Newbie Out of State Investing - Denver

[Diane Tycangco]

HI everyone! I am in California and I would like to invest in the Denver area. Any pointers/caveats/dangers about investing out of state?  Any advice on Section 8 landlording fr out of state?

Thanks!

[Steve K.]

 Hi Diane, Denver is a great market with a nice blend of cash flow and appreciation. Not sure why people with obvious limited knowledge of the area from far away places are mis-representing the Denver market here with false claims that cash flow is "impossible", as that has not been my experience investing here whatsoever (I think they're obviously just trying to steer you towards areas they sell properties in). I've personally been able to pick up 19 units over the past 4 years averaging $500/door positive cash flow. Even better though is the appreciation on those units has equated to $500 PER DAY.

You won't get a ton of cash flow right off the bat from class A properties in the leafiest, toniest neighborhoods in the heart of the city obviously but that will be true anywhere. There are many micro markets within Denver metro that do have ample cash flow however. Look to "up and coming" areas just on the periphery of areas that have recently popped. There are still some grimy pockets very close to downtown that are likely to see positive transformations in the coming years similar to what has happened in Highlands, Sunnyside, Sloan Lake, RiNo, etc. The public transportation system and the already amazing bike path network is also expanding so that is a good thing to look at to find neighborhoods that are likely to appreciate at a more rapid pace than others.

The Colorado market has strong fundamentals overall: diverse and growing job market, active lifestyle, work-life balance, friendly people, the incredible mountains nearby, outdoor sports galore which is skyrocketing in popularity, access to national forests and parks, and significant population growth due to these many positives. Rents are increasing due to increased demand which helps improve cash flow dramatically over time especially several years into ownership, making buy and hold a good strategy even if cash flow is less than other markets on purchase.

The one big negative is that the barrier to entry is getting high compared to less desirable areas of the country which I believe is the main reason some Coloradoans are investing in less expensive markets as mentioned. Your money will certainly go farther purchasing properties in places where less people want to live, but that doesn't mean you will get as good of a return in those markets (cheaper isn't necessarily better IMO). If you focus on overall returns, Denver is one of the top markets in the country to invest. There are also areas within Denver metro where properties can still be found at lower price points (if that's your thing), as well as nearby cities that are still relatively affordable like Fort Collins, Colorado Springs, and Pueblo.

For those who have been able to invest here, the returns are generally quite excellent. Prices are high across the country right now, not just Denver. In areas that still have low prices even after a 10 year bull market, there's probably a reason properties are still cheap in those areas, but I won't comment on other markets that I don't know enough about specifically to comment on accurately! I highly recommend Denver, feel free to reach out with questions, etc.!