Long term rentals in Colorado Springs or out-of-state rentals?

Question

Being new to long term rentals, I am finding that the Colorado Springs market is fantastic for long term buy and holds (increase in the tenant population, military population, etc). I would prefer to purchase undervalued SFH and small multifamilies, make renovations such as adding a bedroom/new paint job/updating the kitchen, then refinance to use that equity for purchasing another property. It seems the market here in CO Springs is so competitive that it is hard to find a good deal.

Would it be wise for me to look out of state? I feel like it would not be, especially because I am not experienced yet.

I would love to know peoples opinions and experiences, in order to keeping moving forward in my goals.Thank you all in advance!

Would it be wise for me to look out of state? I feel like it would not be, especially because I am not experienced yet.

I would love to know peoples opinions and experiences, in order to keeping moving forward in my goals.Thank you all in advance!

Jenny Bayless · Answer

Hi @Ashley Contrascere- I agree that Colorado Springs is an amazing place for long-term rentals, and even better if you can find something with room for value-add!  You are also right in that everyone else has figured out the allure of this city and it is hard to find a good deal lately :) . You'll have to be creative, but they are out there.  You might not find a home-run deal in this market today, but with a few decent deals, I think you will still be happy with your purchases.

My personal recommendation, having invested in both Colorado Springs and out of state, is that I would 100% pick to invest in Colorado Springs if I had to do it over again. Even though I leverage professionals to perform work on our rental properties, and technology to self-manage the homes, the ability to drive to the property and put eyes-on if needed is invaluable. Not to mention the fact that there are extremely low vacancy rates here, low property taxes, and a low supply of affordable rental properties, coupled with decent yearly appreciation (however, don't bank on that!), Colorado Springs is very desirable to rental property investors.

Jaysen Medhurst · Answer

Unless you have experienced "boots on the ground" out of state, I'd be cautious. Concentrate your efforts in finding off-market deals and make sure you know your numbers cold, so you can spot a deal quickly.

What about something like this? Certainly needs work and it's been on the market quite a while. Looks like 1beds in the area rent for $800-900.

Jose L Martinez · Answer

I connected first with an agent and his brokerage, they gave me the insight on the city, (i.e. good areas, bad areas ect..) He also started feeding my lead funnel with MLS notifications specific to my criteria. After the agent, I connected with property management and local General Contractors. I found most of these professionals through biggerpockets and networking with other investors in that market. I went out of state for the cash flow and to eventually supplement my w-2 income. In Co Springs I have two doors which actually positive cash flow every month, and appreciation is great for long term.

M. Anthony Contrascere · Answer

So far everyones feedback is super valuable, thank you!

@Jaysen Medhurst I have seen this property as well, but margins are very narrow for any mistakes...leading me to be cautious of it, especially for a first rental. I appreciate you sending me that link though.

@Jose L. who did you first connect with once you found a market you wanted to target? (i.e. property managers, local RE investors, real estate agents). Also, how did you find property managers that you can trust?

My instincts tell me the local CO Springs market is better for multiple reasons, but Im very interested in why out of state may be more advantageous.

Jose L Martinez · Answer

Hi Ashley, you are correct about Co Springs. It is a great and highly desirable market and deals are hard to find but they are definitely out there. A lot of times you have to make the deal in a place like Co Springs. Creativity is a must these days.

Regarding out of state investing -  it is actually how I got started with very little experience. For me it was a huge mindset shift. There's a lot of work to be done by the investor before pulling the trigger. I read twice both @David Greene Long Distance Real Estate investing and @Brandon Turner's Rental Property Investing and Low to no money down books before feeling comfortable and knowledgeable enough to take action. After picking the location I wanted to invest in I began doing tons of research and connecting with local professionals that I needed to have on my team. I also took a weekend to travel to that city and meet with everyone I wanted to establish a long term business relationship with. Additionally, I drove everywhere and got to know the areas. Again, it takes a lot of work to establish the systems and relationships but totally worth it in my case. So far I haven't had major issues with my decision to go out of state and I've acquired 3 properties in the last 6 months. The big thing is to invest in your education primarily which in return will give you all the tools you need to feel comfortable enough to make the move and take action.

Good Luck!

Long term rentals in Colorado Springs or out-of-state rentals?

Most Popular Reply