Looking for our first rental / income property in Denver area

New Member Introductions
9yFollow

Looking for our first rental / income property in Denver area

Doug Dillmuth
Parker, CO · Member since 2017 · 3 posts · 0 votes

Hi,

My wife and I are recently married and I sold my house to move into her house.  We now find ourselves in the fortunate position of having $250,000 in cash to invest.  The stock market seems to be over priced and we really like the idea of having a higher level of control over our investments.  The idea of being able to use leverage to grow wealth is also attractive.  We decided we are ready to begin the journey of learning everything we can learn about rental properties before we begin shopping for properties.  

The Denver market does seem to be pricey and we are somewhat unsure of the appreciation potential of properties.   Does it make sense to look for a lower value condo or apartment as our first property and to use our assets to acquire multiple properties or to try to leverage our savings to buy a single much larger property?  

We have a new baby and we both work full time so we would be looking for probably a newer property that might not need as much maintenance or rehab.  Does anyone have any recommendations on real estate brokers or agents who are experienced in evaluating investment property potential?  

We are looking forward to learning through Bigger Pockets as we progress towards the purchase of our first rental property.  

Doug & Renee

0Reply
29 views

Investor-friendly agents in Denver, CO

See the agents BiggerPockets members work with in Denver, CO.

Most Popular Reply

Chris LopezPro Member
Real Estate Agent · Denver, CO · Member since 2015 · 1k+ posts · 858 votes
9y

@Doug Dillmuth

There's no right or wrong in terms of investing in smaller properties vs one larger property. You can make a lot of money or lose a lot in either one. Consider:

1) What's your comfort zone?  A lot of people are very comfortable buying a single family home or a condo, because it's in their comfort zone rather than putting $250k as a 20% downpayment into a commercial or small rental apartment building.

I'd recommend staying within your comfort zone as you start out.

2) What fits into your personal finances and risk tolerance? What happens WHEN there is a major repair, vacancy, etc? Is it going to cause a domino effect on the rest of your finances and investments? You don't want one bad event to make you lose the property or worse! 

In my 20's I took every risk in the world. Now that I'm in my "mature" mid 30's, I won't do any investments that make me lay awake at night and worry.

Since you're a new investor and have a baby on the way, my recommendation is to stay conservative as you start. Take $50,000 and buy a ~200k property. After closing and it's been rented for 6 months, go buy another property. You'll learn a lot in the first deal about buying property and about yourself. It's much easier to scale up into more investments, than try to back peddle out of a big one.

There are quite a few great investor friendly brokers in the Denver area. Talk with a couple and see who is a good fit. Definitely reach out to Charles Roberts of Your Castle. He's an investor in Denver with a good portfolio and closed hundreds of transactions for investors. In full disclosure, I'm a bit biased because I'm working with him. I'm working with him because he's a good guy, knows his stuff, and is exactly where I want to be 10 years.

If you reach out to me, I can share a couple of case studies of recent deals that investors have purchased off the MLS in the Denver area. Also, I can send you over the spreadsheet that we use to analyze properties.

Chris

Podcast Guest on Show How to Use Equity in Your Home to Reach Financial Freedom Faster
1Reply
See this reply in the discussion

9 Replies

Jump to latestLatest
  • Chris LopezPro Member
    Real Estate Agent · Denver, CO · Member since 2015 · 1k+ posts · 858 votes
    9y

    @Doug Dillmuth

    There's no right or wrong in terms of investing in smaller properties vs one larger property. You can make a lot of money or lose a lot in either one. Consider:

    1) What's your comfort zone?  A lot of people are very comfortable buying a single family home or a condo, because it's in their comfort zone rather than putting $250k as a 20% downpayment into a commercial or small rental apartment building.

    I'd recommend staying within your comfort zone as you start out.

    2) What fits into your personal finances and risk tolerance? What happens WHEN there is a major repair, vacancy, etc? Is it going to cause a domino effect on the rest of your finances and investments? You don't want one bad event to make you lose the property or worse! 

    In my 20's I took every risk in the world. Now that I'm in my "mature" mid 30's, I won't do any investments that make me lay awake at night and worry.

    Since you're a new investor and have a baby on the way, my recommendation is to stay conservative as you start. Take $50,000 and buy a ~200k property. After closing and it's been rented for 6 months, go buy another property. You'll learn a lot in the first deal about buying property and about yourself. It's much easier to scale up into more investments, than try to back peddle out of a big one.

    There are quite a few great investor friendly brokers in the Denver area. Talk with a couple and see who is a good fit. Definitely reach out to Charles Roberts of Your Castle. He's an investor in Denver with a good portfolio and closed hundreds of transactions for investors. In full disclosure, I'm a bit biased because I'm working with him. I'm working with him because he's a good guy, knows his stuff, and is exactly where I want to be 10 years.

    If you reach out to me, I can share a couple of case studies of recent deals that investors have purchased off the MLS in the Denver area. Also, I can send you over the spreadsheet that we use to analyze properties.

    Chris

    Podcast Guest on Show How to Use Equity in Your Home to Reach Financial Freedom Faster
    1Reply
  • Jared Bouzek
    Lender · Denver, CO · Member since 2015 · 404 posts · 227 votes
    9y

    @Doug Dillmuth Welcome to Bigger Pockets. You're in a good position to get started from a cash standpoint. How you choose to deploy that capital is going to depend on your personality, goals, and risk tolerance. Take some time to soak up all you can from Bigger Pockets. The answer may not necessarily be in quantity of properties but more in quality.

    0Reply
  • Matt M.
    Realtor · Denver, CO · Member since 2013 · 2k+ posts · 1k+ votes
    9y

    Do you homework on agents. I've been getting myself and my clients off market deals which have been more attractive than what I see listed on the MLS. I'm about to list a condo I bought off market earlier this year, and I'm closing on my new flip tomorrow. All off market and well below market.

    The larger investment properties are harder to find. I'm a big fan of diversification until you can safely get into the larger properties.

    Congrats on the new little one! My wife and I just brought our new twins home last week!

    0Reply
  • Dave VisayaPro Member
    Moderator
    Audio Engineer and Investor · Cebu City, Cebu · Member since 2013 · 7k+ posts · 881 votes
    9y

    Hello @Doug Dillmuth, welcome to the site! Feel free to jump in the community here and also take advantage of the treasure of knowledge here.

    BiggerPockets
    0Reply
  • Bill S.Pro Member
    Moderator
    Rental Property Investor · Denver, CO · Member since 2013 · 4k+ posts · 2k+ votes
    9y

    @Doug Dillmuth having $250K in cash is not a bad position to be in but it's also a very dangerous position. It's a bit like handing a toddler a loaded shotgun and telling them to go duck hunting. My suggestion would be to do some serious learning. Read the forums here and work through the ultimate beginners guide. Learn about yourself and your wife's risk tolerance and find something that fits the most conservative one. 

    Unfortunately you missed the easiest opportunity to dip your toe in the investing world by selling your home. Had you kept it, you could have rented it for 2 years (with low tax implications) to get your feet wet will little downside risk. That said, you are where you are so dig in and start learning. There are so many ways to go remember that anyone who tells you "this is what you should do", probably is selling something.

    1Reply
  • Charles Roberts
    Investor · Arvada, CO · Member since 2015 · 18 posts · 35 votes
    9y

    Welcome to the club Doug! All the comments are above are great and I totally agree with them, lots of terrific folks on this chain. There's a lot of interesting learning to be done but one thing I'd add to the mix is you can learn only so much from books, blogs and forums, there is simply nothing like actually going out and looking at properties. It's where the rubber truly meets the road. Once you have some basic metrics under your belt like cap rates and cash-on-cash returns I'd suggest you start looking at properties, a lot of properties, so you can understand what the pros and cons are of a 6.5 cap verses an 8 cap; a 4 percent c-o-c verses a 15. Once you truly understand that you'll be well on your way to learning how to invest for long term wealth building. For example, I closed yesterday on a property in the First Creek neighborhood of Green Valley Ranch with a client on his first rental. It was $243k, $1,895/rent with a 7.2 cap. The cap was a bit lower than what we usually do but we love the complex and the property was perfect so it perfectly met his criteria. It's part art and part science, happy to have you on board!

    1Reply
  • Doug Dillmuth
    OP
    Parker, CO · Member since 2017 · 3 posts · 0 votes
    9y

    Thank you all for the advice and welcoming me to the community!  

    0Reply
  • James Carlson
    Real Estate Agent · Colorado | stan.store/JamesCarlson · Member since 2014 · 2k+ posts · 2k+ votes
    9y

    Hey @Doug Dillmuth . All great info above. I'd definitely opt for using that cash on multiple properties, instead of one big one, or one small one paid for with all cash. I'd suggest leveraging your money, and that means putting as little down on to gather as many properties as possible. As Bill pointed out, your former home would have been a good rental, but that's okay. Not sure you and your wife are interested in this, but if you were both open to moving, you could buy a new house with a low downpayment (5% of whatever), make her home a rental and then you still have a good chunk for future investments. Just a thought.

    About agents ... Definitely talk to a few. The majority of home sales are done by a slim minority of the agents. And even within those ranks, not many have experience with investments. Talk to some, see who knows what, and -- maybe most importantly -- who you feel comfortable with. It's a big financial decision. You need to trust that person.

    Good luck!

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