Gentrifying Neighborhoods in Denver in 2023
Real Estate Agent · Sonoma County, CA (North Bay) · Member since 2020 · 8 posts · 4 votes
I'm a real estate agent in Sonoma County (San Francisco North Bay) and my girlfriend lives in Denver. I've visited many times the past couple years and absolutely love it. She lives in Cherry Creek but there are so many other cool neighborhoods as well (Highlands, Congress Park, Cap Hill, 5 Points, etc.). My question is, what neighborhoods are, or, are on the verge of gentrifying? Which ones have duplexes (both sides are the same property), triplexes, quadplexes, OR commercial buildings with residential above? I'd love to pick up an investment property this year, and why not Denver?! I'd be interested in the price point under $1m, would cash flow, but also something that will appreciate when the neighborhood shifts.
Thanks in advance!
Hey Stephen! I've lived and have been investing in Denver for a few years now, so I definitely don't have the most time of anyone out here, but I've been loving it and have the same mindset as you - it's been great exploring and learning the area, and I'm a big fan of neighborhoods I feel have a lot of upside in the near future.
Ultimately I'd say it depends how speculative you want to get! Higher risk/higher reward as they say haha
Personally, my properties out here are in Englewood, and while there's definitely a spectrum in Englewood of more/less gentrified, I'd say that from the sound of what you're looking for, most of Englewood may already be too gentrified for your tastes (especially on the Cherry Hills Village border). Heading slightly west though, I have high hopes for Sheridan (most of the homes here actually carry an Englewood mailing address and it's very similar to Englewood although I'd say less gentrified currently). There seems to be a good amount of development over there, including small multifamily (their zoning seems to be a little more favorable for this than most of Englewood, although take a look at Englewood's zoning map since there are definitely areas where they do allow small multifamily properties).
Lots of Lakewood falls into the same type of boat, some neighborhoods I've explored have been Harvey Park, Ruby Hill, and Mar Lee although there are other good ones around there as well.
A lot of my friends and fellow investors/househackers really like stuff further north in Sloan's Lake (already a little too developed for me at this point, although still deals to be found if you're willing to really put the work in), Wheat Ridge, Edgewater, and Arvada (Old Town Arvada is actually a really awesome spot to check out!). These areas seem to be less restrictive for househacking/multifamily/investing, but I'm not as familiar with them myself to be honest.
I've also been hearing that going east on Colfax from Denver "will be getting nicer soon!", but check's still in the mail for the most part as far as I can tell. I am optimistic on the area near Anschutz Medical Campus, especially with the development on the Fitzsimons Innovation Campus, but again that may be a longer-term and less certain play.
Let me know next time you're in town, I'd love to grab a beer and chat!
Best of luck to you, and don't hesitate to give me a shout if there's anything I could help with - I invest out-of-state as well so I know how that goes!
Cheers,
Dean
Hey Stephen! I've lived and have been investing in Denver for a few years now, so I definitely don't have the most time of anyone out here, but I've been loving it and have the same mindset as you - it's been great exploring and learning the area, and I'm a big fan of neighborhoods I feel have a lot of upside in the near future.
Ultimately I'd say it depends how speculative you want to get! Higher risk/higher reward as they say haha
Personally, my properties out here are in Englewood, and while there's definitely a spectrum in Englewood of more/less gentrified, I'd say that from the sound of what you're looking for, most of Englewood may already be too gentrified for your tastes (especially on the Cherry Hills Village border). Heading slightly west though, I have high hopes for Sheridan (most of the homes here actually carry an Englewood mailing address and it's very similar to Englewood although I'd say less gentrified currently). There seems to be a good amount of development over there, including small multifamily (their zoning seems to be a little more favorable for this than most of Englewood, although take a look at Englewood's zoning map since there are definitely areas where they do allow small multifamily properties).
Lots of Lakewood falls into the same type of boat, some neighborhoods I've explored have been Harvey Park, Ruby Hill, and Mar Lee although there are other good ones around there as well.
A lot of my friends and fellow investors/househackers really like stuff further north in Sloan's Lake (already a little too developed for me at this point, although still deals to be found if you're willing to really put the work in), Wheat Ridge, Edgewater, and Arvada (Old Town Arvada is actually a really awesome spot to check out!). These areas seem to be less restrictive for househacking/multifamily/investing, but I'm not as familiar with them myself to be honest.
I've also been hearing that going east on Colfax from Denver "will be getting nicer soon!", but check's still in the mail for the most part as far as I can tell. I am optimistic on the area near Anschutz Medical Campus, especially with the development on the Fitzsimons Innovation Campus, but again that may be a longer-term and less certain play.
Let me know next time you're in town, I'd love to grab a beer and chat!
Best of luck to you, and don't hesitate to give me a shout if there's anything I could help with - I invest out-of-state as well so I know how that goes!
Cheers,
Dean
Hey @Stephen Pearson! You are in the same boat as a lot of investors from California, and getting into the Denver market. However, as I am sure you have noticed is that our markets are pretty similar in that we are high-priced markets and our price-to-rent ratios aren't quite there. So if getting cash flow is important to you, then you may need to open up some different strategies beyond typical long-term rentals, otherwise, you may be riding the appreciation train more so.
Under a million you will be well poised for these up-and-coming neighborhoods and could go as big as a 4 unit. Personally, I would steer towards either Englewood (southern Englewood is a bit less loved), or the area just west of Fitzsimons, and East of Dayton street. These areas are prime for future growth (I have a client that is friends with the Englewood city planner) and have the small multifamily properties that you want. But they are also able to utilize different rental strategies mainly medium term due to the hospitals and create the cash flow. Beyond that, most of Denver is pretty "gentrified" at this point, and I wouldn't anticipate a neighborhood to take off in the next few years, most of the area is pretty even and grows together. Unless you want to take a big chance, then there are a few pocket neighborhoods that still maintain a lower quality over the rest of Denver, and may turn around eventually. This would be mainly Westwood, Valverde, and a few other areas.
Really most of Denver appreciates on average 6% YOY, so we are no slouch when it comes to that, so I would focus on finding a property that works and gets you a decent COC return, or possibly has a value add play in it.
Thank you both for your responses. I've got some more neighborhoods to research! Definitely not looking for something to skyrocket in appreciation, but if it make sense now and looks like it'll potentially pay off in the future, then that's what I'll go for.
The multifamily space really interests me because theoretically I could pick up a 4plex, rent 3 units out and do a mid-term rental in the 4th, which would allow me to utilize that unit for myself whenever I want to come visit.
As far as price-to-rent ratios, I have noticed that rents aren't astronomical in most places, but prices also aren't what they are in my city. For perspective, a 4 unit building just came on the market for $2.2m, all identical 1 bed, 1 bath, 845sq.ft. units.
What are the tenant laws out there? My city just passed an ordinance where we have to give 120 day notice to tenants, and cannot evict anyone during the school year, if they have kids in school. Seems to me Colorado laws favor the landlords a little more? My gf's building was purchased and the new owner jacked up everyone's rents, and when people moved out, they just renovated the unit and rented it out for more. No issues doing that I am guessing?
Thank you both for your responses. I've got some more neighborhoods to research! Definitely not looking for something to skyrocket in appreciation, but if it make sense now and looks like it'll potentially pay off in the future, then that's what I'll go for.
The multifamily space really interests me because theoretically I could pick up a 4plex, rent 3 units out and do a mid-term rental in the 4th, which would allow me to utilize that unit for myself whenever I want to come visit.
As far as price-to-rent ratios, I have noticed that rents aren't astronomical in most places, but prices also aren't what they are in my city. For perspective, a 4 unit building just came on the market for $2.2m, all identical 1 bed, 1 bath, 845sq.ft. units.
What are the tenant laws out there? My city just passed an ordinance where we have to give 120 day notice to tenants, and cannot evict anyone during the school year, if they have kids in school. Seems to me Colorado laws favor the landlords a little more? My gf's building was purchased and the new owner jacked up everyone's rents, and when people moved out, they just renovated the unit and rented it out for more. No issues doing that I am guessing?
Thank you both for your responses. I've got some more neighborhoods to research! Definitely not looking for something to skyrocket in appreciation, but if it make sense now and looks like it'll potentially pay off in the future, then that's what I'll go for.
The multifamily space really interests me because theoretically I could pick up a 4plex, rent 3 units out and do a mid-term rental in the 4th, which would allow me to utilize that unit for myself whenever I want to come visit.
As far as price-to-rent ratios, I have noticed that rents aren't astronomical in most places, but prices also aren't what they are in my city. For perspective, a 4 unit building just came on the market for $2.2m, all identical 1 bed, 1 bath, 845sq.ft. units.
What are the tenant laws out there? My city just passed an ordinance where we have to give 120 day notice to tenants, and cannot evict anyone during the school year, if they have kids in school. Seems to me Colorado laws favor the landlords a little more? My gf's building was purchased and the new owner jacked up everyone's rents, and when people moved out, they just renovated the unit and rented it out for more. No issues doing that I am guessing?
Of course! Haha definitely do some research, but like Ben said, if it makes sense/cashflows now as-is, pretty much anywhere in this area will get you some decent appreciation gravy on top of that.
I'm with ya - one of the reasons I like and steer toward small multifamily myself is the ability to hedge a bit and mix/match strategies like you were saying.
I'm not super familiar with Sonoma, although I did live near LA for a few years and I'd say the price-to-rent ratios here are probably somewhat similar (like you mentioned, lower prices but also lower rents here), maybe a bit more favorable in the Denver area. We're certainly still not hitting the 1% rule on most properties I see, at least on the MLS. Quick example that's fairly typical (although it really depends how close you get to downtown Denver and what condition the property is in) - usually somewhere $900K-$1.3M range for 1/1-2/1 (or mixed 1-bed/2-bed) 4plexes, with rents in the $1,250-$1,900 range (lower end being 1/1s, higher end being 2/1s, and again largely dependent on specific location and quality/condition of the units).
Tenant laws are still pretty decent here, I'd say we're still falling more on the landlord friendly side. No issues that I'm aware of doing what you mentioned. However, the trends we've been seeing lately and especially going into 2023 have been leaning much more in favor of the tenant side, so the current regime/sentiment does seem to be starting to implement things favoring tenants more. Nothing crazy that I've seen yet, certainly not to the levels of California and New York nonsense, mostly just making it more difficult to keep security deposits and higher penalties if it's wrongfully withheld, etc. but it does concern me a little for the future if it continues too far in that direction.
Whats up man,
The areas you mentioned are great. I see a ton of my investors investing into those areas. Some do scrapes, others buy the property and flip it. But those areas are prime. If you are looking, would love to connect and help you through it, I work for an investment brokerage out here.