Moving to Denver, CO, SFR vs Rental property investing?

6 Replies

Hello BP family, 

I am planning on moving to Denver by the end of the year. I am not really familiar with that market: is investing in a primary SFR a smart idea and if so what neighborhoods/suburbs would you recommend?

How about rental property investing? 

Thank you for any feedback you may have. 

@Benjamin Papet
The best cash flowing rentals in Denver are condos. Yes, even with HOA's they'll give you the best cash flow (around a 7 cap.) Multis are usually 5.5- 6.3 cap (assuming not the hot spots), and many single-family homes are 4.5 cap +. There are some nice plays for 5 bedroom detached houses in north Aurora that can give you some nice cap rates.

If you have the option to House Hack or Nomad, make that your investing priority as you'll get a greater ROI. You just can't beat the low down payment options that give you amazing leverage!

Let me know when you're headed to Denver and I can give you a quick run down.

@Benjamin Papet

Welcome to Denver! (Almost.) One of the best places to live in my mind. 300 days of sun, great city scene, killer beer, legal weed, and a solid job market and proximity to the mountains. Anyway, we love Denver. Also, you should come to the BP meetups when you're in town.

To your question about what neighborhoods to buy in. If you're buying solely as an investment, there are places to go and others not to go. But if you're buying a primary residence, telling you what neighborhood to live in is like telling you how to dress. 

Personally, I think buying a home in which to live is the way to go for your first property. It's what we urge our buyers to do. Lower down payment and everyone needs somewhere to live. Might as well gain some equity along the way. Maybe you love the place and you stay and start collecting rentals elsewhere. Or maybe you move out in a year or two and make your first home your first rental. 

Now, what can get fun is trying to make one place serve two purposes. If you're open to roommates, a simple rent-by-the-room house-hack can definitely work. We also like homes with basement apartments (or at least lock-off basements) where you can  rent the lower half long-term or on Airbnb as a short-term rental. 

The one caveat to the one-home-two-purposes idea is if you're living with someone. What we find is that one partner thinks it's a great idea and the other thinks they're on board but really just want a place they can call home, rental be damned. If you're with someone, make sure they're on the same page.

I wish you well!