Best place to start in Denver Metro area
Member since 2021 · 6 posts · 6 votes
Best place to start in Denver Metro area
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Denver, CO · Member since 2018 · 32 posts · 50 votes
5y@Kevin Noonan
Hey Kevin, this market isn’t easy but it’s far from impossible. My partner and I have investments in Denver, Aurora and Colorado Springs and have managed to engineer cash flow out of each of them. I was stuck in ‘analysis paralysis’ for a long time, and here’s what helped me:
1) Think creatively: It’s easy to run cash flow calculators on properties around Denver and get discouraged at the results. I started researching different cities and learning where I could rent by the room to increase cash flow, or zoning districts where I could have or add a second kitchen to operate one property as if it were two, for example.
2) Follow Development: My first purchase in Denver was 5 blocks from the Purina factory in a, shall we say, ‘up and coming’ neighborhood. But you know what? I’m an unapologetic nerd and had been plotting where projects were taking place in Denver (Literally. In my office. With color coded pins. On a map.) I knew there’d be a walking path directly into RiNo soon, the highway would be placed underground with a park on top and that a nearby complex was undergoing a billion dollar renovation. Three years later it has provided me with almost free housing (thank you house hacking), and massive equity. I used a similar strategy to determine where to buy my first rental in Aurora. If it doesn’t cash flow, I won’t buy it, but buying in the path of progress gives you your best shot at increasing future rents and equity.
3) Reach Beyond the Keyboard: I overanalyzed everything before my first deal, and I largely did so alone and lurking on forums like these. It’s not until I reached out and started building a team and networking with other investors over coffee that things really began to move for me. We all have a passion for this or we wouldn’t be here, and it’s energizing to know you’re not alone!
14 Replies
- Denver, CO · Member since 2018 · 32 posts · 50 votes5y
@Kevin Noonan
Hey Kevin, this market isn’t easy but it’s far from impossible. My partner and I have investments in Denver, Aurora and Colorado Springs and have managed to engineer cash flow out of each of them. I was stuck in ‘analysis paralysis’ for a long time, and here’s what helped me:
1) Think creatively: It’s easy to run cash flow calculators on properties around Denver and get discouraged at the results. I started researching different cities and learning where I could rent by the room to increase cash flow, or zoning districts where I could have or add a second kitchen to operate one property as if it were two, for example.
2) Follow Development: My first purchase in Denver was 5 blocks from the Purina factory in a, shall we say, ‘up and coming’ neighborhood. But you know what? I’m an unapologetic nerd and had been plotting where projects were taking place in Denver (Literally. In my office. With color coded pins. On a map.) I knew there’d be a walking path directly into RiNo soon, the highway would be placed underground with a park on top and that a nearby complex was undergoing a billion dollar renovation. Three years later it has provided me with almost free housing (thank you house hacking), and massive equity. I used a similar strategy to determine where to buy my first rental in Aurora. If it doesn’t cash flow, I won’t buy it, but buying in the path of progress gives you your best shot at increasing future rents and equity.
3) Reach Beyond the Keyboard: I overanalyzed everything before my first deal, and I largely did so alone and lurking on forums like these. It’s not until I reached out and started building a team and networking with other investors over coffee that things really began to move for me. We all have a passion for this or we wouldn’t be here, and it’s energizing to know you’re not alone!
- Member since 2021 · 6 posts · 6 votes5y
Thanks for the advice Bridget! I know that the worst thing to do is do nothing, so I plan to get educated and get help to find my first deal whatever it may be!
- 5yColin SmithBusiness MemberRealtor · Colorado Springs, CO · Member since 2013 · 987 posts · 447 votes
I would highly recommend considering small multi-families in the Colorado Springs market. Granted I might biased but I find there is still opportunity here. They don't come around often and when they do there is often multiple offers making them for a deal that breaks even on the cash flow at best but still in a market that is appreciating for the foreseeable future. There is still opportunity because these small multi-families often don't sell when things are going well but when the owners are done with their headaches. These properties are often self-managed or owned by slum lords who are defeated by the process and too cheap to maintain them. This leaves the Buyer with an opportunity to increase the value and to push the cash flow up for a cash flow positive state in the first couple years of ownership. This means you'll need cash for down payment, closing costs, and individual unit remodel to bring the properties back up to a performance level. This takes a combined effort of investing cash and great management to create a great investment for a long term performing asset.
- Flipper/Rehabber · Arvada, CO · Member since 2019 · 63 posts · 47 votes5y
Congrats on getting in the game @Kevin Noonan!
I've been investing/flipping in the surrounding Denver areas for 5+ years - and dang a lot of growth, so I echo @Bridget Brazelton saying it can be frustrating when running the numbers (with the high price tags). Here are some things that I've done over the years - and am doing now (always learning, right!?):
1. Ask yourself how far you're willing to travel to manage a renovation/rental - and look in those areas that are a bit outside the Denver Metro. We do fix n flips ourselves and are finding that the houses in the 2-5 mile range of our primary (Arvada) are super pricey, but since the last few we've done have been in that range, it's hard to deal with traffic/commute for further properties. Just need to find what you're willing to deal with.
2. Write some letters to homes that look distressed/have older occupants/have renters in them. This is a bit of work, but we found one of our first flips this way (handwritten letter) - so you never know!
3. Analyze a deal/property once a week AT LEAST. I'm stressing this because I need to do it myself! It's 'easy' to listen to all of the podcasts, attend meetings, learn, learn learn.....but until you start diving in and getting comfortable with the numbers and what is actually possible, ya are sitting on the sidelines saying there aren't any deals. Again, I need to take my own advice here!
4. Would a wholesale deal be possible for you (how much cash do you have to invest)? We are on several lists of wholesalers in the area - and every once and awhile a deal will come on - again run the numbers. Doesn't hurt to get on some lists!
5. Look at properties with ADU's already attached. Would you be willing to live in one of the units, while you rent the other? Even if it was for a short amount of time - this could help with the financing option.....
Good luck!!! - Real Estate Agent · Littleton, CO · Member since 2014 · 74 posts · 45 votes5y
Hey @Kevin Noonan, Depending on how much cash you have available, investing is still possible in Denver. Don't be afraid to partner with other investors. Money is cheap right now, but it still digs into your profit. Find a group to create an investment group to take the market on.
You do have to be a little creative when finding properties, but they are out there. The inventory on the MLS is low, but the deals still exist where people have unrealistic goals for their asking price. Don't be afraid to troll the MLS for properties that have been sitting on the market too long. They are overpriced and might be willing to negotiate.
It's a numbers game, so don't spend a lot of time analyzing deals. You will get scared off and not pull the trigger. Pulling the trigger and making a little money is still more than $0. You won't always find a touchdown with each one, but a bunch of short passes over the middle do equal one!
- Member since 2021 · 6 posts · 6 votes5y
Thanks for the ideas @Mike Wadsley, @Colin Smith, and @Catie Lawrence. I have max $30k that could go to a deal. There are so many options for what to do with it. Do we keep saving for 20% down on another property in town, do we try to go out of state where the markets are different or...!?
It really help reading everyone’s personal experiences getting started. - Real Estate Agent · Denver, CO · Member since 2017 · 145 posts · 99 votes5y
@Kevin Noonan I know you said moving from your home wasn't an option. I just want to dig in a little before you move on from this. Have you heard of NOMADing? You buy a new investment property with an owner-occupied loan, and rent out your former property. It's not house hacking, but still takes advantage of the little money down and good interest rates for primary homes (as opposed to the 20% down for investment properties). Investors using this model move from home to home (hence the "nomad" term). It's a lot of work, but any investment will take work (from sweat equity to analyzing deals), it's just figuring out the type of work that aligns with your life, goals, and even personality. I'm sure it's a lot of change and work to move a family and 2 young kids, but want to make sure you're exploring all the options, not just the traditional house hack I think you referenced as the live-in method.
- Realtor · Denver, CO · Member since 2018 · 227 posts · 241 votes5y
@Kevin Noonan Hey Kevin -- the Denver market is not impossible, as others mentioned in previous replies. It's of course easier if you purchase a property as a primary residence and take advantage of being able to put down a low percentage on the down payment, but good news is...that's not the only way. Now i"m not sure how much capital you have to invest, but certain parts of denver still have a lower barrier to entry (barnum, athmar park, ruby hill). There are also properties in Sherrelwood (unincorporated adams county, but denver address) that are more affordable and still within 15 minutes of denver. Aurora is also a great place to start. Certain parts of Aurora are quite affordable and can still yield a decent cashflow with a lower price point. Are you looking to use cash you have saved? or will you pull a HELOC on your primary residence?
- Member since 2021 · 6 posts · 6 votes5y
Thanks @chris freeburg, I have heard of that strategy and it’s not super high up on my list yet. While it really doesn’t matter where I live for my work, my kids are pretty settled at their school. I don’t yet have 20% down for something in this market, so out of state investing might be an option? We’re just getting our feet wet and considering many options!
- Member since 2021 · 6 posts · 6 votes5y
Thanks @Grace Wang, in this market that is definitely the way to go!
- 5yJames CarlsonBusiness MemberReal Estate Agent · Colorado | stan.store/JamesCarlson · Member since 2014 · 2k+ posts · 2k+ votes
Congrats on taking a first step. I'm self-centered here and would tell you to look at Colorado Springs. A real rough rule of thumb is that homes are about $100,000 cheaper here than in Denver, so that $400,000 home in Barnum or Westminster might be $300,000 here.
If that $60,000 for downpayment is out of the question, then look to the midwest. We had some investor clients who have a few homes in Oklahoma City and are doing well cash-flow wise. I've got family in Kansas City and see a lot of indicators of it becoming a "cooler" city -- there's a RiNo like district and a LoDo like district. I have another buyer client who's buying in Indianapolis and doing well.
Good luck.
- 5yBen ScottPro MemberProperty Manager · Oklahoma City, OK · Member since 2019 · 577 posts · 351 votes
Hey @Kevin Noonan, Oklahoma City is a great market to invest. Appreciation can be slow because we're a linear market. But there is huge demand right now. Every time I drive by a U-haul lot its full of trucks. Because people are moving here in droves. Let me know if you need any OKC market intel.
- Real Estate Broker · Kansas City Metro · Member since 2015 · 2k+ posts · 1k+ votes5y
Originally posted by @Kevin Noonan:
Good morning BP, I’m a complete beginner but have spent plenty of hours on the BP forums and listening to podcasts. I’m in my early 40s married with 2 busy kids. I’m a project manager for a local electrical contractor and have some money available to begin investing. Moving from our current home is not a viable option, so the live in method would be quite difficult for us.
I’m wondering whats the best place/ market is to get started? The Denver Metro area home prices are a bit out of reach for me right now, so we are thinking of the northern or southern areas outside of Denver.
I would appreciate any advice from locals on referrals or meet ups to start networking.
Thanks for reading, and have a great weekend!
-Kevin
I would recommend David Greene's book on Long Distance Real Estate investing. It is a great starting point, then pick a market either you have been to many times, have family or close friend...or like what you hear about it. I am partial to KC. There is still cash flow and it is appreciating surprisingly well.
- Member since 2021 · 6 posts · 6 votes5y
Thanks for the advice @Alex Olson, @Ben Scott and @James Carlson, I am currently reading the Long Distance investing book by David Greene. Right now we are thinking that the Midwest would be a good place to start hopefully with a duplex type property.
Everyday we get a little bit more educated and talk to more people about this process.
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