Military Move - Rent or Buy in Denver
BP,
I just found out I could be moving to Denver, CO for my next set of military orders. I'd be stationed at Buckley AFB. I just started looking at houses and it looks as if prices are extremely high. I will only be there for two years, so I'm wondering if it's better just to rent and invest my money elsewhere in cheaper areas of the country, or look for a place to buy.
If I was to purchase, I'd want to buy a house that I could hold on to and know that I would have positive cash flow as a rental after I move. Does anyone know of any areas of Denver where this would be possible? From a very quick look on the internet, it doesn't look like there is anything on the market right now that would pass the 1% rule.
Remember, I'd be living in it first with my family, so I don't want to look in the bad areas of town. I'd be open for a rehab, as I've done some fix and flips in Texas. And I'd be ok with a longer commute to work if the location was right.
Would love some recommendations from local Denver investors/realtors.
Castle Rock area is one of the fastest growing regions in the area as far as I know.
I live in Lakewood(west of Denver) and am looking out of state due to soaring local prices. However, If I were you....I would look for a duplex and use my VA assuming you can get a property with nothing down. I would then house hack and live basically free from tenant rents. I don't expect a decline in rents anytime soon. Just need to be sure you are okay with 375k plus loan.
Castle Rock is a crazy long commute from Buckley! And the pass between the two is often closed in the winter. So, no to that. Play around with the Trulia tools (used to be HotPads' heat map), which has crime, rental, best schools etc. overlaid on the housing demand map. Trulia Heat Maps
As an aside, when the weather is snowy/icy, I'd rather not be driving into the sun...I-70 is wicked. Denver's prices have had a big run-up; in-migration from wealthier areas has been strong. Two headlines show economists expect prices to fall.
http://www.thedenverchannel.com/money/consumer/zil...
http://www.denverpost.com/business/ci_29220471/den...
"...But after the area's big run-up in home prices, renters would do better to invest their down payment savings elsewhere and wait to buy, according to an index from Florida Atlantic University.
"There is about a 70 percent chance that renters in Denver will get more wealth on average than buyers," said Ken Johnson, a real estate economist at the university in Boca Raton, Fla...."
Hi Stuart, the competiton in denver is fierce and there are many options for you. Autora can be extremely affordable and most areas are really nice and can be rented once you vacate the house after a few years and you could always sell it too. The win will be appreciation and rent in the future.
Yep, the prices are high in Denver, but on the other hand the long term prospects are good. And rent is astronomical, so if you find the right place you might be better of buying in the long run. you could either sell or keep it as a rental- if you decided to sell I really doubt you'd lose any money on a two year hold
That area around Buckley is pretty good for a buy and hold rental. The idea of a duplex is great (a favorite strategy of mine to recommend actually) but there aren't too many plexes out there. Closer in towards Denver proper, or a bit north, maybe. You do want to consider location/commute a lot- the traffic can be awful.
It's hard to get too specific about what your options would be without knowing a little more about your possible price range and the size of your family. Do you know when your move would happen?
Stuart - I might look into Green Valley Ranch, just north of Buckley near DIA. The commute would not be bad at all. Prices are a bit more reasonable there and I'm optimistic about the area due to the looming development of Pena Station. Read more here:
http://www.penastation.com/Home.aspx
After that development is completed and the commercial spaces fill up with shops, restaurants, and bars, we could see GVR prices appreciate accordingly.
Originally posted by @Kerry Baird:Castle Rock is a crazy long commute from Buckley! And the pass between the two is often closed in the winter. So, no to that. Play around with the Trulia tools (used to be HotPads' heat map), which has crime, rental, best schools etc. overlaid on the housing demand map. Trulia Heat Maps
As an aside, when the weather is snowy/icy, I'd rather not be driving into the sun...I-70 is wicked. Denver's prices have had a big run-up; in-migration from wealthier areas has been strong. Two headlines show economists expect prices to fall.
Just curious which pass that is that closes between Castle Rock and Aurora? :)
@Stuart Grazier Because of the short time frame I would suggest renting, you will need a little time to understand the area before you make a decision to invest and hopefully not making a decision from an online forum. Knowing that you need to be in a safe place for your family and the frenzy of our market it will be challenging to get a "deal".
I will second @Tyler Howell, prices in Green Valley Ranch seem to be lagging the rest of Denver - but it was one of the hardest hit areas in the downturn. A lot of people working at Buckley live in that area - I know because I bought 3 properties in the last 6 months from people that were transferred out over the last few years.
It really depends on your price point - the price point ($250k and lower) that will make the most sense for a long term rental is in the highest demand right now. I just listed a house between Buckley and GVRish at $220k and have offers up to $250k.
@Travis Sperr~ Whoops! I'm thinking S of Castle Rock. Monument. :D
If you're willing to make the commute from Colorado Springs then you can definitely find properties that meet the 1% rule. Or at least something close to it in the best middle income class parts of town. Just shoot me a PM if you're interested in knowing more about the Colorado Springs (or Monument) market.
I am not thinking a commute of that distance would make Stuart a happy guy...
Another area to consider is the SE Aurora area that is covered by the Cherry Creek School district, zipcodes 80015, 80016, 80013 (South of Hampden Ave to stay in CC schools). I live and invest in this area, and have had renters in the past working at Buckley. Its a 15 minute drive.
You won't find anything meeting the 1% rule strictly speaking. But there is a decent amount of stuff that would make ideal rental property (3/4 bed, 2 bath, newer build, great schools, very safe, lots of shopping via Southlands Mall area that is booming) in the $300K-$350K range in the area that can work as cash- flow-positive at current rental rates, and even with some softening on rental rates. This type of place is selling very very quickly. Know the price point is pretty high compared to other areas, but the math can work.
I work with a property manager who has 30 years experience in the area, has 15 properties of his own, manages many others, and he's pretty bullish about the prospects for this area for the next several years.
@Stuart Grazier you are not likely to find a SFR that meets the 1% rule in the Denver area. It maybe possible with lots of shopping and perhaps if you could buy a fixer from a wholesaler with cash. I'm for owning in general and there are tons of other considerations that are hard to weigh for others. We have had good appreciation and rent growth the past few years. We probably have at least one more year of that but you never really know about the future.
If I were to sum things up. If you want to own a property in a great market then buy. If you want own cash flow today then rent.
-
Real Estate Agent Colorado (#IR044146)
- Reliant Real Estate, Inc.
Hey @Stuart Grazier
I am in the Air Force and stationed down in Colorado Springs at Schriever afb. I have been investing for the last two years while active duty mainly in fix and flips.
It can be difficult to do both military and active investing but it definitely is possible.
Let me know if you want to meet up and discuss deals and strategies.
Keep Hustling.
Wow! Thanks to everyone for so many recommendations. It's definitely appreciated.
@Joseph Graeve It can definitely be difficult investing while active military. I've been doing deals from Naples, Italy the last two years and that makes it even harder!! I'll be moving to Denver next summer, so I'm still a ways off, but when I get in the area, I'd definitely like to join up. I'll send you a private note.
@Bill S. Thanks for the thoughts. You make a good point about a solid market and long term appreciation.
@Sherman Langford Incredibly helpful! Thank you very much. These prices definitely look a little better and may work for buy and holds. Are there many foreclosures or off-market deals from wholesalers in the area? I'm assuming they get picked up pretty quick. What are typical rents going for in that area? I'd probably be purchasing a 3 or 4 bed home.
@Colin Smith Colorado Springs is probably a little too far of a commute. Thank you though.
@Travis Sperr and @Tyler Howell I'll take a look at GVR as well. Thank you. I'd like to shoot for as close to getting the 1% rule as possible, so the closer to $250k, the better for me. I'm sure those go quickly though.
@Jean Bolger Thank you for the info. I still have a year before I will move...June 2017 is my move date, so I have lots of time. I do like the idea of a duplex, but it would have to be big enough for my family. I have one kiddo, with hopefully another on the way soon. I'd like to stay below $400k, but would be happier with $250k-$300k if that is even doable. Do you have any particular zip codes that would be better for duplexes? Would need at least a 3 bed per side, but prefer 4 bed.
@Matt Grace Love the idea of the house hack with a duplex. Same question I asked to Jean: any suggest areas of town to look at duplexes? Would need at 3-4 bed per side. I randomly saw advertising for new-construction KB home duplexes in Stapleton that are going for a little less than $400k. Is that a decent area? Seems like that price point would work if the other side is renting for normal Denver rents.
@Greg Hamer Castle Rock looks nice too. Looks a little more expensive than SE Aurora, but definitely nice. Thanks for recommendation.
Lastly, does anyone know of any wholesalers that may have off-market deals? I would be interested in getting on investor buyer's lists to start getting an idea of the market.
Thanks again.
Hi @Stuart Grazier,
The Stapleton area is an interesting option if you can find places in your price range. The redevelopment there will likely start spreading across the Stapleton borders into Aurora, but those areas are still rough and might not be great for a young family. I also like the potential in the neighborhoods near Children's Hospital in Aurora. The area between Colfax, Peoria, Potomac and 11th has interesting potential. The hospital will be a stabilizing factor and the neighborhoods are quiet. The private school in the neighborhood is great, but the biggest issue is the quality of public schools. If your kids are not school age, then I think that has the potential to be a good rental after you move. I haven't researched the area to understand rents vs purchase prices so you'll have to let me know what you think.
Buy and live in a quadplex. Then move out and find a duplex in a class B area. Then after enough cash is built buy a SFR to live and flip. Done.
I have lived in SE Aurora for 25 years. Personally, I prefer Denver for properties, but you can still find some less expensive properties in Aurora if you do your research. In my area (Mission Viejo, Meadowood, 80013-14 zip), there are houses that are usually fixed up for around 310 or so. These would be 1970's ranch or bi-level homes. Mission Viejo falls in the Cherry Creek school system, which is a great selling point (schools are wonderful). Meadowood side is Aurora Public Schools and some of the schools are great and others, not so much. I have been trying to figure out that 1% rule too, but I don't think you could apply it to Denver metro because the prices are so high. Even if you purchased in Aurora, you will probably only get max about $2200 or so for a 3 bedroom home. Your market would be middle income, blue collar families.
Aurora has kind of a bad rap for a lot of people. It's really a great city, very diverse, safe, family oriented but there are areas that are "bad" and those are the areas which come to mind when you say you want to live in Aurora.
So, the areas I would avoid would be right around the Denver/Aurora border. You would definitely be able to find homes under 300k and you may be able to find an older duplex (if that is your goal), but I would use caution when investing in those areas as there is lots of crime, not the best schools, etc.
With that being said, they are developing quite a bit around by the Children's Hospital/CU Medical/VA hospital area (around that area and off of Colfax) and I was thinking that might be an interesting area to take a look at. Lots of apartments, restaurants going up like crazy, although you go in a few blocks off of Colfax and it's still pretty rough. I have also heard that the area around by the City Center (used to be Aurora Mall back in the day, Chambers/Mississippi and 225) is really growing like crazy. They just put the new light rail station in and there are tons of condos and apartments going up around that area. Another part to look into is right around by Parker and 225. They just tore down an entire shopping center over there and are in the process of putting up new development. Not sure when or what yet, but with the proximity to the Nine Mile Station, it might be worth looking into.
As you go further south (Southland Mall area), the houses are newer, better schools, more appealing to renters, you will find houses in the low to high 400's. You might get a bit more for rent, but still not going to come close to 1% rule.
If you have any other questions about Aurora, I would be happy to help you. Good luck!