Looking at investing in 80219, Denver area code. Advice?

Question

An experienced investor in the area says to know what I'm getting into in the neighborhood. I know it's a transitional area, but are there serious concerns I should look at before investing here?

Can anyone speak from experience of investing in this area? How have your investments turned out? Have you had a lot of difficulty finding good tenants that won't destroy the property?

Anson Young · Answer

- just came across a wholesale deal in 80219 - I'll send it your way via email.

Gavin E. · Answer

Thanks @Bill S. I have driven the area and toured a few 3-2s with my realtor. The property I'm looking at in the area is a duplex with 3-1 on the 1st story. and a 2-1 garden level unit in the basement. You're correct in that there aren't any egress windows for the basement unit.

I would also definitely agree that I haven't seen a "good rent/ sale price" ratio in any of the areas i've looked at in Denver. Currently, I'm trying to find places that can come as close to 1% as possible and still have trouble finding >0.75%. I'm comfortable not hitting a home run on my first investment and using it as a learning opportunity. I'd like to make sure it's at least positive cash flow, however.

Bill S. · Answer

have you driven the area. I have been through it a few times and I don't recall very many 3-2s there. I suppose there might be some with basements that would look that way on paper (that vintage doesn't have egress windows in the basements). I haven't seen too many areas of Denver or surround that I would classify as "good" rent / sale price ratio.

Account Closed · Answer

It's been a while since I updated my spreadsheet, but 80219 was (and probably still is) the most active zip code in Denver for investor purchases.

Here's a screenshot:

Gavin E. · Answer

What % deal is good enough in your book for buy and hold investing? Where/ what area do you look to find them?

Tom Spaeth · Answer

Not really sure what you mean by transitional. At this point there is no gentrification going on in the area that I know of. And Jason post points to that. In true transitional neighborhoods the investors get pushed out as the owner occupants start to buy in. A few years ago I talked to a police officer. He stated it was the worst area in the city as far as he was concerned. (Not scientific I know).

This will be a tough area. A great home run investment would be a duplex in an area you could handle living in and then live in one side and rent the other. It's a great way to start.

Jon Holdman · Answer

I don't think there's anywhere here you can find a 1% deal.  And a 1% deal isn't really good enough in my book.  Too much competition and too many new investors wanting to jump on the bandwagon.

Gavin E. · Answer

Thanks for the replies. I'm not 100% set on investing in 80219, but was attracted to it since it's close to downtown and with in my price range of <250k for 3bed2bath SFR.

Any recommendations for other areas to look at in the Denver or surrounding areas with a good rent/ sale price ratio for buy and hold investing?

Jon Holdman · Answer

I've tried to buy some properties in that area without success.  I'd buy property in that zip if I could get a deal.

Bill S. · Answer

I've had two former tenants and a neighbor of one of my units buy in that area. I would say that they think it's going to change. It's really one of the few inexpensive areas remaining near downtown.

It really depends on who you want to rent to. My experience in investing in transitional areas is that rents are the last thing that turns around. People are willing to risk buying in a transitional area but not rent there. Your primary tenant pool would be those already living there. When I did that, I did not rent to the natives and it was a tough go for the first few years. To attract the tenants like I wanted to deal with, I had to be below market and even then it was tough sledding. If you don't mind dealing with the locals, I don't know what to tell you.

Someone I know purchased a building (24 units) in that area and got their lunch handed to them. They paid too much, over improved, improved wrong, mismanaged, got caught in the down turn, and lost the building and all the cash they sunk into it.

Looking at investing in 80219, Denver area code. Advice?

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