First time Investing Advice

[Katelin M Barson]

Hello everyone!

I've read through quite a few posts and gotten some fairly good advice, so now I'm looking for some situation-specific advice.  I am in my 20s and wanting to get in to the real estate investing market.  However, it is quite difficult to get good advice elsewhere!  

I currently live in the Denver area, I own a home, and rent to roommates, which is awesome for living expenses.  I am looking to purchase an investment property in the very near future and do have a substantial amount to put down for the necessary 20%.  I have primarily been looking for single family houses that are $350-$385K in the Westminster/Arvada area.  The problem I am running in to is that a $375K house would be great, but every house is going for at least $25K over asking price, if not up to $50K over asking price!  This definitely does not follow the 1% rule.  It doesn't seem worth wile to spend $400K on a property, even with 20% down, especially since most places going for this need work or are quite small.

Does anyone have advice as far as price point vs. rental income goes?  Is it worth it to get a property in this market?  Should I be looking for a condo/townhome instead of a single family home?   If my rent to mortgage ratio is something like $1700 to $2500, is this worth it?  Or am I getting into dangerous territory?

Ideally I would like to purchase in the Denver area, since I live here, but am open to suggestions.  I have heard Colorado Springs is a good market for investing, but I'm not sure yet.

Bottom line is that I know real estate investing is worth it, but I'm not sure the parameters.  Especially with a ridiculously competitive market that every property gets 20 offers in the first day! 

Thank you!

Katelin

[Spencer Abeyta]

Hello @Katelin M Barson, I am in a similar boat to yours I just live in Colorado Springs. In the Denver and Colorado Springs area it is almost impossible to find 1% deals. But keep in mind this is just a rule of thumb. You can still cashflow great with more expensive properties that don't rent for 1% of the purchase price. 

Are you looking for appreciation or cashflow? If you are looking for appreciation the markets here are great for that even if the barrier to entry is higher. If you are looking for cashflow I would highly recommend investing in the Midwest. You can make your dollar stretch a lot further and they are typically a lot better for cashflow.

It sounds like you would like to stay in the Denver area. I believe it is definitely worth it to invest in the Denver market if you can find a good deal. I would recommend connecting with a Denver agent from BiggerPockets to explore your options. I'm sure they will jump in on this thread soon.

But Colorado Springs is worth looking at as a second option as a great market! :)