Is 1% rule still possible in Denver? I can't even find cashflow!

General Landlording & Rental Properties
7yFollow

Is 1% rule still possible in Denver? I can't even find cashflow!

Diane Tycangco
Member since 2019 · 120 posts · 26 votes

I live in California and thus would like to be an out of state investor in Denver. I'd like invest in Denver but with HOA and property management fees, I am always negative around $150/mo in cash flow. Where and how can I find cash flowing properties in or around Denver? My budget is $270k for ideally 3b2b. Thanks.

0Reply
92 views

Most Popular Reply

Russell BrazilBusiness Member
Moderator
Real Estate Agent · Washington, D.C. · Member since 2012 · 17k+ posts · 30k+ votes
7y

All properties cash flow. If they are not, then that is because of leverage, not because of the property.

[email protected]301-893-4635Podcast Guest on Show #192
District Invest Group545 Reviews
WebsiteView Page
5Reply
See this reply in the discussion

28 Replies

Jump to latestLatest
  • Geordy Rostad
    Real Estate Broker · Kirkland, WA · Member since 2018 · 549 posts · 411 votes
    7y

    @Diane Tycangco

    If you are investing out of state anyway, why are you trying to jump into yet another overpriced market?

    Have you looked at Memphis, Kansas City, Oklahoma City, and the rest of the long list of where investors are getting insane cashflows right now? 

    4Reply
  • Matthew Irish-JonesBusiness Member
    Real Estate Agent · Buffalo, NY · Member since 2017 · 2k+ posts · 2k+ votes
    7y
    Tons of markers are no longer cash flow positive. Denver is one of them. I would find a cash flow positive market besides Denver
    Irish Jones Realty4.947 Reviews
    View Page
    1Reply
  • Diane Tycangco
    OP
    Member since 2019 · 120 posts · 26 votes
    7y

    Do those cashflowing cities appreciate?  Which ones do?

    0Reply
  • Russell BrazilBusiness Member
    Moderator
    Real Estate Agent · Washington, D.C. · Member since 2012 · 17k+ posts · 30k+ votes
    7y

    All properties cash flow. If they are not, then that is because of leverage, not because of the property.

    [email protected]301-893-4635Podcast Guest on Show #192
    District Invest Group545 Reviews
    WebsiteView Page
    5Reply
  • Diane Tycangco
    OP
    Member since 2019 · 120 posts · 26 votes
    7y

    What I mean is cashflowing with 20% down.  what you are saying is that all properties cash flow -  if they don't at 20% then increase your downpayment, right?

    0Reply
  • Tanner Crawley
    Realtor · Lone Tree, CO · Member since 2017 · 139 posts · 112 votes
    7y

    @Diane Tycangco
    Denver can be tough, you might want to look into tertiary markets nearby. Colorado Springs and Fort Collins have several cash flowing properties. They also have positive market outlooks going forward. I especially like Colorado Springs. 

    0Reply
  • Russell BrazilBusiness Member
    Moderator
    Real Estate Agent · Washington, D.C. · Member since 2012 · 17k+ posts · 30k+ votes
    7y
    Originally posted by @Diane Tycangco:

    What I mean is cashflowing with 20% down.  what you are saying is that all properties cash flow -  if they don't at 20% then increase your downpayment, right?

     Yield is a matter of underlying risk in any asset class, whether real estate, dividends, bonds. If you want greater yield, then you need to take on more risk. Denver is a relatively low risk market this why the yield is relatively low. Either increase your risk, or lower your leverage.

    [email protected]301-893-4635Podcast Guest on Show #192
    District Invest Group545 Reviews
    WebsiteView Page
    3Reply
  • Joe Massey
    Lender · Denver, CO · Member since 2017 · 52 posts · 22 votes
    7y

    Hi @Diane Tycangco,

    Denver is still a great place to invest! The Denver Metro Area has exhibited an average of 6% growth in value every year for the last 40 years! A knowledgeable agent like @Chris Lopez can help find properties that appreciate and cash flow. If information is what you're looking for; Chris can be found within many of his classes and webinars. 

    0Reply
  • Alyssa Dyer
    Rental Property Investor · Oklahoma City, OK · Member since 2017 · 1k+ posts · 694 votes
    7y

    @Diane Tycangco I know agents from Denver that are also investors that are still coming to OKC to invest. Even though they've got the best tap on the market, first access to on-market inventory it's just tough to do there right now due to the high entry point and exactly the pain point you're facing.. the inability to cash flow with only 20% down. 

    As far as appreciation, OKC appreciates slowly, but steadily. We see around 3% annually, which is just enough to cover increases in insurance and taxes. You won't ever have big exciting jumps, but during the next downturn, you won't see a big drop either! 

    Overall an off-market deal here looks like 60-150k, 7-8% cap rates and cash flow from $100-$200 a door after all debt service, vacancy, maintenance, property management and other operating expenses! 

    3Reply
  • Diane Tycangco
    OP
    Member since 2019 · 120 posts · 26 votes
    7y

    I tried to contact Chris Lopez but no reply.  Being from California, what I am trying to do is the exact opposite of what his podcast Podcast #92: Out of State Investing w/ Terrance Doyle is saying meaning invest where you live.

    0Reply
  • Jalen McKenna
    Member since 2019 · 1 post · 0 votes
    7y

    I would look at markets close to Denver as mentioned above! I have seen some condos that can cashflow in Denver, but thise come with their own worries. Mainly poor quality neirborhoods, or newly formed condos from a previous apartment complex. Again, I would look at Colorado Springs, Fort Collins, or some areas in Pueblo.

    0Reply
  • Steve K.
    Realtor · Boulder, CO · Member since 2016 · 3k+ posts · 5k+ votes
    7y
    Originally posted by @Diane Tycangco:

    I live in California and thus would like to be an out of state investor in Denver. I'd like invest in Denver but with HOA and property management fees, I am always negative around $150/mo in cash flow. Where and how can I find cash flowing properties in or around Denver? My budget is $270k for ideally 3b2b. Thanks.

     There are still cash flowing properties in Denver but you have to go multifamily, 3-4 units minimum. With a budget of $270k you could put 25% down on a quad and get cashflow. 

    Rents here have been going up so fast, properties I bought just a few years ago with $250/door cashflow are now kicking off $400/door. Even better than that, they have appreciated $350 PER DAY. 

    0Reply
  • Diane Tycangco
    OP
    Member since 2019 · 120 posts · 26 votes
    7y

    No, my money to invest is not $270k, what I meant was the value of the property is $270k.  so hard to find anything.

    0Reply
  • Account Closed
    Rental Property Investor · Yuma, AZ · Member since 2019 · 637 posts · 46 votes
    7y

    @Diane Tycangco Do a lease option.

    0Reply
  • Ryan Riches
    Real Estate Broker · Denver, CO · Member since 2018 · 87 posts · 66 votes
    7y

    Looking for a 3br 2ba home with a value of $270k is simply not going to happen in Denver. The median sale price for a 3 bed house in Denver is $465k. However, you could find a 1br house in your budget. Your best bet for what you are looking for would be to look in Colorado Springs, or Pueblo.

    2Reply
  • Diane Tycangco
    OP
    Member since 2019 · 120 posts · 26 votes
    7y

    I was talking about a condo.

    0Reply
  • Chris Koch
    Member since 2019 · 26 posts · 13 votes
    7y

    @Diane Tycangco... Denver is very tough market to find good real estate deals in. I am north of Denver in Ft. Collins and this area also is becoming almost impossible to find 1% deals. In addition, it is hard to find reasonable properties for under $270K -- unless you want to go the "slum lord" route. You could look into areas such as Loveland, Windsor, and Greely, but they are clearly not the same as Denver. That said, I must agree with some others as you can also look at other markets outside of CO to find solid 1%+ deals.

    0Reply
  • Gretchen P.
    Rental Property Investor · Littleton, CO · Member since 2014 · 150 posts · 114 votes
    7y

    Colorado is becoming less investor/landlord friendly, with Denver leading the way. I have several small multi-family  properties in Colorado Springs, and it is becoming difficult to find a 1% deal. 

    0Reply
  • Chris LopezPro Member
    Real Estate Agent · Denver, CO · Member since 2015 · 1k+ posts · 858 votes
    7y

    @Diane Tycangco we connected over email, correct?

    Yes, you can still find cash flowing properties in Denver. However, the majority of condos are investor heavy and therefore require a 25% down payment for a 30 year conventional. Some local banks, will lend on those conds at 20% with their portfolio products, but then you have 5/1 or 7/1 ARM.

    Is Denver the cash flow? No. The bull market has been going on for a long time. Most markets will have compressed cap rates. Investing out of state at a 7-8 cap rate to me is not worth the risk of being a long distance landlord. I'll take a 6.5 multi cap or a 7.5 condo cap in Denver, before looking out of state.  I live in Denver, since you're out of state, it may make sense to invest elsewhere. Regardless, I think more people should invest where they live for a long term investment. Yes, there are places to even invest in California!

    Podcast Guest on Show How to Use Equity in Your Home to Reach Financial Freedom Faster
    0Reply
  • James Carlson
    Real Estate Agent · Colorado | stan.store/JamesCarlson · Member since 2014 · 2k+ posts · 2k+ votes
    7y

    @Diane Tycangco

    A couple options I'm thinking of. 

    1. What about a really small condo in the heart of Denver that you can furnish and rent to traveling nurses? That usually brings in 20-30% more per month than a traditional long-term rental. (There are places around $170-$180 that can be nice. I am trying to get some clients to buy a $150k place right now that I think would do well.)

    2. Maybe a slightly larger condo out west by the CU medical campus. You can get a 2 (maybe 3) bedroom unit out there that might cash flow okay as well. 

    3. Look at Colorado Springs, where your $270,000 is going to go further. Also, you have the option of operating an Airbnb/short-term rental, which can give you flexibility and likely higher rents.

    0Reply
  • Diane Tycangco
    OP
    Member since 2019 · 120 posts · 26 votes
    7y

    Thank you James.  My budget is actually $70k.  The total value of the property would be $270k.  How much would a condo for traveling nurses rent for and what would be the vacancy rate for those?  Do you have  prospects for #2 and/or #3?

    0Reply
  • Derek Diamond
    Rental Property Investor · Steamboat Springs, CO · Member since 2014 · 278 posts · 100 votes
    7y

    @Diane Tycangco 

    I have invested in Denver for the last 8 years. Now I am not finding the cashflow I want. The first property I bough was at 1.8% (so close to that illusive 2%) and that was off the MLS. I personally don't like to work super hard when finding a place, to me the competition is just to high in Denver, so I went out of state and get 1.5%-2.0%.

    0Reply
  • Diane Tycangco
    OP
    Member since 2019 · 120 posts · 26 votes
    7y

    Where did you go?  The reason why I like is because Denver has such steady appreciation, and fast growth because of high tech right?

    0Reply
  • Diane Tycangco
    OP
    Member since 2019 · 120 posts · 26 votes
    7y

    but slow appreciation if any.

    0Reply
  • Josh C.Pro Member
    Property Manager · Indianapolis, IN · Member since 2010 · 1k+ posts · 1k+ votes
    7y

    I know. I want high cash flow and high appreciation for not too much down too.

    0Reply
Join the conversationCreate a free account to reply, vote on answers and follow this thread.
Log InJoin for Free