New to the business in Colorado

Commerce City, CO · Member since 2016 · 5 posts · 1 vote

I am Brandon Donahue. I am a current U.S. Army service member looking to begin a career with investment properties. I am a Colorado native and have lived here all but 4 years of my life. I spent 4 years on active duty in Georgia.

I honestly do not have real estate experience other than buying one home and then selling it. My goals are probably similar to most. I want to be able to own multiple properties and create an investment portfolio for myself. I learned about Bigger Pockets while listening to other podcasts about business and entrepreneurship.

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Dorothy Ma

Investor · Denver, CO · Member since 2015 · 138 posts · 73 votes

10y

@Brandon Donahue - welcome! I own several rentals in Denver. I was lucky to have purchased them a few years ago. You just have to be strategic in today's Denver market. If you're just looking for rentals, I've had some of my investor clients buy in more suburban areas for buy and holds since the metro is insane. You might also have to put in some work to get the deal in some houses and get them to rentable condition. Also, for someone like you it might be good to try to utilize your ability to get a VA loan and put no money down to be able to free up capital. I've had a few VA loan offers on a duplex I just recently listed - they were both interested in living in one unit and renting out the other, which is also a good strategy to get into this market.

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Michael S.Pro Member
Biggerpockets Support · Las Pinas, Metro Manila · Member since 2015 · 7k+ posts · 1k+ votes
10y
Welcome to Biggerpockets @Brandon Donahue Have you already read the Ultimate beginner's guide? It would be a good resource for starters. Also there are plenty more you can get by asking around the forums. All the best
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Robert Herrera
Investor · Denver, CO · Member since 2015 · 492 posts · 267 votes
10y
Brandon Donahue I own a rental in commerce city where you are. Cashflow is great on that one. I have better luck in other areas that are more affordable now. Mostly southern Colorado
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Ivan Mendoza
Denver, CO · Member since 2016 · 19 posts · 0 votes
10y
@Robert Herrera would you suggest anyone investing in a rental in commerce city, this will be my first investment in real estate. For example a duplex for $300,000, you can probably get the same deal in Denver. Just curios to know your opinion. Thanks
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Robert Herrera
Investor · Denver, CO · Member since 2015 · 492 posts · 267 votes
10y
@Ivan Mendoza Have you ran any numbers? mortgage will be between 1,500-2000. How much can you rent each side? Going to need about $60,000 down plus closing costs etc. Is it ready to go or will you need to do repairs? Also management costs our just do all yourself?
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Ivan Mendoza
Denver, CO · Member since 2016 · 19 posts · 0 votes
10y
@Robert Herrera thanks good points. I'm noticing there are a lot of over priced homes in Denver and Lakewood that would not make any good rentals. Bigger pockets mentions using the 1 to 2% when analyzing the a rental, but I have found out that technique doesn't really work in the Denver metro area everything is always under 1% Where you you suggest to start looking?
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Dorothy Ma
Investor · Denver, CO · Member since 2015 · 138 posts · 73 votes
10y
@Brandon Donahue - welcome! I own several rentals in Denver. I was lucky to have purchased them a few years ago. You just have to be strategic in today's Denver market. If you're just looking for rentals, I've had some of my investor clients buy in more suburban areas for buy and holds since the metro is insane. You might also have to put in some work to get the deal in some houses and get them to rentable condition. Also, for someone like you it might be good to try to utilize your ability to get a VA loan and put no money down to be able to free up capital. I've had a few VA loan offers on a duplex I just recently listed - they were both interested in living in one unit and renting out the other, which is also a good strategy to get into this market.
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Ayodeji Kuponiyi
Investor · King of Prussia, PA · Member since 2014 · 1k+ posts · 339 votes
10y
@Brandon Donahue Thank you for your service. welcome to BP! Continue your education. Read books on investing in real estate, listen to the podcasts, attend webinars and stay active on the forums while connecting with other investors in your area and pick a niche. Best of luck!
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Tyler Howell
Property Manager · Denver, CO · Member since 2016 · 107 posts · 43 votes
10y
@Brandon Donahue I began my RE investing career using my VA loan as well. I "house hacked" like @Dorothy Ma mentions above, however VA loans have a cap around $420k, and you're very unlikely to find a multifamily property in Denver that will be approved for the loan at that price point. You might look for a property with some type of in-law suite with separate entrance and rent that out (or live in it for a while). Glad to talk VA loan experience sometime.
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Brandon Donahue
OP
Commerce City, CO · Member since 2016 · 5 posts · 1 vote
10y
I also would love to speak with you about VA possibilities. I agree with you about the Denver market. There is very few properties that are considerable for VA loans.
We have thought about branching out to other cities as well. Fort Morgan and Brush to be exact. The hardest thing there is the conditions of the homes. I'm sure the VA would laugh at us if we even considered some of them.
Thank you for the post. I hope to speak with you soon!
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Joshua Lyon
Investor / Sales Associate / Airline Pilot · Oviedo, FL · Member since 2016 · 105 posts · 31 votes
10y
I have a single family unit just north of Fort Carson in Colorado Springs. There's a great rental market there due to all the military bases surrounding the city. I've had no problem covering expenses and building cash flow with stable renters. I used my VA loan and I highly recommend it.
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Norberto Villanueva
Real Estate Consultant · Colorado Springs, CO · Member since 2013 · 325 posts · 117 votes
10y
@Brandon Donahue - Welcome to Bigger Pockets. You will find everything you wanted to know but didn't know you needed to ask in the BP community.
@Tyler Howell is correct, the VA loan is an excellent investment strategy to use for house hacking. Know that some or all of your entitlement will be used if and when you do, but any entitlement used will be released if and when you sell. BTW, VA loans are assumable in certain circumstances, making it easier to move up, down or sideways in your real estate investment ventures.
@Ivan Mendoza, it is increasingly difficult to find properties that fit the 1-2% rule in Colorado due to the strong seller's market we find ourselves in. Many, ourselves included, are pursuing a southward purchasing trend, with Denver investors routinely come down to Colorado Springs, Springs investors to Pueblo, Pueblo investors to Trinidad and so on.
@Robert Herrera - yes, a $200k purchase will require $60k down with most conventional financing. However, there is a 15% down payment conventional program for investors, not to mention 10% down, 100% rehab financing with some private/hard money sources.
Please don't hesitate to let me know if I can help.
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Brandon Donahue
OP
Commerce City, CO · Member since 2016 · 5 posts · 1 vote
10y
Does anyone have experience north of Denver? With the way the market is up north we could find ourselves in homes for $70k (With a ton of Reno needed.)
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Adilah Curry
Investor · Gulfport, MS · Member since 2016 · 74 posts · 21 votes
10y
@Brandon DonahueThank you for your service & welcome to Bigger Pockets! I'm relatively new here as well. My colleague has experience with VA & renovation loans & has worked all over the state. I would go as far as saying that she's an expert in that area. She could possibly help. I could inbox you her info if you're interested. If nothing more than to pick her brain & ask questions, it'd be well worth it to give her a call if you're looking to invest & do renovations outside of Denver. She's very friendly, knowledgeable, experienced & helpful. She takes a lot of pride in educating people around renovation loans, VA, etc. :)
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Brandon Donahue
OP
Commerce City, CO · Member since 2016 · 5 posts · 1 vote
10y
Absolutely. Please inbox me that!!
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Brandon Donahue
OP
Commerce City, CO · Member since 2016 · 5 posts · 1 vote
10y
Another question we came up with today. We looked at a multifamily property that had a 9.7% Cap rate.
What is the cap rate and how does that benefit me as a buyer?
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Kerry BairdPro Member
Rental Property Investor · Melbourne, FL · Member since 2011 · 3k+ posts · 2k+ votes
10y
Welcome! I'm originally from Colorado, joined the Air Force and served for 10 years. Hubby and I started buying when we were stationed in England as young airmen, and have now been doing houses for a number of years.
A reminder that you can go up to 4 units on the VA, and must intend to owner occupy for a year, but can rent the other units. We had to sign a certification that we would owner occupy for a year. I'm attaching a link that discusses CAP rate. Cap Rate
All the best~
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Tripp Howell
Real Estate Agent · Denver, CO · Member since 2016 · 58 posts · 24 votes
10y
@Brandon Donahue, cap rate is the Net Operating Income (NOI) / Sales Price. For the property you looked at with a 9.7% cap rate, that means, if the property costs $100,000 to purchase, it will generate $9,700 of NOI. For you, the buyer, the cap rate allows you to compare investments to each other. Generally, you'd like to buy at a higher cap and sell at a lower cap.
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