All Forum Posts by: James Carlson

@Dakota Mivshek

As @Joe Kaliher said above (thanks for linking to my post), Denver's unrelated persons restriction is proposed to go from 2-8. I suspect that will see some pushback as it makes its way through public hearings, the planning board and finally city council. (I can see a very similar argument from the opponents as you saw over the Airbnb/short-term rental fight ... it will change the character of a neighborhood ... it'll be nothing but parties ... transients!!!

I think the change is a bit drastic -- they're going from the strictest city in the state to the most generous -- but I think the direction of change is good. It's especially true if you're looking to do a rent-by-the-room model or are house-hacking yourself. (I just had clients close on a 6-bedroom house nearish downtown Denver. They're going to kill it as house hackers, but technically, they will be in violation of the law until it changes.)

That last point is important to make. According to those that do co-living houses where lots of people live, the city doesn't want to penalize people for this. So long as you're being a good neighbor, it isn't likely to come to the city's attention. 

@Charles Phanumphai

I guess the simplest way I talk to buyers and investors looking in Denver is this:

• If you're solely interested in cash flow, (the weakest of ways to make money in real estate) Denver's not for you. The price-rent ratios aren't as favorable as they are in the midwest.
• If you're open to looking at the other ways that real estate makes money, such as appreciation, then Denver's a potentially great buy. (Average annual home price appreciation from 1975-2016 in Denver was 6%. On a $350,000 house, that's $18,000 the first year. You're not getting that in cash flow most places.)

You can tell my bias from the above characterizations, but it's just a matter of your goals and what feels comfortable -- somewhat certain cash flow or somewhat certain appreciation.

Now, we haven't even mentioned doing a rent-by-the-room model (like house hacking without you staying there). If you self-manage a property like that, it can look real good for cash flow in Denver. I had two buyers do this in Aurora. They nabbed a 4/2 house in Aurora for $335,000. 20% down. All-in monthly was at $2050. Rents averaged $725/room or $2900/mo. 

Good luck!

Thoughts on moving to Denver??? Uh, yeah. Do it!!! Excuse me for the same line I say on here all the time ... 300 days of sun, proximity to the mountains, great beer, legal weed, bars, restaurants, arts, culture, tons of parks. Who doesn't like Denver? (Seriously, who doesn't? I'll fight them.)

@Scott L.

To be the second contrarian, this "don't bank on appreciation" rule is just wrong for certain markets. (Markets like Denver, for instance.) This is not to say you should buy cash-flow negative properties, but like @Chris Lopez pointed out, there are historic appreciation numbers that you can pull to see how a certain city does. On top of that, there are markers you can look for in a city to gauge it's potential for growth. Net migration, high-paying jobs/companies coming in, low unemployment, etc. To not at least consider appreciation would be like not considering the future appreciation potential of a stock. 

Now, maybe your market doesn't historically appreciate well, and so then you bank on zero to little appreciation, but that's not a rule that applies to all markets. 

When we buy, we're getting places that cash-flow, but we are also certainly considering the long-term appreciation potential. But we're also keeping everything we can. It's a long-term play. It's worth noting that if you think you might need to sell in 2-5 years or so, no one knows what will happen in the market. 

@Elijah Bryant

I agree with the others. I think the idea of a "best time of year" to buy is a misnomer. The consensus view is that there's less inventory but fewer buyers in the winter and more houses on market in summer and more buyers. So that's a wash, right? But then this January/February in Denver, the market has been crazy. Multiple offers on houses, over asking. And it's just the start of winter. So who knows?

The best time to buy is when you're ready. The 1-3% fluctuation of prices month over month doesn't mean as much as the year over year appreciation that you hopefully see in the long term. As the saying goes, don't wait to buy real estate; buy real estate and wait.

I wish you luck!

@Aaron T. 

You should check the ordinance. I know there is language in there addressing military deployments. I don't know about PCSing. 

@Aaron T. 

Even if you got a variance, if you want to do a short-term rental/Airbnb rental, you need to make sure it's at least 500' from the other nearest non-owner occupied STR.

Now, if you live in the property, the city of Colorado Springs is okay with you doing Airbnb in it, no matter the zoning and no matter the density of other nearby STRs.

@Brandon Bonfiglio

Robin hit all the points. Just to reiterate, under the new Airbnb laws in Colorado Springs, you can:

• run a non-owner occupied short-term rental (i.e investment STR) in areas zoned R2 and above ONLY IF it it is not within 500' of another non-owner occupied STR.

We are sending a list of homes to the city every week to check on the 500-foot bubble status of them. What we get back is that almost everything is within 500' of another non-owner occupied STR. So the gaps between those bubbles is shrinking and pretty soon, the map will be blotted out with bubbles and make it impossible to start a new Airbnb property.

@Knox B Howe

The correction! Yes, it's been coming in Denver for six years now. Where's that dang correction? As long as inventory stays low and low interest rates encourage more buyers, there will be upward pressure on prices. 

I thought we were finally slowing down last year in Denver. The pendulum swung slightly back in the favor of buyers. Interest rates weren't as crazy low and inventory had nearly doubled from 4500 to 9000 homes for sale at any given time. As a buyer's agent, it was a little more fun as we could negotiate instead of just throwing money at a house.

But now ...

Just anecdotally, Denver seems to have reverted. Multiple offers on a lot of homes my buyers are looking at. Properties going under contract in two days. And it's only February! Two numbers give some backbone to my gut feeling. 

• Inventory is back down to 4900 homes in the Denver metro area as of February. (For context, Denver has historically had 15,000 homes on market at any given time. There was a high of 24,000 homes in 2006.)
• Interest rates are back in the basement, which encourages more buyers. (I just had a buyer get a 3.3% rate. WTF!?)

Low supply and high demand often equals higher prices. There has to be a roof to this as prices continue to outpace wage growth. And we seem to be on the tail end of this upward cycle. But damn if I know when that we can officially call it the death of this upward ride. (This has to be at least one factor in why so many are house hacking as well. People are buying at closer and closer to their DTI limit and are looking for relief.)

@Justin Calahan

First off, congrats on the potential big step of buying your first place. That's really exciting.

Two things could be true at the same time: 1. This landlord is shady; and 2. You don't have any right to a month-to-month lease. 

Not much matters unless it's in your lease. Read it through, line-by-line. Is there anything that talks about what happens at the end of the initial agreed-upon term? I know our leases in Denver will say explicitly that it goes month to month at X rate.

When does your lease actually end? Do you have time to start the search and buy before then? If not, what about putting your stuff in storage and renting a furnished, medium-term rental after this lease term ends? THat would give you some flexibility during your home search.

I wish you luck!