Identifying Hot Areas of the Denver Metro

6 Replies

Hello Bp Community and the Denver Investor Network,


The market has been very strong and finding the next hot area is always on everyones mind. I have come across a ton of resources for choosing a neighborhood within a city for investing in a rental property, but what are some good resources and criteria that flippers look for when having a 4-6 month exit strategy. What else about the area do you all consider when flipping a property?

Below is always an interesting question I like to ask my investors when getting to know their criteria and what motives them to purchase there next project: "Which local areas of the Denver Metro would suite themselves best for their strategy and why?"

Some folks will look for low days on market, low active inventory and comps that are closing above ask.

What are the areas that you all like to flip in? For flips any recent success stories? Any of my Data folks have any good insight?


Thanks in advance,

Spencer

@Spencer Rafii there are a lot of flippers in Sunnyside. It is close to the Highlands and interest will only be growing further north. West Colfax and Barnum. Really anything SW of Colfax and Federal to Sheridan, down to Mississippi is going to be a great price point for an up and coming area in the next 2-4 years.

Funny what @Matt M. says about the plant - that place smells! And, there's a history of industrial contamination. But, even in Globeville, there are pockets of new development...

I will second @Mark Stark on the potential for neighborhoods S of W. Colfax (Barnum, Athmar Park, etc) and N of I-70. I also think there is potential in Edgewater and Wheat Ridge (a little bit sleepier for some reason, but they just added a big food hall).

I'd also look at E Colfax due to the city's East Area Plan and the Denver Opportunity Zones (specific low-income urban and rural communities areas identified for favorable treatment of reinvested capital gains and forgiveness of tax on new capital gains)

@Chris Freeburg  - Thanks for those links, always great to stay up to date with any changes in plans. I am curious how many flippers out there target Opportunity Zones. Four Point Funding is a really sweet OZ investors. 


@Mark Stark - Funny you all mentioned Barnum, one of the investors that buys from our Wholesale Network, just bought a SFR that he had flipped back in 2016. He used very low end finishes in 2016 but the growth in that area now allows for a few steps up so he is going to give it a facelift.

@Spencer Rafii Thanks for the shoutout to our OZ fund at Four Points.  I appreciate it.

I thought I'd chime in on your flipping discussion. Prior to setting up four points we flipped hundreds of properties on the Western Slope.  There are multiple ways to analyze a deal, and we would change to numbers based on our evaluation of risk and timing, but the short answer is that we looked to net 15% on each flip, counting all rehab and transaction costs (but not counting financing costs)  Ideally we'd go start to finish in 6 months which allowed us to turn the money twice in one year.  Most of our distressed purchases were courthouse steps purchases for cash. In many cases that meant we could not see inside, and we were never doing full inspections.  Terrible way to buy one house but it can work out well at scale if you factor in risk appropriately. If we couldn't see inside, we'd increase our rehab guestimate.  If the house was older or we felt like it would take longer (occupied for instance) then we would increase our profit target.  Ultimately in our case that came down to being disciplined about only buying it at or below our max number at auction.

Chris