Investing in NE Colorado

9 Replies

Hey BP investors!

Have any of you invested in the smaller towns of NE Colorado? Fort Morgan, Brush, Sterling, etc. Properties are lower cost with lower gross income but cashflow is still possible. The great concern is demand. Can you invest in small communities with success? 

If you have any experience or recommendations I would greatly appreciate it. 

Thank you for your input,

Joshua Tikal

Sfh or multi family? Smaller communities are a little harder to cash flow than larger ones because you have a smaller customer pool. Would just say increase your vacancy rate when you run your numbers. 

find out the main employers in the area and make sure you stay attentive to how they are doing because it only takes one to close it's doors to have a drastic impact on a small community.

Hello @Charles D Cruz ,

SFR's and multi-family are the focus. The strategy would be to have a great amount of saturation in the market once a property is acquired. Trying to maximize the footprint in a small market will allow for more influence on rates.

We are property managers in Fort Morgan. The rental market here is hot.  People are desperate to find a place to rent, meaning we have low turnover on our rentals and usually have excellent applications for any new rentals before a unit even comes open.

It's a seller's market right now, making it more challenging to find new rentals. And, because it's a seller's market, several landlords have sold their rentals in the last year which has made the rental market even tighter. 

An example: we looked at a (supposed) three bedroom/1 bath SFR last week, priced at $60K. It had no furnace, foundation was shaky (cinder blocks stacked on old bricks, car jacks and poles in buckets of sand), the 220V for dryer and stove were apparently pig-tailed together. It needed a new roof at a cost of at least $12k, new siding, lots more issues. The third bedroom was really the landing upstairs. There were so many problems that we wondered if it was better as a scrape. Anyway, it was on the market about a day and under contract. There are a lot of houses similar, in bad need of rehab, that are being thrown on the market right now. It's challenging.

@Joshua Tikal when it's good it's very very good and when it's bad it's very very bad. If I was looking in the areas you mentioned, I would start in Ft Morgan. I know of many contractors' laborers that are commuting from there to work in the Denver metro. Demand is driven by forces outside of the immediate area. Know this, in general farming and ranching communities (rural communities) are dying. The number of folks in agriculture is shrinking. If there is not some outside driver for jobs, then I would pass. 

Thank you @Bill S. Those are great points. Market sensitivity is absolutely a factor when evaluating a location. That being said, as an investor we could provide a greater impact to a smaller community which is a key goal with our business. We are just unsure if the risk is worth it.   

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