Moving to Denver!!!

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Moving to Denver!!!

Chelsey Hamill
Realtor 路 Denver, CO 路 Member since 2015 路 29 posts 路 7 votes

Hello Denver!

My boyfriend and I are planning on moving out to Colorado by this coming September, and we are pretty set on Denver. I have so many questions, so if you can help with any of them, it would be of tremendous help!

We will eventually visit before moving out there, just so we can get the feel of the city and find somewhere to live. Ideally I would want to purchase a multifamily, if we can qualify for a loan. Obviously 4 units or smaller, because I know prices are way higher in CO than they are here in West Virginia. So here goes!

-Where is a good place to reside in Denver? I am talking about desired neighborhoods that renters look for.. But more importantly for myself and my boyfriend, because we would be living in the unit too! We wouldn't want to be in the center of the city, but we can keep an open mind to different settings.

-How difficult is it to qualify for a multifamily FHA/VA loan where buyers occupy a unit and put as little as 3.5% down.. We are both servers (and will be until we search for other jobs). He is military as well. I'm unsure of any obstacles we may face when applying for a loan.

-I'm looking for the start of my eventual career in real estate, so I could use some pointers. I haven't made any investments yet, and have also been considering a job as a realtor to help build my savings.

I appreciate your help in advance,

Cheers!

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Bill S.Pro Member
Moderator
Rental Property Investor 路 Denver, CO 路 Member since 2013 路 4k+ posts 路 2k+ votes
10y

@Chelsey Hamill you won't likely be buying a 4 unit anywhere in the Denver metro on two server incomes. The most junky properties in the least desirable neighborhoods are over $400,000. You should sit down with a mortgage broker and see what you would have to make to qualify for that kind of loan on a 4plex. It's pretty easy to spend $600,000 on a four-plex in a sough after area. I don't mean to throw cold water on your plans and at the same time it's better to find this out right away as opposed to after you spend a few months digging around.

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  • Jonathan J. Miller
    Lender 路 Denver, CO 路 Member since 2015 路 275 posts 路 35 votes
    10y
    VA loan will be the way to go for sure.
    0Reply
  • Mark Graham II
    Williston, ND 路 Member since 2015 路 63 posts 路 17 votes
    10y

    This will probably cause a lot of hate, but it's a natives opinion... You couldn't pay me enough to live in Denver. However, the market in Denver is so strong, if I could afford it, there is no better place to invest. If you want a larger city, I would strongly look at Colorado Springs. It's smaller, with multiple military bases. The cost of living is cheaper, and this property prices are cheaper. Just something to consider

    0Reply
  • Bill S.Pro Member
    Moderator
    Rental Property Investor 路 Denver, CO 路 Member since 2013 路 4k+ posts 路 2k+ votes
    10y

    @Chelsey Hamill you won't likely be buying a 4 unit anywhere in the Denver metro on two server incomes. The most junky properties in the least desirable neighborhoods are over $400,000. You should sit down with a mortgage broker and see what you would have to make to qualify for that kind of loan on a 4plex. It's pretty easy to spend $600,000 on a four-plex in a sough after area. I don't mean to throw cold water on your plans and at the same time it's better to find this out right away as opposed to after you spend a few months digging around.

    3Reply
  • Mark Limke
    West Des Moines, IA 路 Member since 2015 路 100 posts 路 36 votes
    10y

    @Chelsey Hamill, I have no Denver knowledge, less than you, probably. There's wisdom in the earlier advice, for sure. 

    But don't forget what success coaches say: Don't say, or let others say for you, "I can't," but instead say "How can I?" Mindset is so important, and you sound like yours is in the right place.

    If you have a dream/goal, figure out a way. Leverage, partnership, working your way up to it, live farther out and gradually move in, who knows?

    Being a Realtor in a new town, you'll want a mentor right away. It's easy to blow a lot of money getting started in real estate. I can hook you up with someone helpful, if you want. 

    Good luck!

    1Reply
  • Samantha Reeves
    Columbia, MO 路 Member since 2016 路 30 posts 路 8 votes
    10y

    Hi Chelsea,

    If you are considering going the VA route, keep in mind that there are some restrictions on who can be on the loan with the service member if you want to get the zero down payment benefit. Typically it's limited to a spouse or another service member who will be residing in the home.

    Samantha 

    0Reply
  • Anson YoungBusiness Member
    Flipper/Rehabber 路 Denver, CO 路 Member since 2009 路 1k+ posts 路 726 votes
    10y
    Originally posted by @Chelsey Hamill:

    Hello Denver!

    My boyfriend and I are planning on moving out to Colorado by this coming September, and we are pretty set on Denver. I have so many questions, so if you can help with any of them, it would be of tremendous help!

    We will eventually visit before moving out there, just so we can get the feel of the city and find somewhere to live. Ideally I would want to purchase a multifamily, if we can qualify for a loan. Obviously 4 units or smaller, because I know prices are way higher in CO than they are here in West Virginia. So here goes!

    -Where is a good place to reside in Denver? I am talking about desired neighborhoods that renters look for.. But more importantly for myself and my boyfriend, because we would be living in the unit too! We wouldn't want to be in the center of the city, but we can keep an open mind to different settings.

    -How difficult is it to qualify for a multifamily FHA/VA loan where buyers occupy a unit and put as little as 3.5% down.. We are both servers (and will be until we search for other jobs). He is military as well. I'm unsure of any obstacles we may face when applying for a loan.

    -I'm looking for the start of my eventual career in real estate, so I could use some pointers. I haven't made any investments yet, and have also been considering a job as a realtor to help build my savings.

    I appreciate your help in advance,

    Cheers!

    Checking MLS and backing up @Bill S., there is one 4 plex under 400k right now in the metro area, and its in north Aurora (which if you want to be close to the heart of Denver, this isnt).  Not to double kick this thing, but most new agents rely on their sphere of influence for their first 6-12 months, friends, family, etc.  Starting from zero in a new town as an agent is the hardest way to start.  Not at ALL saying it cant be done, I'd honestly start with a Keller Williams office and go through their BOLD program to get the best start after getting your license.

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    3Reply
  • Dan MackinBusiness Member
    Real Estate Agent 路 Erie, CO 路 Member since 2014 路 1k+ posts 路 512 votes
    10y

    @Chelsey Hamill here's an early welcome to a market that is the exact opposite of WV. Multifamily properties are definitely a great way to get started, but they do have a good price premium here. There is lots of competition for each one (unless it is grossly over priced) and you'll be competing with high down payments and cash buyers. A lot of folks are steering towards the "rent by the room" standard to make their numbers work for their investment properties. This method can be used in almost any type of property and can be a good way to get into it. 

    As Anson said, becoming an agent doesn't mean quick or even easy money. If you don't have the connections out here already then you'll need to be able to hustle and network to get that client base built. When networking you also need to know particular areas and trends so that you can knowledgeably answer the questions. Getting even a minor scope of things here will take a few months of research.

    The Denver metro area really is a great place to live, but things are just a little more tight here.

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    1Reply
  • Chelsey Hamill
    OP
    Realtor 路 Denver, CO 路 Member since 2015 路 29 posts 路 7 votes
    10y

    Thank you for the replies! And for the record I don't want anyone to think they are crushing my spirit. I am not going into this completely blind, I understand that the market in Denver is pricey. I do my research, read every day, listen to podcasts and videos, so I have a notion of what I will be getting myself into.

    I also didn't mention that a rental isn't a must-have, at least not right off that bat. I could always rent an apartment until I figure things out a bit more. But it would be a great financial relief to at least have a duplex to cover a mortgage.

    Originally I wanted to research more about wholesaling and flipping, and so on. Again I'm keeping an open mind. But I figured, why not figure out how I could buy a house and essentially live in it for free. 

    Please keep the advice coming. Tell me about different brokers, books, meetings. Anything! 

    0Reply
  • Chelsey Hamill
    OP
    Realtor 路 Denver, CO 路 Member since 2015 路 29 posts 路 7 votes
    10y

    @Mark Limke thank you for the motivation. I'd like to think that I generally keep a positive attitude for my goals. I may have to take you up on that offer in the coming months.

    0Reply
  • Dave MeyerPro Member
    Head of Real Estate Investing at BiggerPockets 路 Seattle, WA 路 Member since 2015 路 224 posts 路 826 votes
    10y

    As a Denver-based investor in multi-families properties, I have to agree with the above posters. Denver is a very expensive market right now, and finding even a Duplex for a reasonable price is tough. I looked at one (a duplex) yesterday in a decent neighborhood, and decent property that was over $700k. You can look in suburban Denver in areas like Wheat Ridge, Broomfield, Westminster, Arvada, and Aurora. They are all pretty close to Denver and more affordable. Not sure how zoning works out there and if 4-plex properties are even possible. 

    But, to answer your other question about good neighborhoods within Denver proper that are desirable for renters I'd rank them: Capitol Hill (this is where I own and have never had a single vacancy in 5+ years), Washington Park, Highlands, Congress Park, Sunnyside/Tennyson. Areas like RINO and LoDo are desirable, but the housing stock isn't there - it's pretty much all lofts and townhomes at this point. You can also look at areas near the University of Denver (south) or Regis University (North) that may have some cheaper student-focused housing. However, being a landlord to college students sounds like a nightmare. 


    Best of luck! 

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    1Reply
  • Logan AllecBusiness Member
    Accountant 路 Los Angeles, CA 路 Member since 2014 路 1k+ posts 路 980 votes
    10y

    @Chelsey Hamill, I don't know your market, but if it's anything like Los Angeles, you may have to look outside the city center to find a deal on a 3- or 4-unit property you could purchase using FHA financing. I recently did the 4-unit house hack in the Los Angeles area, but I had to head 50 miles outside Downtown.

    Regardless, though, I believe that this is the best way for someone with limited means but time on their side to get into real estate investing.  You'll be patting yourself on the back in 30 years for getting into Denver real estate in 2016 for only 3.5% down.

    One thing to keep in mind when looking for an FHA owner-occupied triplex or fourplex is that 85% of the market rents on all the units need to cover your monthly payment (principal, interest, taxes, insurance, and mortgage insurance). This is known as the self-sufficiency rule. It only applies to 3- and 4-unit properties (not SFRs or duplex) bought using FHA financing. I put together a spreadsheet here to help potential house hackers quickly analyze whether or not a property qualifies. There are other FHA requirements concerning which you should contact your local lender, but determining whether or not a triplex or fourplex meets the self-sufficiency rule is a good place to start as this rule will immediately eliminate many properties from your search, especially in expensive markets like ours.

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    0Reply
  • Kelly Sennholz
    Denver, CO 路 Member since 2012 路 268 posts 路 164 votes
    10y

    I agree that 2 people working as servers are going to have a really hard time buying any multifamily in Denver. You could buy a home with a mother in law suite and rent that out to secure your future. It is possible, it is just not going to be easy. I agree that utilizing the Veteran's benefits may be helpful. 

    0Reply
  • Chelsey Hamill
    OP
    Realtor 路 Denver, CO 路 Member since 2015 路 29 posts 路 7 votes
    10y

    @Logan Allec Wow, that's thanks for the spreadsheet. I didn't even know that those loans didn't apply to duplexes. Again, I'm thinking I will have to start on the outskirts of somewhere near Denver. But for work, it would be way more practical for myself to live closer to the city (at least in the beginning). I don't doubt that I will make it work though.

    0Reply
  • Logan AllecBusiness Member
    Accountant 路 Los Angeles, CA 路 Member since 2014 路 1k+ posts 路 980 votes
    10y

    @Chelsey Hamill, FHA loans work perfectly fine for duplexes. It's just that on a triplex or a fourplex, there is an additional requirement called the self-sufficiency rule, which is the purpose of the spreadsheet.

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    0Reply
  • Chelsey Hamill
    OP
    Realtor 路 Denver, CO 路 Member since 2015 路 29 posts 路 7 votes
    10y

    @Kelly Sennholz Yes, I'm leaning towards the VA loan too.. The only down side, from my understanding, is that you have to be a veteran or spouse to be on the contract, so I wouldn't be able to sign. However, I could be wrong about that.

    0Reply
  • Chelsey Hamill
    OP
    Realtor 路 Denver, CO 路 Member since 2015 路 29 posts 路 7 votes
    10y

    @Logan Allec Ohhh, gotcha. I misunderstood what you meant about SFR's and duplexes.

    0Reply
  • Jerry Padilla
    Lender 路 Rochester, NY 路 Member since 2014 路 3k+ posts 路 1k+ votes
    10y

    @Chelsey Hamill

    I moved to Rochester from Denver several years. I loved Denver, but it is very pricey as others have pointed out. VA is typically the better way to go as they don't have the "self sufficiency" rule like FHA does, but VA also doesn't allow you to use rental income without experience, whereas FHA does. I would recommend seeing what you can get pre-approved up to and speak with a lender on which way would be better. A duplex with an FHA mortgage is what my opinion is, as it will allow you to put down 3.5% and use potential rental income, without requiring the "self sufficiency" rule.

    0Reply
  • Chelsey Hamill
    OP
    Realtor 路 Denver, CO 路 Member since 2015 路 29 posts 路 7 votes
    10y

    @Jerry Padilla thank you! Very very helpful

    1Reply
  • Jerry Padilla
    Lender 路 Rochester, NY 路 Member since 2014 路 3k+ posts 路 1k+ votes
    10y

    @Chelsey Hamill Absolutely. I am glad to answer any financing questions and provide advice.

    0Reply
  • Colin SmithBusiness Member
    Realtor 路 Colorado Springs, CO 路 Member since 2013 路 987 posts 路 447 votes
    10y

    I too would recommend Colorado Springs. Maybe I am biased as I am an agent in Springs, but property values are significantly less than what they are in Denver. You can get a lot more house for your dollar down here and it is an easier market to break into. 

    1Reply
  • Matt Campbell
    Aurora, CO 路 Member since 2015 路 4 posts 路 1 vote
    10y

    @Chelsey Hamill, 

    I have been looking at buying an investment property for a few months now.  I am in a similar situation as you in the sense I am looking to invest with a lower amount of cash available for a down payment.  

    I have seen a lot more opportunity in the Springs, which is where I personally plan on investing in the future.  That being said, you want to live near Denver and if you live in Colorado Springs it is anywhere between 1-2 hrs to get to Buckley AFB in Aurora.  If you are not concerned about proximity to mountains Aurora is an affordable area but be warned you need to be sure of the area you are thinking of as there are many iffy sections of Aurora that are not great.  Denver's market is very tough to move into at an affordable price. I would suggest starting with looking at Littleton, Aurora, or north of I-70.  All have their corks but in my mind all much better options than Denver. Best of luck!

    1Reply
  • Max James
    Investor 路 Cincinnati, OH 路 Member since 2015 路 229 posts 路 50 votes
    10y

    What are some other good options out west, other than Denver, for small multi families and a good job market?  Sounds like Colorado Springs is the first next best thing?

    0Reply
  • Chelsey Hamill
    OP
    Realtor 路 Denver, CO 路 Member since 2015 路 29 posts 路 7 votes
    10y

    @Max James yes, sounds like Colorado Springs has been the unanimous helping hint. I've looked more into it, and it seems like a good place to live. A little bit less city. Not sure of other states out west though..

    0Reply
  • Max James
    Investor 路 Cincinnati, OH 路 Member since 2015 路 229 posts 路 50 votes
    10y
    Originally posted by @Chelsey Hamill:

    @Max James yes, sounds like Colorado Springs has been the unanimous helping hint. I've looked more into it, and it seems like a good place to live. A little bit less city. Not sure of other states out west though..

     I was checking out Zillow last night and only saw 4 small multifams available in Colorado Springs, starting at $225,000 and higher. That was for a duplex. Being from the Midwest where you can find properties that cash flow well, I would never buy a duplex for $225K that probably only pulls in $2000/month in rent. 

    I'm beginning to think that there isn't a single place in Colorado where you can cash flow on small multifams 馃様.

    My company is starting to lay off people and I'm putting together contingency plans. One of the plans is to move out to Colorado, get another high paying W2 job and move into a small multi as I have done this twice now out here. At first glance though like I said, I am thinking there's not a single place in Colorado I would invest for cash flow.

    Thoughts?

    0Reply
  • Bill S.Pro Member
    Moderator
    Rental Property Investor 路 Denver, CO 路 Member since 2013 路 4k+ posts 路 2k+ votes
    10y

    @Max James there are plenty of cheap properties in Colorado. I watched a 1/1 duplex in Rocky Ford that was listed at $16,000. It sat on the market for over a year. Each side rented for about $300 per month. There are cheap properties here, they just aren't in the major metro area. BTW the population of Otero County (where Rocky Ford is located) has decreased at 3% per year for the past 50 years but there is cheap RE there. If you go to rural Colorado there is definitely cheap RE and there is no future there either.

    1Reply
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