First multi-family purchase Denver area

9 Replies

I have been following BP for the past two years and have hugely benefited from this collective knowledge. I currently own two rental SFRs in Louisville, CO area - both doing well. I am thinking about upping the game and buying my first multi-family home later this year, probably in fall. The main reason is that when I run numbers, multi-family homes come far better than single family homes.  Couple of questions. 1) Denver-Boulder region is way to expensive for me. Is there any place <2 hours from Denver where I can find sub 500K 4-plexes ? 2) How much down payment is required by lenders for this? Usual 25-30% ?  I can put together about 100K for down payment 3) I have currently 3 mortgages, including that of my primary home.   Getting more will be difficult ?

@Navin Naik What are the numbers that you're seeing for multis? The ones I've seen are giving the lowest returns compared to single family.

How many units are you looking to buy? If it's 5 or more, you'll need to talk with a commercial lender. To hard to say if getting more would be difficult. Depends on the property size, your income, how the others' cash flow, etc. Talk to a lender ASAP.

I'm going to send you over some info that I compiled a few months ago.

Have you looked at Col Springs?

@Navin Naik 2 hrs is a long ways. You can get to Cheyenne Wyoming in 2 hrs. 

Here is a listing on the MLS (Cheyenne 4 plex) that meets your bill. Not sure I would be all that jazzed about buying there but it's something easy. Closer to home, you might find something in Commerce City or out in Ft Morgan. The more into farming country you go the lower the price. 

The Springs has sub $500k 4 plex's -- location will be something you have to manage down there.  You can get a 4 plex for well below that price range if you are willing to look at Pueblo.

All. Thanks for your insights. Looks like Colorado Springs is a good place for me to start crunching numbers. Unlike Denver region, the cash flow is higher here. I understand that these houses might not appreciate like Denver-Boulder region.  However, my current goal is to improve my cash flow since the cash-flow from my Louisville properties (which have appreciated a lot) are not that great.

@Navin Naik As people in the Denver Metro are priced out of their homes or as investors can no longer find returns, more and more money finds its way to the Springs market. I included a little blurb from the Colorado Business Journal that shows that the appreciation is just as high (if not higher) than Denver. So you can get both cash flowing properties and appreciation potential. 

For down payment, the lenders I typically work with require 15-20% for a duplex (highly recommend 20% as PMI on commercial is very high killing ROI), 20-25% for a triplex, and 25% for a fourplex. Chris mentioned 5 or more being commercial - that is correct and it is very hard to be approved without a very strong history of rentals, which you have some but it will still be an uphill battle.

Be aware that the MLS system for the Springs is different than the Denver Metro - if you are looking in El Paso county make sure any Realtor you use has access to Pikes Peak MLS. If you are looking at Tri-Lakes area or north, it moves into the REColorado MLS that covers the full Denver Metro. Pikes Peak really focuses on El Paso County, but lines can often get blurred around the borders.

Article on appreciation in the Springs:

Hi Navin, 

There are a few multiplexes in Weld county that would be super $500k. With the number of loans you have and properties you may look into a portfolio loan.

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There is a Triplex with 3 single family homes all on one site in Ft. Lupton for $500k on the MLS.

Does someone know what is the typical property management fee in CS ? It will help me crunch the numbers. Thanks

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