Newbie from Denver, Colorado

Newbie from Denver, Colorado

Denver, CO · Member since 2018 · 19 posts · 5 votes

Hi Everyone,

I'm a long time Denver resident looking to increase my income through REI, though still exploring what "niches" and locations I'd like to focus my energy on. I currently own my primary residence (purchased in 2011) as well as a rental property (a single family HUD home purchased in 2009), both located in Denver. I was ready to begin exploring real estate as a source of additional income more seriously back in 2011/2012, but then other business opportunities got in the way. Long story short, I'm now an owner at a small brewery in the Five Points Neighborhood in Denver. The brewing industry is fun and rewarding (I've been a brewer for 14 years now), but nobody brews beer for quick profit. In the meantime, I'm back to exploring REI as a potential source of income, which in turn led me to the already incredibly helpful BP podcast and community. I've already enjoyed tons of podcasts and numerous posts, and am excited to dive into some of the BP books available.

I'm hoping for any input on my situation, which I'll explain below and is mostly related to money. While I can't currently offer any worthwhile REI advice in return, I can offer a free beer to anyone who happens to find themselves in Denver!

I don't receive a W2 and my income is not enough to qualify me for a conventional loan. I only have about $7k I might be able to access (in the forms of dividends from a life insurance policy I can borrow from).

I have a good amount of equity in both homes (conservatively, around $350k combined), but not sure how/if to access it? Do I try to get some sort of an equity financed heloc or non-traditional refi? I've also debated selling the rental (Mortgage is $72k, ARV is $290k) and reinvesting the money. I'm kind of stuck here...Even if I sell the rental, I'll need to put some work and money into it...I'm not sure if I'd even be able to get financing to do this (hard money loan?). If I don't fix it up, I'm pretty sure I can still sell it, but for much less, likely to an investor or maybe someone with 203k loan. This is my main road block now, as some people tell me I'd be crazy to sell the rental (after all expenses I still cash flow around $700/mo), and I understand the sentiment. But I also need some cash to get moving.

Once I do find a way to get cash, I'm thinking of looking at Cleveland and Akron as possible locations to invest in rentals or flips (I grew up in Akron and still have friends and family there and am somewhat familiar with the area). But I'm open to suggestions.  Denver seems like it might be tough to get into right now. 

Or..Maybe it's just not the right time for me to start investing in real estate?

Thanks for reading my rambling and I look forward to learning from and eventually contributing to BP!

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Real Estate Agent · Colorado | stan.store/JamesCarlson · Member since 2014 · 2k+ posts · 2k+ votes
8y

@Taylor Rees

Probably the most important thing for me to know is ... Where do you brew? I'm always looking for a good new place.

Everyone above offered some good thoughts. I would definitely want to set up a HELOC. (It can take a few weeks to set up, so even if you don't use it right away, you'll have it available when you're ready.) The W2 job is probably the harder issue. For the right deal, there's always private money or even some lenders who base their lending off something other than two years of continuous income in the same field.

I think the Midwest is certainly interesting. My wife and I have a goal to buy there this year. If you want to stay nearby, you could look at Colorado Springs. It's prices are high but not nearly as bad as Denver. (Plus you can do Airbnb in rentals down there.)

Oh, and @Jerryll Noorden is spot on. The best learning you'll ever get is by doing. Get out there, wherever it is! Good luck!

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  • Equity Raiser and Turnkey Provider · Cleveland, OH · Member since 2016 · 4k+ posts · 1k+ votes
    8y
    Originally posted by @Taylor Rees:

    Hi Everyone,

    I'm a long time Denver resident looking to increase my income through REI, though still exploring what "niches" and locations I'd like to focus my energy on. I currently own my primary residence (purchased in 2011) as well as a rental property (a single family HUD home purchased in 2009), both located in Denver. I was ready to begin exploring real estate as a source of additional income more seriously back in 2011/2012, but then other business opportunities got in the way. Long story short, I'm now an owner at a small brewery in the Five Points Neighborhood in Denver. The brewing industry is fun and rewarding (I've been a brewer for 14 years now), but nobody brews beer for quick profit. In the meantime, I'm back to exploring REI as a potential source of income, which in turn led me to the already incredibly helpful BP podcast and community. I've already enjoyed tons of podcasts and numerous posts, and am excited to dive into some of the BP books available.

    I'm hoping for any input on my situation, which I'll explain below and is mostly related to money. While I can't currently offer any worthwhile REI advice in return, I can offer a free beer to anyone who happens to find themselves in Denver!

    I don't receive a W2 and my income is not enough to qualify me for a conventional loan. I only have about $7k I might be able to access (in the forms of dividends from a life insurance policy I can borrow from).

    I have a good amount of equity in both homes (conservatively, around $350k combined), but not sure how/if to access it? Do I try to get some sort of an equity financed heloc or non-traditional refi? I've also debated selling the rental (Mortgage is $72k, ARV is $290k) and reinvesting the money. I'm kind of stuck here...Even if I sell the rental, I'll need to put some work and money into it...I'm not sure if I'd even be able to get financing to do this (hard money loan?). If I don't fix it up, I'm pretty sure I can still sell it, but for much less, likely to an investor or maybe someone with 203k loan. This is my main road block now, as some people tell me I'd be crazy to sell the rental (after all expenses I still cash flow around $700/mo), and I understand the sentiment. But I also need some cash to get moving.

    Once I do find a way to get cash, I'm thinking of looking at Cleveland and Akron as possible locations to invest in rentals or flips (I grew up in Akron and still have friends and family there and am somewhat familiar with the area). But I'm open to suggestions.  Denver seems like it might be tough to get into right now. 

    Or..Maybe it's just not the right time for me to start investing in real estate?

    Thanks for reading my rambling and I look forward to learning from and eventually contributing to BP!

    Hello and welcome! You have come to the right place! Also, Cleveland is a great place to earn an amazing ROI, plus the market is starting to take off due to other investors (real estate and industry) investing in the region!

  • Rental Property Investor · Cleveland, OH · Member since 2015 · 1k+ posts · 880 votes
    8y

    Welcome to BP @Taylor

    @Taylor Rees! Sounds like you've got a great plan! Cleveland and northeast Ohio has been a great market for a lot of out of state investors! 

  • Chris LopezPro Member
    Real Estate Agent · Denver, CO · Member since 2015 · 1k+ posts · 858 votes
    8y

    @Taylor Rees Welcome to BP!

    Talk with as many loan officers as possible to explore your options. Make sure you discuss the scenarios. If you sell your Denver rental to buy out of state, are you paying all cast for properties or financing? if you're financing, are you able to qualify for a loan? 

  • Flipper/Rehabber · Wilton, CT · Member since 2015 · 4k+ posts · 4k+ votes
    8y

    Duuuuude, Podcasts are all great and stuff...

    But be careful. The more you learn the more you realize you know nothing, the more you will want to learn the more you realize you know nothing, the more you want to learn, the more...

    I think you get it. It was HELL for me to start... till I finally said, screw this poop! And I dove in.

    The best thing you can do right now is get a  domain name, and set it up. Then look into getting leads asap. You will learn as you go. Important is the domain name. Get ranking on google. The rest will follow!

  • Realtor · Denver, CO · Member since 2013 · 2k+ posts · 1k+ votes
    8y

    I've got a contact at Merchants here in town that will finance based on the asset and not your income. Rates are 7.5%+. You'll need 25% down at least, which looks like you'll have to pull as a heloc out of one or both of your properties. Westerra will do helocs on rentals. The real question is can you qualify for one with your income scenario. 

    I buy where I know and live. I wouldn't feel comfortable buying out of town. Deals can be had in Denver, you just have to look.

    Can you leverage your patrons to help you find a place? My best deals come from my sphere. 

  • Bill S.Pro Member
    Moderator
    Rental Property Investor · Denver, CO · Member since 2013 · 4k+ posts · 2k+ votes
    8y

    @Taylor Rees there are hard money loans where you can cross collateralize the equity in 2nd position on your rental property and the added value of the purchased property to purchase a flip. So you can go that route to flip or BRRR locally. The exit on the BRRR is a bit challenging right now. As for looking out of state, I am not a fan of that approach but since you are familiar with the area you are looking, you would be better off than most. In reality, it's pretty hard to invest without cash. I would not be in favor of selling your local property to buy something out of state. Your transaction costs would really hurt your returns for years to come. If you could sell you SFR here and get a larger multi in an area you know then mayyyybeee I would go there.

    Come out to one of the local meetups and meet some folks and see what you can learn.

  • Real Estate Broker · Cleveland Dayton Cincinnati Toledo Columbus & Akron, OH · Member since 2013 · 31k+ posts · 20k+ votes
    8y
    Originally posted by @Taylor Rees:

    Hi Everyone,

    I'm a long time Denver resident looking to increase my income through REI, though still exploring what "niches" and locations I'd like to focus my energy on. I currently own my primary residence (purchased in 2011) as well as a rental property (a single family HUD home purchased in 2009), both located in Denver. I was ready to begin exploring real estate as a source of additional income more seriously back in 2011/2012, but then other business opportunities got in the way. Long story short, I'm now an owner at a small brewery in the Five Points Neighborhood in Denver. The brewing industry is fun and rewarding (I've been a brewer for 14 years now), but nobody brews beer for quick profit. In the meantime, I'm back to exploring REI as a potential source of income, which in turn led me to the already incredibly helpful BP podcast and community. I've already enjoyed tons of podcasts and numerous posts, and am excited to dive into some of the BP books available.

    I'm hoping for any input on my situation, which I'll explain below and is mostly related to money. While I can't currently offer any worthwhile REI advice in return, I can offer a free beer to anyone who happens to find themselves in Denver!

    I don't receive a W2 and my income is not enough to qualify me for a conventional loan. I only have about $7k I might be able to access (in the forms of dividends from a life insurance policy I can borrow from).

    I have a good amount of equity in both homes (conservatively, around $350k combined), but not sure how/if to access it? Do I try to get some sort of an equity financed heloc or non-traditional refi? I've also debated selling the rental (Mortgage is $72k, ARV is $290k) and reinvesting the money. I'm kind of stuck here...Even if I sell the rental, I'll need to put some work and money into it...I'm not sure if I'd even be able to get financing to do this (hard money loan?). If I don't fix it up, I'm pretty sure I can still sell it, but for much less, likely to an investor or maybe someone with 203k loan. This is my main road block now, as some people tell me I'd be crazy to sell the rental (after all expenses I still cash flow around $700/mo), and I understand the sentiment. But I also need some cash to get moving.

    Once I do find a way to get cash, I'm thinking of looking at Cleveland and Akron as possible locations to invest in rentals or flips (I grew up in Akron and still have friends and family there and am somewhat familiar with the area). But I'm open to suggestions.  Denver seems like it might be tough to get into right now. 

    Or..Maybe it's just not the right time for me to start investing in real estate?

    Thanks for reading my rambling and I look forward to learning from and eventually contributing to BP!

     Welcome aboard my man.

    Tons of info & close to 1M members here on BP so don't be shy in the forums. You have questions ask away & somebody is bound to have a solid answer for you. Feel free to tag me in any questions & i'll drop by to post my $.02

  • Rental Property Investor · Escondido, CA · Member since 2018 · 268 posts · 137 votes
    8y

    Welcome Taylor. I'm new myself with less experience with REI than you. I would definitely defer to the veteran investors here on your situation, but I do like the advice of finding a good loan officer/financial advisor to run your options by. I tend to be analytical, so creating a chart that compares the different options on things like how much capital they generate, interest rates, long term implications (selling vs refi vs helocs), etc. You could also consider partnering on your first few deals.

    Hope everything gets rolling for you.

  • Denver, CO · Member since 2018 · 19 posts · 5 votes
    8y

    @Tom Ott Thanks for the hello and welcome, as well as the input regarding Cleveland. 

    @Matt Motil Thanks for the Welcome and input.

  • Denver, CO · Member since 2018 · 19 posts · 5 votes
    8y

    @Chris Lopez Thanks for the advice! Do you recommend I continue to reach out to some more conventional lenders (i've already spoke with a few who indicated it would be difficult to impossible to get traditional financing) or should I be focusing my effort on hard money and private lenders?   Your questions are also concerns of mine...Even if I have the cash from selling my other property, if i can't qualify to refi on a rental property into a more conventional loan down the road, it may not be worth it unless i just want to flip. Thanks again, and I intend to keep working on the financing situation.

  • Denver, CO · Member since 2018 · 19 posts · 5 votes
    8y

    @Jerryll Noorden Thanks for the advice! I think you're right that at some point I just need to dive in and start learning by doing. 

    @Matt M. Thanks for the recommendations regarding lending/helocs. I intend to keep reaching out to conventional and hard money/private lenders to see what they can do with my situation, if anything. 

    Also, thanks for the insight regarding Denver. I'd obviously prefer to stay close to home if possible. Talking to our patrons is something i've not really considered in the past, but could be a real option for finding leads. Many of them live in the 5 points/Curtis Park/Whittier/Cole areas and might know of some properties. Thanks for the tip!

  • Denver, CO · Member since 2018 · 19 posts · 5 votes
    8y

    @Bill S.  Thanks for the advice, recommendations, and information!  I'm going to be digging deeper into hard money loan options, and what you've said here gives me more clarity as to what I may be looking for. Most real estate professionals I've spoken with, in general, share your sentiment regarding selling my rental property.  Your also not alone in your concerns with out of state investing. Ideally I'd like to stay local if possible. I'm also going to do my best to make it to the local meet up at Blue Moon on Feb 26th! 

    Thanks again!

  • Denver, CO · Member since 2018 · 19 posts · 5 votes
    8y

    @James Wise Thanks for the warm welcome and willingness to help!  I'll be sure to reach out in the future.

  • Denver, CO · Member since 2018 · 19 posts · 5 votes
    8y

    @Account Closed Thanks for the welcome and information!  I also like your idea of creating charts/spreadsheets so I can start analyzing my options and possibilities.  Thanks again.

  • Lender · Denver, CO · Member since 2017 · 23 posts · 8 votes
    8y

    @taylor Rees Welcome! I love 203K loan! In investing, you would be using the Homestyle renovation loan (that's Fannie Mae's program) as 203K doesn't allow for investment properties anymore.

    I am originally from Pittsburgh and still have friends in real estate there. A lot of them are buying in Ohio right now b/c the opportunity is even better than Pittsburgh right now.

    I agree with Bill S, a meet up is a great place to get information. The good new is you have options to get another property.

  • Investor · Orlando, FL · Member since 2012 · 822 posts · 303 votes
    8y

    Dude! Welcome! That is awesome you brew. My family lives in Cap Hill/LoDo so next time I am in town I will have to check out your brewery(if I havnt drank there already)

    We should start a brewers guild hedgefund to buy real estate. I know some of these cats are cashing in on beer and maryj and need somewhere to dock that cash! haha! 

  • Denver, CO · Member since 2018 · 19 posts · 5 votes
    8y

    @Jeff Zinsmeister Thanks for the welcome and the input! 

    @Justin Stamper Thanks for the welcome! I like your idea about the hedgefund! Stop by Spangalang Brewery the next time your are back in Denver, and let me know you're coming in. 

  • Real Estate Agent · Colorado | stan.store/JamesCarlson · Member since 2014 · 2k+ posts · 2k+ votes
    8y

    @Taylor Rees

    Probably the most important thing for me to know is ... Where do you brew? I'm always looking for a good new place.

    Everyone above offered some good thoughts. I would definitely want to set up a HELOC. (It can take a few weeks to set up, so even if you don't use it right away, you'll have it available when you're ready.) The W2 job is probably the harder issue. For the right deal, there's always private money or even some lenders who base their lending off something other than two years of continuous income in the same field.

    I think the Midwest is certainly interesting. My wife and I have a goal to buy there this year. If you want to stay nearby, you could look at Colorado Springs. It's prices are high but not nearly as bad as Denver. (Plus you can do Airbnb in rentals down there.)

    Oh, and @Jerryll Noorden is spot on. The best learning you'll ever get is by doing. Get out there, wherever it is! Good luck!

  • Flipper/Rehabber · Wilton, CT · Member since 2015 · 4k+ posts · 4k+ votes
    8y
    Originally posted by @James Carlson:

    @Taylor Rees

    Oh, and @Jerryll Noorden is spot on. The best learning you'll ever get is by doing. Get out there, wherever it is! Good luck!

     I get goosebumps when someone praises me.

    Come on say it again!

    ^_^

  • Chris LopezPro Member
    Real Estate Agent · Denver, CO · Member since 2015 · 1k+ posts · 858 votes
    8y

    @Taylor Rees I don't have a great answer for you on talking with more conventional loan officers or not. I just know the financing aspect is the most over looked by many investors. My best answer is generic - talk to more people in every category. If you're looking to buy out of state, talk with lenders in that state too.

  • Denver, CO · Member since 2018 · 19 posts · 5 votes
    8y

    @James Carlson Hi James! I'm a brewer/owner at Spangalang Brewery in Five Points (27th and Welton). Stop by sometime and I'd love to buy you a beer and pick your brain! 

    Thanks for the input. I'm in the process of reaching out to different lenders to start the process and see if any of them think it's worth the time to apply for heloc, given my situation.  I've heard that the Springs may be an option as well. 

    Thanks!

  • Denver, CO · Member since 2018 · 19 posts · 5 votes
    8y

    @Chris Lopez  Thanks for the input! Will do. 

  • Denver, CO · Member since 2016 · 114 posts · 99 votes
    8y

    If you are buying in Cleveland or Akron buy this summer when the market tanks as Lebron inevitably leaves for the Lakers ;-)

  • Denver, CO · Member since 2012 · 27 posts · 12 votes
    8y

    Happy to help out if you need any appraisal assistance. I'm just 3 blocks east in Whittier!

  • Specialist · Cleveland, OH · Member since 2011 · 1k+ posts · 852 votes
    8y

    @Taylor Rees That is awesome that you Brew Beer! My wife owns a Vodka Company. 

    As you know, being in the booze business, real estate is a cake walk! LOL

    Cleveland is a great market to grab cheap cash flow properties. I offer financing for most of my deals because lets face it, if you are in this business full time, it is challenging to get a bank loan. My point is, do not worry about w2 and getting bank loans. that is irrelevant to your success in buying rentals. 

    I would love to meet up sometime and of course sample your beer!

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