condition single family homes. There are deals out there they just got quick and often get bombarded with cash buyers immediately. 

My partner and I are considering waiting a 3 - 6 months. As of right now, I am the only one applying for a loan and I am not approved for very much. My partner has sold a home within the past 3 years with an FHA loan. Since it has not been 3 years since he sold the house, he can not be added to the FHA loan according to my lender. Of if he does, it will hurt the amount we qualify for, one of the two. If we wait until November I can take out a loan with my partner instead of by myself. Our lease is up in July, so we are considering living with a friend from July - October and saving as much money as we can to afford 5% down instead of 3.5% down. This worries me a little because the more we wait, the more potential the market has to go up, the more we are missing out on, and even less inventory will be available. However, if we do wait and take out a loan with my partner, the duel income may help us get qualified for more and we will be able to put more money down, making our monthly payment less.

Do you think waiting 6 months would be a smart or bad move on our part? 

Waiting until November you miss the Summer market which usually has extra inventory open up.  I'm not sure how pricing appreciation will go over the summer, but even winter has kept the steady upward trend so it seems likely to stay on the same path.  Check with other lenders on the loans.  Each will tell you slightly different things.  I can't see how a partner would hurt how much you qualify for as long as they have an income and better than horrible credit.  Shopping around is always highly recommended. 

My sister in law just got herself a townhome in Westminster for 170k, but it did take them somewhere around 4 or 5 months. The place just needed some minor updates. They used a VA loan which is not an easy sell right now either, but did make it happen. Just stick with it if you decide to get out there now and make sure your agent is really selling you.

I might be reviving a dead thread here...  One of my buddies moved out from NYC to Denver and loves every minute of it, and he's the one telling me about the real estate market up there.  The difference being I think he lives in the metro area, and not in the surrounding area.

As someone who hasn't been to Denver yet (planning on visiting in the summer - mid/late July), is Denver also a commuting city?  Like do people drive .5 - 1.5 hrs to get to their workplace?  Judging by this thread, the immediate surrounding areas of the metro area are also getting pricey so I'm looking in the surrounding area to cater to commuters.

Denver definitely is a commuting city, but the surrounding areas also have their own business hubs so lots of them are a good bet. Take a ride with someone who knows the area when you're in town to get a better idea. 

@George Chang

Yes, Denver is a commuting city.  The traffic is terrible (although, some of you in LA or NYC would probably laugh at me for saying that).  I commute the opposite way from Denver to Boulder, and it still sucks at peak rush hour.  With an end to the construction on 36 in sight, maybe it'll get better on the north end (stop laughing, fellow Denverites), but the south has been a mess for the 10 years I've been here... was probably a mess well before that, and will continue to be a mess well into the future.

@Shawn McMahon - I'm a young professional in Denver looking to buy (though a bit more south and west than where you were looking). I was wondering - how was your experience? Did you end up buying? Did you go FHA or conventional? Anything you wish you'd known?

@Ryan Robirds - I'm interested in your thoughts too.

Thanks so much for your insight guys, this is so helpful.

@John Robison IV My rental is doing great and increased rent in line with the area and not being greedy. If you are serious about buying I would talk with a lender, they can give you the best options for your situation. I ended up doing conventional (non-FHA) and it worked out great. I've been watching the appreciation and collecting rent ever since. If you need a lender I can refer one, they do their underwriting in house and it's really quick and hassle free. Your only problem now is houses are approaching 220k-250k price point, at least in my area. I don't know many places more affordable than that anymore for SFH.

@Ryan Robirds congrats on getting a good return on your rental. I am new to the Denver market and am getting ready to get pre qualified for a conventional loan my self. I am looking into getting a property in a similar range 220-280k, my plan is to get a SFH that I can rent out the rooms or even better the basement. While also living in the same house or duplex. I am looking to build a network here and if you have any references to realtors or what helped you search the market for a good deal I could use all the help / references. I also found this site have you used this in your search?

@Ryan Robirds - could I take you up on your offer to refer a 3% down conventional loan lender? I am debating between FHA and conventional, and I agree with your point - would like to investigate both options :) thank you!

@Svetlana Nikic The 3% down conventional program is called HomeReady. Basically if you can qualify for the 3% down conventional program and have decent credit you are typically better off going that route but that program does have income limits that depend on where you want to purchase. 

FHA is a good option if you have had some credit hiccups in the past or can't quite get there on income to qualify for conventional. Both programs are for owner occupants so would work well if you want to house hack. Your loan officer should be able to explain to you the pros and cons of each option specific to you scenario but general guidance typically says to go conventional if you can.

I'm happy to answer any other questions you have about both programs.

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