Build & Hold in Denver, Colorado

[Account Closed]

We're looking at a deal we have under contract as a possible build and hold. What price / SF are you seeing for rental grade new construction in Denver? Do you know anyone who is actively using this strategy in Denver, or anyone who has done it in the past?

Details about the property:

Duplex lot, approximately 1400 finished square feet per side, so 2800-3000 finished SF total. E-TU-C zoning - the property is Urban Edge, but in an area where there are other rental grade scrapes occurring. I'll be visiting active job sites this week.

[Scott Trench]

I'd be interested to learn more about this and hear from other investors doing this in town. It's my belief that build-and-hold doesn't make the most sense right now, as rent-to-value ratios on new construction might not be as great as they could be. If you build a $1,000,000 duplex, each side renting for $2,000 per month, I'd think that even with the limited need for repairs/capex/maintenance that goes with new construction that you would be better off selling it, taking the equity created and moving it to an investment capable of producing more income per dollar of asset value.

I think that if I were building brand new here in town, I'd be planning to sell it as soon as possible, and buy more property in great parts of town that can generate both income now, and possible redevelopment exits down the line.