SFH versus condo/apartment DENVER

[Justin Kramp]

Looking to buy my first property to rehab and rent out using BRRRR in the Denver/aurora, etc. area.

I want to start out “cheaper” and be able to have more money left to put into the rehab in order to get a better deal.

What's your take? Should I look for a 150-200k apartment/condo or a SFH 280-350k?

Looking for some guidance and experiences!

[Jeff White]

@Justin Kramp That's a great goal, but unfortunately, Denver is a very tough market to due a true BRRRR deal unless you find a great off market deal or compete with the big wholesallers that spend 10-20k month on marketing alone. The average house in Denver metro is now over 500k, so not much room to work by BRRRRing.

Also, anything on the MLS will be extremely difficult to BRRRR because even the crappy properties are getting over asking and multiple offers since we have such tight inventory right now.

The best you can do is find an off market 3/2 house with 2000 or more sqft in Westminster/Arvada/Lakewood/Denver that has a huge unfinished basement for 350-425k, add two bedrooms and a bathroom down there, and make it a 5/3, so when you go to refi, the appraiser will compare it to other 5/3s in that area with finished basements. Is that possible?  Absolutely!  Is it realistic?  It depends.  

The tricky part would be getting it at such a discount that will make it worthwhile to BRRRR it, and sellers aren't stupid, they know they can get more money on the MLS even in a crappy condition, so that's where you will have to find a deal yourself and probably negotiate it by giving great terms, quick close, "as is" condition, etc. Condos/townhomes are possible too, but again, you will have to find one at a great discount, and most likely off-market.

Realistically, BRRRRR isn't a good strategy here in Denver anymore. Your best bet would be to go to a city where houses sell for 100-150K since it is easier to BRRRR those properties.

Your best ROI right now is a house hack. You get the benefits of low down payment financing, property will still need some work, and then make it your primary residence, rent out the other space or rooms, so you get buy a future investment property and become an on-site property manager as well.