first property advice

Member since 2020 · 26 posts · 9 votes

Hello, I am wondering what ppl's thoughts are on this scenario. I live in Denver metro area and can't afford to buy a property as an investment property as the down payment will take awhile to save due to cost of homes. I am toying with 2 different scenarios. 1) buy a home and live in it for 2 years so I can put less down and then use my current home as a rental, or 2) invest our of state where I know less about the area. My initial thoughts are Michigan, where I am from, but I hear it isn't landlord friendly or Florida where I spend some time but I'm worried about cost of insurance after hurricanes etc. Would love to hear ppl's thoughts if you have the time for a first time investor. Ultimately, I see myself investing not necessarily for cash flow (although that would be a bonus) but more so for appreciation where I can then sell it closer to retirement. Essentially, real estate being a place I can park my money. TIA.

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Konstantin GinzburgPro Member

Member since 2021 · 376 posts · 242 votes

@Carrie Brauninger

Since this is your first step into real estate investing; my advice is to stay in the area you are currently living in or at least are within a commutable distance. Out of state investing can definitely work but it requires you to have a set team that is that location to real allow the system to flow smoothly (essentially you need boots on the ground). This means you would need a team of realtors and property managers (along with some other team members) that you completely trust. Have you looked into house hacking in your area? If there are multifamily (4 units and below) properties available near you, you could look into purchasing one of those. As long as the property is 4 units or less; the financing works the same as with a single family home and if you plan on moving into the property for at least a year; you should be able to qualify for primary residence financing options such as an FHA loan (among other programs) that would qualify you for lower interest financing. By living in one unit and renting out the remaining units; you could potentially build equity, gain value through appreciation, and still cash flow all at the same time. You would also gain the experience of how to manage a property so you will be better able to manage from long distance if you do want to try out of state investing down the road.

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Derrick Young
Member since 2023 · 4 posts · 0 votes
3y
Quote from @Carrie Brauninger:

Hello, I am wondering what ppl's thoughts are on this scenario. I live in Denver metro area and can't afford to buy a property as an investment property as the down payment will take awhile to save due to cost of homes. I am toying with 2 different scenarios. 1) buy a home and live in it for 2 years so I can put less down and then use my current home as a rental, or 2) invest our of state where I know less about the area. My initial thoughts are Michigan, where I am from, but I hear it isn't landlord friendly or Florida where I spend some time but I'm worried about cost of insurance after hurricanes etc. Would love to hear ppl's thoughts if you have the time for a first time investor. Ultimately, I see myself investing not necessarily for cash flow (although that would be a bonus) but more so for appreciation where I can then sell it closer to retirement. Essentially, real estate being a place I can park my money. TIA.

0 Reply
Konstantin GinzburgPro Member
Member since 2021 · 376 posts · 242 votes
3y
@Carrie Brauninger
Since this is your first step into real estate investing; my advice is to stay in the area you are currently living in or at least are within a commutable distance. Out of state investing can definitely work but it requires you to have a set team that is that location to real allow the system to flow smoothly (essentially you need boots on the ground). This means you would need a team of realtors and property managers (along with some other team members) that you completely trust. Have you looked into house hacking in your area? If there are multifamily (4 units and below) properties available near you, you could look into purchasing one of those. As long as the property is 4 units or less; the financing works the same as with a single family home and if you plan on moving into the property for at least a year; you should be able to qualify for primary residence financing options such as an FHA loan (among other programs) that would qualify you for lower interest financing. By living in one unit and renting out the remaining units; you could potentially build equity, gain value through appreciation, and still cash flow all at the same time. You would also gain the experience of how to manage a property so you will be better able to manage from long distance if you do want to try out of state investing down the road.
2 Reply
Austin WyrickBusiness Member
Real Estate Agent · Cedar Rapids IA · Member since 2022 · 26 posts · 16 votes
3y
What if you bought a duplex or triplex lived in one unit and rented out the other units then move back into your personal home after a year once the lease for your personal home expires? This is a strategy I have thought of doing and I have friends who have done it and have gotten very successful. I would be happy to explain further if you have any questions about this 😊🏡
[email protected]319-693-7503
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Theresa HarrisPro Member
Member since 2019 · 15k+ posts · 11k+ votes
3y
What about a home with a legal suite whether it be a basement suite or a laneway home? You can live in either the larger or smaller unit and rent the other one. For your current home that you want to turn into a rental, if it has appreciated a lot, I'd stick to your plan of renting it for 2 years and moving back in in case you want to sell as it will avoid cap gains.
If you know Michigan well, then you could buy there; but as others said you will need a PM to manage it which will add to your costs. I don't know how much house prices have increased in Michigan (not saying they haven't, but that I don't know), so if you are looking for appreciation that is important.
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Carrie Brauninger
OP
Member since 2020 · 26 posts · 9 votes
3y
Quote from @Austin Wyrick:

What if you bought a duplex or triplex lived in one unit and rented out the other units then move back into your personal home after a year once the lease for your personal home expires? This is a strategy I have thought of doing and I have friends who have done it and have gotten very successful. I would be happy to explain further if you have any questions about this 😊🏡

Thanks. I have thought of that and duplex/triplex seem rare to get and expensive in Denver. Although, it does sound like house hacking of some time is the way that seems like it makes most sense based on responses. thanks for your time.
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Carrie Brauninger
OP
Member since 2020 · 26 posts · 9 votes
3y
Quote from @Theresa Harris:

What about a home with a legal suite whether it be a basement suite or a laneway home? You can live in either the larger or smaller unit and rent the other one. For your current home that you want to turn into a rental, if it has appreciated a lot, I'd stick to your plan of renting it for 2 years and moving back in in case you want to sell as it will avoid cap gains.
If you know Michigan well, then you could buy there; but as others said you will need a PM to manage it which will add to your costs. I don't know how much house prices have increased in Michigan (not saying they haven't, but that I don't know), so if you are looking for appreciation that is important.

Thanks for your advice. Sounds like house hacking in some way is consensus vs buying out of state for first one. I appreciate your time.
1 Reply
Carrie Brauninger
OP
Member since 2020 · 26 posts · 9 votes
3y
Quote from @Konstantin Ginzburg:

@Carrie Brauninger
Since this is your first step into real estate investing; my advice is to stay in the area you are currently living in or at least are within a commutable distance. Out of state investing can definitely work but it requires you to have a set team that is that location to real allow the system to flow smoothly (essentially you need boots on the ground). This means you would need a team of realtors and property managers (along with some other team members) that you completely trust. Have you looked into house hacking in your area? If there are multifamily (4 units and below) properties available near you, you could look into purchasing one of those. As long as the property is 4 units or less; the financing works the same as with a single family home and if you plan on moving into the property for at least a year; you should be able to qualify for primary residence financing options such as an FHA loan (among other programs) that would qualify you for lower interest financing. By living in one unit and renting out the remaining units; you could potentially build equity, gain value through appreciation, and still cash flow all at the same time. You would also gain the experience of how to manage a property so you will be better able to manage from long distance if you do want to try out of state investing down the road.

Thanks! Duplex/Triplex in Denver are super competitive and hard to find and then hard to land but it sounds like some kind of house hacking is the way to go. Thanks for your thoughts and time.
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Matthew DrouinPro Member
Developer · Rochester, NY · Member since 2016 · 406 posts · 339 votes
3y
@Carrie Brauninger
Three different thoughts;
1. When you say “looking for a place to park your money”, what do you mean? Like temporarily?
If that’s the case, you can invest passively into a syndication partnered with a proven operator which can cash flow and appreciate.
They typically have terms of 5 years and investment minimums as low as $25k. It’s also not uncommon to see equity multiples of 2x or close to 2x over that holding period.
The process of looking at multiple opportunities and vetting them and then tracking those deals will give you great experience to passively learn the business until you figure out what you want to do.
Or maybe opportunities become more abundant in your market.
2. In regard to owning something directly. Out of state is tricky. I just have always felt uneasy about investing a substantial portion of my wealth and signing on a personal guarantee for a bank loan for something that is outside my direct reach. It’s very difficult to find a good property management company that does smaller deals.
3. Third train of thought. You own a house. What about the possibility of building an ADU. You could probably finance the build with a HELOC. It would be an awesome experience to go through the zoning process, architecting, building etc.
Just some thoughts. Hope it helps!
Podcast Guest on Show The $150K “Stolen” Rental Property and How to Avoid a Real Estate Scam
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Nicholas L.Pro Member
Flipper/Rehabber · Pittsburgh · Member since 2018 · 6k+ posts · 5k+ votes
3y
@Carrie Brauninger
can you pick a market within driving distance that is lower cost than Denver? even if it's 1-2 hours away?
there is just no substitute for being hands-on.
this lets you go to REIA meetings, visit as many properties in person as you like, network, etc.
1 Reply
Ben Einspahr
House Hacking Specialist · Denver, CO · Member since 2016 · 411 posts · 396 votes
3y
@Carrie Brauninger first off. Love your view on REI for more than cashflow! Cashflow is just the tip of the ice burg. Based on the details you provided, I would comment 2 different options.
Option 1: Traditional investment property with in a 2 hour commute
Not sure how much you have for a downpayment but here are 2 options.
1. Pueblo rental. Our clients are still finding great investment properties down there that are not able to afford Denver or Colorado Springs.
2. Denver condo. This will not move the needle too much for you but it could be a great first step. You would get hands on property management experience and HOA traditionally covers all major cap ex that could come up. If I did not house hack for my first investment, I would have chosen condo.
Option 2: House hack while still maintaining your privacy
This would be the preferred option in my opinion. I think it is safe to say you are not wanting to share your living space with roommates, right? You have 2 options with this.
1. Buy a single family home that has some form of separate income suite (walkup/ walkout basement, Mother-in-law suite, ADU) and rent that out to off set your living expenses. Move out and turn into a rental at your desired time period (12 month min). That is with I do :)
2. Buy a duplex. Live in one end and rent out the other. This can be difficult in Denver because they come at a premium, typically renovations, and owner occupied financing can get tricky. Read this post I wrote last week covering owner occupied financing in more detail.
Separately, I self-managed a rental property in NE for 5+ years. Would not recommend it. At least for your first investment.
I can follow up with a few Pueblo and Denver house hacking case studies you will find value in. Best of luck!
1 Reply
Abbey Humphreys
Member since 2023 · 303 posts · 324 votes
3y
I think what @Nicholas L. asked is great- a market that isn't necessarily Denver, itself, but close enough for you to keep an eye on your property would likely be your best bet. Investing far away from where you reside is significantly trickier and more rife with complications than finding something a bit closer to home.
0 Reply
Carrie Brauninger
OP
Member since 2020 · 26 posts · 9 votes
3y
Quote from @Ben Einspahr:

@Carrie Brauninger first off. Love your view on REI for more than cashflow! Cashflow is just the tip of the ice burg. Based on the details you provided, I would comment 2 different options.
Option 1: Traditional investment property with in a 2 hour commute
Not sure how much you have for a downpayment but here are 2 options.
1. Pueblo rental. Our clients are still finding great investment properties down there that are not able to afford Denver or Colorado Springs.
2. Denver condo. This will not move the needle too much for you but it could be a great first step. You would get hands on property management experience and HOA traditionally covers all major cap ex that could come up. If I did not house hack for my first investment, I would have chosen condo.
Option 2: House hack while still maintaining your privacy
This would be the preferred option in my opinion. I think it is safe to say you are not wanting to share your living space with roommates, right? You have 2 options with this.
1. Buy a single family home that has some form of separate income suite (walkup/ walkout basement, Mother-in-law suite, ADU) and rent that out to off set your living expenses. Move out and turn into a rental at your desired time period (12 month min). That is with I do :)
2. Buy a duplex. Live in one end and rent out the other. This can be difficult in Denver because they come at a premium, typically renovations, and owner occupied financing can get tricky. Read this post I wrote last week covering owner occupied financing in more detail.
Separately, I self-managed a rental property in NE for 5+ years. Would not recommend it. At least for your first investment.
I can follow up with a few Pueblo and Denver house hacking case studies you will find value in. Best of luck!

Thanks for the info Ben. I like idea of condo in terms of being able to get in in an area I would like to live in initially, the HOAs just seem super high. thanks again for the info. Appreciate your time.
0 Reply
Ben Einspahr
House Hacking Specialist · Denver, CO · Member since 2016 · 411 posts · 396 votes
3y
Quote from @Carrie Brauninger:

Quote from @Ben Einspahr:

@Carrie Brauninger first off. Love your view on REI for more than cashflow! Cashflow is just the tip of the ice burg. Based on the details you provided, I would comment 2 different options.
Option 1: Traditional investment property with in a 2 hour commute
Not sure how much you have for a downpayment but here are 2 options.
1. Pueblo rental. Our clients are still finding great investment properties down there that are not able to afford Denver or Colorado Springs.
2. Denver condo. This will not move the needle too much for you but it could be a great first step. You would get hands on property management experience and HOA traditionally covers all major cap ex that could come up. If I did not house hack for my first investment, I would have chosen condo.
Option 2: House hack while still maintaining your privacy
This would be the preferred option in my opinion. I think it is safe to say you are not wanting to share your living space with roommates, right? You have 2 options with this.
1. Buy a single family home that has some form of separate income suite (walkup/ walkout basement, Mother-in-law suite, ADU) and rent that out to off set your living expenses. Move out and turn into a rental at your desired time period (12 month min). That is with I do :)
2. Buy a duplex. Live in one end and rent out the other. This can be difficult in Denver because they come at a premium, typically renovations, and owner occupied financing can get tricky. Read this post I wrote last week covering owner occupied financing in more detail.
Separately, I self-managed a rental property in NE for 5+ years. Would not recommend it. At least for your first investment.
I can follow up with a few Pueblo and Denver house hacking case studies you will find value in. Best of luck!

Thanks for the info Ben. I like idea of condo in terms of being able to get in in an area I would like to live in initially, the HOAs just seem super high. thanks again for the info. Appreciate your time.

@Carrie Brauninger yes HOAs are high but your annual insurance cost is significantly less (almost half). Plus if there are any utilities built in the HOA you can bill those back to the tenant.
1 Reply
Jessie Dillon
Investor · Hopedale, MA · Member since 2021 · 321 posts · 213 votes
3y
hi carrie! if you're open to moving and living in a multifamily for a year, i would TOTALLY go with the first option! here's why:
- you'll have a way higher-priced asset appreciating for you from day one
- you'll have way more debt paydown happening for you, by your tenants, monthly, from day 1
- this is an easily-repeatable process every year, to househack a new multi
- you said you're investing for appreciation --> buy the $most$ real estate, for the least amount of money.
i would only go for option #2 if you're totally resistant to moving and living in a multi in denver area. but keep in mind, short term discomfort vs long term wealth...
don't be afraid of a tenant-friendly state. standup landlords usually do just fine in them. i live and invest in one and run my business through a 'customer service' lens. so long as you screen tenants properly and/or have a great PM company, and have access to a great RE attorney, you are fine!
hope this helps, good luck!!
1 Reply
Carrie Brauninger
OP
Member since 2020 · 26 posts · 9 votes
3y
Quote from @Jessie Dillon:

hi carrie! if you're open to moving and living in a multifamily for a year, i would TOTALLY go with the first option! here's why:
- you'll have a way higher-priced asset appreciating for you from day one
- you'll have way more debt paydown happening for you, by your tenants, monthly, from day 1
- this is an easily-repeatable process every year, to househack a new multi
- you said you're investing for appreciation --> buy the $most$ real estate, for the least amount of money.
i would only go for option #2 if you're totally resistant to moving and living in a multi in denver area. but keep in mind, short term discomfort vs long term wealth...
don't be afraid of a tenant-friendly state. standup landlords usually do just fine in them. i live and invest in one and run my business through a 'customer service' lens. so long as you screen tenants properly and/or have a great PM company, and have access to a great RE attorney, you are fine!
hope this helps, good luck!!
Good point re landlord in tenant friendly states. Thanks for your input. I’m definitely open to moving locally to be able to put less down etc. Thanks for your time.
0 Reply
Julien J.
Investor · CO · Member since 2016 · 757 posts · 1k+ votes
3y
My personal favorite is the duplex. I am biased, but it was my start to retired from the W2.
1 Reply
Carrie Brauninger
OP
Member since 2020 · 26 posts · 9 votes
3y
Quote from @Julien J.:

My personal favorite is the duplex. I am biased, but it was my start to retired from the W2.
Would love to do that. Denver is super competitive with duplexes, everyone wants to do what you did. :). Definitely keeping my eyes peeled anyway though.
0 Reply
Jimmy Bostic
Investor · Columbus, OH · Member since 2023 · 73 posts · 82 votes
3y
@Carrie Brauninger if you go the out of state route I would consider Columbus Oh--it has good cashflow and appreciation. I would probably try to invest in an area where you can be hands on for a first time investment property. If you do go the oos investing route you'll just need to ensure that you have a trusted team. I'd personally look into multi families..
0 Reply
Jimmy LieuBusiness Member
Real Estate Agent · Columbus, OH · Member since 2019 · 3k+ posts · 2k+ votes
3y
Quote from @Carrie Brauninger:

Hello, I am wondering what ppl's thoughts are on this scenario. I live in Denver metro area and can't afford to buy a property as an investment property as the down payment will take awhile to save due to cost of homes. I am toying with 2 different scenarios. 1) buy a home and live in it for 2 years so I can put less down and then use my current home as a rental, or 2) invest our of state where I know less about the area. My initial thoughts are Michigan, where I am from, but I hear it isn't landlord friendly or Florida where I spend some time but I'm worried about cost of insurance after hurricanes etc. Would love to hear ppl's thoughts if you have the time for a first time investor. Ultimately, I see myself investing not necessarily for cash flow (although that would be a bonus) but more so for appreciation where I can then sell it closer to retirement. Essentially, real estate being a place I can park my money. TIA.
Hi Carrie, I recommend that you look into Columbus Ohio and as someone who works with a lot of out of state investors - there's so many catalysts for why you should invest here. Specifically, there's job growth (Intel, Honda, Amazon, Nationwide, etc) and the population is growing (unlike Cleveland or Cincy). I really see Columbus Ohio as an extremely safe bet for the next 10-20 years. Plus, there's still so many positive cash flowing and 1% deals here in Columbus Ohio. As a local investor and agent here in Columbus, let me know if you have any questions or want to connect!
[email protected]614-300-7535
Jimmy Lieu, Red 1 Realty4.9120 Reviews
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Scott AllenBusiness Member
Real Estate Agent · Columbus, OH · Member since 2020 · 449 posts · 471 votes
3y
@Carrie Brauninger
Option 1 is not a bad idea if you can make your current home cashflow and at the same time it lets you put less money down to buy another one that you can live in and eventually turn into a rental as well. You'd be investing locally which is always great when you're able to go that route. I'm not as sure about the Denver market but if it's landlord friendly and you can make it work, go that route.
If you're planning to invest out of state. Research 3-5 different markets before picking one that you want to get started in. Build a core four (agent, lender, property manager, contractor). Start sending offers and work your due diligence period to work the deal.
Columbus, OH - hybrid market with both cashflow and appreciation. Cleveland, OH - heavy cashflow. Tertiary markets in Ohio - Newark, Dayton, Lancaster
[email protected]614-698-1227
Reafco - Columbus, OH
Website View Page
1 Reply
Carrie Brauninger
OP
Member since 2020 · 26 posts · 9 votes
3y
Quote from @Jimmy Bostic:

@Carrie Brauninger if you go the out of state route I would consider Columbus Oh--it has good cashflow and appreciation. I would probably try to invest in an area where you can be hands on for a first time investment property. If you do go the oos investing route you'll just need to ensure that you have a trusted team. I'd personally look into multi families..

Thanks for the tip, Jimmy.
0 Reply
Carrie Brauninger
OP
Member since 2020 · 26 posts · 9 votes
3y
Quote from @Jimmy Lieu:

Quote from @Carrie Brauninger:

Hello, I am wondering what ppl's thoughts are on this scenario. I live in Denver metro area and can't afford to buy a property as an investment property as the down payment will take awhile to save due to cost of homes. I am toying with 2 different scenarios. 1) buy a home and live in it for 2 years so I can put less down and then use my current home as a rental, or 2) invest our of state where I know less about the area. My initial thoughts are Michigan, where I am from, but I hear it isn't landlord friendly or Florida where I spend some time but I'm worried about cost of insurance after hurricanes etc. Would love to hear ppl's thoughts if you have the time for a first time investor. Ultimately, I see myself investing not necessarily for cash flow (although that would be a bonus) but more so for appreciation where I can then sell it closer to retirement. Essentially, real estate being a place I can park my money. TIA.
Hi Carrie, I recommend that you look into Columbus Ohio and as someone who works with a lot of out of state investors - there's so many catalysts for why you should invest here. Specifically, there's job growth (Intel, Honda, Amazon, Nationwide, etc) and the population is growing (unlike Cleveland or Cincy). I really see Columbus Ohio as an extremely safe bet for the next 10-20 years. Plus, there's still so many positive cash flowing and 1% deals here in Columbus Ohio. As a local investor and agent here in Columbus, let me know if you have any questions or want to connect!

Thanks for the info. Columbus seems to be popular area for oos.
0 Reply
Carrie Brauninger
OP
Member since 2020 · 26 posts · 9 votes
3y
Quote from @Scott Allen:

@Carrie Brauninger
Option 1 is not a bad idea if you can make your current home cashflow and at the same time it lets you put less money down to buy another one that you can live in and eventually turn into a rental as well. You'd be investing locally which is always great when you're able to go that route. I'm not as sure about the Denver market but if it's landlord friendly and you can make it work, go that route.
If you're planning to invest out of state. Research 3-5 different markets before picking one that you want to get started in. Build a core four (agent, lender, property manager, contractor). Start sending offers and work your due diligence period to work the deal.
Columbus, OH - hybrid market with both cashflow and appreciation. Cleveland, OH - heavy cashflow. Tertiary markets in Ohio - Newark, Dayton, Lancaster

Thanks! Yes, my current home would cash flow. low interest rate on it and rents are good. You need to have a license to rent in Denver but could be worth that trouble for the appreciation. Ohio seems to popular place based on feedback from this question. Thanks for the tips regarding 3-5 markets. My initial thoughts are Denver, Tampa, northern MI, and now Ohio. Will try to ignore the fact Ohio State is there. :)
0 Reply
Matthew Kwan
Lender · Seattle, WA · Member since 2022 · 482 posts · 768 votes
3y
Hi Carrie,
If you are planning to buy a rental property while renting an apartment, lenders will have to count both of it as a liability. Typically investment properties requires 15%-25% down payment depending if it's a single family or multifamily. However, if you put it as a primary residence house, the only liability you will be counted towards is the monthly mortgage payment of the house and removing your rent expenses (since you moved out). The benefits of buying a primary or first time homebuyers is that rates are typically lower than investments because the governments incentives to buy houses. On the other hand, you can repeat the process every year through house hacking and rent out your current primary house by converting it as a rental and acquire another property. I'll be happy to connect if you have any questions or concerns. Wishing you all the best on your Real Estate Journey!

@Carlos Valencia @Albert Bui
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Samuel Toma
Livermore, CA · Member since 2018 · 38 posts · 24 votes
3y
Hi Carrie,
Looks like you already got a lot of good advice from other replies. I think other factors to consider is where you want to live long term and time frame of when you want to be able to walk away from a traditional job. Something to consider is to start buying houses in places you would like to possibly live one day. If your income allows you to make up negative cash flow for a season, you could potentially buy in a place like San Diego or Vegas or any growing city that will have reasonably moderate appreciation over time in a city you enjoy.
If you know you want to stay in CO, you could look in markets with lower price points just to start collecting properties and at least you have options. You could sell a few years down the road to buy another primary, you could hold for cash flow, 1031 into multifamily, etc. Nothing wrong with buying a lower priced house which cash flows.
I also live in an expensive market so I've chosen the long distance investing strategy with long term rentals. Sounds like you are in a good position so you have options. Good luck!
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