Hello everyone! I'm a pretty new aspiring investor, and am hoping to make my next property be a 2-5plex somewhere in the Denver area. given my minimal experience, I know this may be a lofty goal. But I love Denver (and I live here) so I want to be a part of making our city a good place to live. Any thoughts on that challenge are welcome as well, but the specific question I have is this:
In my basic MLS search, a 5plex came up in the 80236 zip code that seems to me to be priced a lot lower than I normally expect to see for fjive units in Denver. Looking into it further, there seems to be some potential in the property. My main concern with it is whether or not the neighborhood is a good one in which to invest. I've since learned that the crime rate in that area is relatively high, and my general feel from growing up here is that it is a little bit on the sketchy side. At the same time, Mullen High School is right there so maybe it's a decent neighborhood. Is there anyone out there who may have experience investing in this area?
Here's the property's address: 3860 S Lowell Blvd Denver, CO 80236
Do you have financing figured out for a 5plex? That's commercial lending territory and is a whole different ball game, with usually 20-25% down.
You'll get better rates and lower down payment options by sticking with a 1-4 unit place.
It sounds like you have your heart set on Denver, but let me know if you are open to Littleton.
I have a couple of thoughts:
1) This property is yes, technically in the city of Denver, but come on it's right on the border with Englewood and farther south than most people consider "Denver" to be. So, you'll get more feedback if you allow investors that know Englewood and Littleton a chance to join in the discussion.
2) This property is up there in terms of the cash flow that you can potentially generate for the purchase price in Denver, sourced from the MLS. I don't know this particular neighborhood, but there is probably a reason for that. Not many places in this city where you can rent a 1bd for less than $700 per month. Who are the tenants?
3) This property is over 100 years old, and it's not exactly in Cap Hill or Wash Park. Repairs and rehab in those neighborhoods cost the exact same amount, but add a very different amount of value. What kind of work does this place need?
If you have great answers to all of these questions, and get perspectives from more Denver folks that have been investing much longer than I, I think you'll be in much better position to determine whether or not to offer on this property, and how much.
@Chris Lopez , No, I don't quite have financing figured out for a 5plex. I am working on it though, and it certainly isn't impossible. I wasn't necessarily looking for over 4 units but just don't want to be closed to that idea if the right opportunity comes. I agree with you though, 4 units or less would probably be better for a beginner without much capitol already there. Thanks for the reply!
My RE agent and I went to check it out today, and it is quite the dump! Might be a little bit more than I am prepared to handle. We'll see . . .
Thanks for the reply @Scott Trench !
1) I guess when I say Denver, I'm thinking the metro area. That's good to know that saying "Denver" may not get the right eyes on my post about a property that's this far south. I will be more specific in the future. Do you have any investors/agents that focus on Englewood/Littleton that would be good to talk to about this property?
2) I agree with you, the numbers automatically make me suspicious. My thought is, it's probably too good to be true. My agent and I went to check it out today and we found out why the rent is so low right now - the place is a dump! I don't know who the tenants are, but by the looks of the property they're more concerned about low rents than nice accommodations to put it mildly. The location actually looks good though so there might be potential.
3) I wouldn't be surprised if the rehab costs got higher than $150K on this property, but if the purchase price was low enough, it could still be a good deal! Definitely going to do more research on it, but not going to drop it yet. Again, if you know anyone that would be good for me to talk to I'd definitely appreciate a recommendation.
Thanks again for the input Scott. Very helpful!
I bought my first duplex right across the street from the one you are looking at. The people selling the one at 3820 also had another property around the corner that sold a number of months ago. As you saw, they were never into care of the place. If you like, PM me and I can give you my perspective of the neighborhood. Would love to see a "good" landlord take over the property and make it more habitable, which will only help the neighborhood.