All Forum Posts by: James Carlson

@Charles Conroy

Without more details, it's tough to answer whether a market-listed duplex in Denver is a good buy or not. And hard to say without seeing the unit and knowing its location whether you should put some money in or not. As with so many questions here on BP, the answer is a frustrating ... "it depends." 

I think @Bill S. makes a great point about the inaction that comes from too many supposed deal pipelines. Keeping focused and taking action is important, so if just focusing on the MLS works, then great. (Side note: I would be interested to see what kind of properties you're seeing, because it does seem tough to make an on-market Denver duplex truly cash flow once you consider all the repair and capX savings. Anyway, maybe you've found a decent place. Would love to know more.)

Also, to supplement what @Brent Crosby said, it's not timing the market, it's time in the market that matters. So if you're holding this duplex for the long-term, you're probably going to do well. (That's a personal opinion based on my affinity for Denver as a long-term buy-and-hold investor.) 

I wish you luck!

@Jason Breton

Yes, when you're doing a furnished rental -- whether medium term or short-term rental like Airbnb -- I think you should be covering everything. They want to move in and be ready to go. No hassle. 

Yeah, we know the Colorado Springs market well. (About 50% of our deals are down there.) There are definitely areas that seem to get the biggest volume of Airbnb travelers. Old Colorado City, downtown area (though you gotta know where the boundaries of good/bad are. It's hit or miss.), and a bit north on the west side all seem to do well. Those are the areas where most of our clients look and is also where we own run our own STR on both sides of a duplex.

Good luck!

@Jason Breton

A couple things:

• I'd second @Jake Cohen about the medium-term furnished model seems to do quite nice here in Denver. We do it ourselves in the first condo we bought years ago. A number of our buyer clients have also bought property in Denver for the traveling nurse model, and it's worked well for them too. (Of course, this all depends on what you bought in at. If your mortgage is $4,000, then it'll be more difficult.)
• On the question of whether to do Airbnb/short-term rentals (STRs) or not ... no, DO NOT DO IT. We talk about this in our monthly presentation, but the city of Denver now requires every STR applicant to sign a legal affidavit affirming that it's your primary residence. If they find out you lied, you can be charged with a felony. (Like this couple was, and this lawyer, and this guy.) I get the allure of the Airbnb money, but you want your investments to be something you can count on, and one that's always in legal jeopardy doesn't fit that bill. 
• If you like Airbnb money, you might look at Colorado Springs. We've had a lot of clients buy there where the laws are open to short-term rental investment. It's not Denver Airbnb money, but it's better than a medium-term rental here. 

Good luck!

@Tanner Westerheid

There's no wrong answer here. It depends on your comfort level. That said ... my thoughts ....

• I agree with some of the above comments. You'd be fine buying a 3/2 in Athmar Park/Barnum or East Colfax for under $400k, rent out the other two rooms and in a year or two or three, you can move on to another and continue to rent the previous. You will be fine. 
• What about a slightly higher priced home with a separate basement space? We just had a mid-20s client buy this exact thing. You rent out a room up top long-term and then you Airbnb or short-term rent the downstairs. This could offset your mortgage quite a bit. 
• That said, I don't get everyone's disdain for condos. This was actually my wife's and my first purchase (and later became our first rental). Sure the HOAs can be costly, but it's good experience with the buying process without the higher price point. (Plus, you're 24 and may want to stay in the downtown/RiNo/LoDo/LoHi area and finding a smaller condo in your price range in those areas is doable.)

The most important thing I think is action. I'm a big advocate of your primary residence being your first investment. You have to live somewhere; might as well own it. Then you can start looking elsewhere -- out of state, etc.

Good luck!

@Britton Anderson

First off, welcome to Colorado. No better state to make a home than here, in my opinion. 

I hate to be discouraging, but I prefer to be honest with my buyer clients. Deals are tough to impossible to come by in Denver. That's for a couple reasons:

• The supply-and-demand ratio has been out of whack for so long. Record low inventory and record high demand means sellers don't have to sell to just anyone. They can get better dollar.
• Denver's been a hot spot for bigger name investors for awhile, and they have their systems in place to gobble up properties that might actually be deals.
• Coastal money keeps coming in for either a primary residence or a second home. They don't care as much whether there's any meat on the bone of a deal. 

There are still ways to not overpay. (A good agent is a good first step.) Also, buy in an area that hasn't totally exploded. (I'm looking at you Athmar Park and Barnum and East Colfax.) If you're open to it, you could also house-hack, either by getting a bigger home and renting out all your other rooms or finding a home with a separate basement space and doing a short-term rental on Airbnb. 

But when it comes down to it, if you're moving to Denver, and you're looking to stay in Denver for a bit, then buy a good home and settle in for the long-run. This market is as good as any for the long-run.

I wish you luck! 

@Reed W.

Well, that's not a bad situation to be in. ;) Not every day someone offers you that kind of money at that kind of rate. And not to stroke your ego too much, but it seems like you're thinking about it in the right way. A couple thoughts:

• I'll share my thought on your investment strategies below, but I'd say the first thing you want to do is have a serious conversation with your partner. We work with a lot of clients (male clients) who want to get a Denver house with a basement apartment for either long-term or short-term renting like Airbnb. The ones that actually work out are the guys who have their spouses on board. I don't mean to stereotype here, but often times, the guy is gung-ho for the investment piece of it, while the woman's top priority by a long-shot is simply the comfortable space to live. My wife, and business partner, @Erin Spradlin runs a women's investment group if your partner were ever interested. 

• Of your options, I like the first three. (New builds are overpriced and won't nab you the rent you need to make it a good investment.) At your price, a duplex or home with a mother-in-law suite is certainly an option. There're a few nice ones right now in the central Denver area -- Cap Hill, Uptown, RiNo, Sunnyside, Highlands, etc.. Be sure to work with someone who knows the zoning laws and lot size requirements around duplexes and homes with basement apartments. And you definitely want to know that when you're looking at homes one which you think you can build an ADU.

• Just in general, try to be as clear as you can on your goals. That means you, your partner and your agent all being on the same page. You've got some great options, and all of them are within reach at that price point.

Good luck!

@Brandon Ness

That's an interesting idea. I know just enough to get me in trouble, so I'll only address a few of your questions.

When you're talking down-payment assistance programs in Colorado, you're likely talking CHFA. (Colorado Housing and Financing Authority.) Basically, they put you in a 3.5% down-payment loan but then provide that downpayment. You have to cover at least $1,000 of the closing costs -- and often more than that. You need to talk to a lender who understands the CHFA program. They will be able to walk you through the issues. (I already foresee an issue with you providing funds for the downpayment. You can't accept downpayment gifts unless it's from immediate family.)

In general, though, the process ain't too hard. We have a lot of clients buying their first home in Colorado Springs, and we think it's a great buy. The city is getting so much overflow from Denver, and COS continues to show up on all these lists of best places to live. This is all to say that it's attracting more and more people and seems poised to be a good long-term investment. 

Your lender and your agent might come at the same time. If you find a good lender, they'll have an agent they can recommend. If you find a good agent, they'll have a few good lenders. And definitely ask your agent about their experience with investing. Hopefully, they do a lot of deals with investors and hopefully invest themselves. 

Good luck!

@Jacob Mueller

I'd second @Robin Searle. Hoste's been managing our duplex for short-term rentals in Colorado Springs (and the STRs of several of our Airbnb investment clients) and we've been really happy. They've been in it for a few years and have their systems down. 

You can also do a modified version where you get a suped-up cleaning crew that will keep an eye out for household items running low or any maintenance issue, but if you want full-service, hands-off Airbnb property management, give Hoste a call.

@Tekota Ruby

The way I think about things is this ... RE investing isn't about killing it on the one deal. It's about amassing numerous properties that help you gain more financial freedom. Because of that, I think the best first purchase is a safe purchase that doesn't overwhelm you and keeps you motivated for the next purchase and the next and the next one. 

I know, I know ... everyone has heard the incredible stories on the podcasts of creative investing. And maybe I'm too conservative about this, but I think the best first purchase is a simple primary residence. That's how we got started in Denver (bought a simple 1br condo), and it's how a lot of our clients do it in either Denver or Colorado Springs.

I mean, you have to live somewhere so why not own that place. If you can afford it, make it a duplex or a triplex, and get some practice with being a landlord, but don't get discouraged if it's simply a SFH. You can rent out the rooms long-term or do a short-term rental on Airbnb. Even if you just live there by yourself, it's great practice with reading the market, with maintenance, etc.. Hopefully you build some equity and in a year or two, you can buy a full-on investment or buy another primary residence (taking advantage of the lower down payment) and make the first home a rental.

That's my take anyway. Good luck!

@Robert Jordan

I'd reach out to a few people who've invested in Summit County. We do a lot of work with people house-hacking with Airbnb in the Denver area and investors looking to buy STRs in Colorado Springs where the laws are pretty open. Several of those clients also have places in Summit County. I'm happy to connect you with them. From what I've heard, they are doing pretty well. I'd try to find your own cleaning crew that understand the short-term rental market in places like Keystone and Breckenridge. They can be your eyes and ears. Otherwise, you're giving away 30-50% for property management up there.

Good luck!