Finding a good deal in the Denver Colorado market?

Question

Micki M. · Answer

Chris H. you've gotten some great answers here and the only thing I'd like to add is that at the end of the day you get to define what a "good deal" is for you. Everyone's financial circumstances and long-term goals are unique to them.  At a big picture level if your motivation is to get the absolute highest return on your funds (and you are only looking at immediate ROI rather than counting on appreciation) then investing outside of Denver and/or Colorado might be your best option. However, if you are more comfortable investing in your local area, or you are looking to build a slow and steady portfolio that will reduce your current living costs and provide passive income in the future, then "good deals" can be found locally. We just had a client close on a 3bed home with 3 rental units in the yard. She gets to live in a nice neighborhood and have her tenants pay her mortgage which is ideal for her personal situation. Know what you need, be specific with your numbers, and keep evaluating actual properties until you find what works.  Keep us posted!

Account Closed · Answer

My opinion is not popular here on BiggerPockets...but I'll share it anyway.

Denver is not the best area to invest.  If you want to invest in Colorado, I like the Wiggins/Fort Morgan area.  I also like Brush, but the majority of Brush is in a flood zone so you have to factor in flood insurance.  Property managers in Fort Morgan have large waiting lists of tenants looking for rentals.  Sterling could also be good under the right conditions.  Stay away from Pueblo, La Junta, etc.

Outside of Colorado, I like the Midwest/rust belt

Bill S. · Answer

Chris H. so if you are considering Pueblo you should read this post. Do some searching on this site and you can see the many posts about investing there. I won't repeat them again.

So the 70% rule is not that applicable to Denver. When you are doing a $400,000 flip that means you have $120,000 in profit on it. After deducting expenses like rehab and carrying costs you are well South of $250k in most cases. When competing in that price point, if the property is livable, the there are literally dozens of owner occupant home buyers competing for the property. Margins are 10% or less. The flips that make money are the large ones where square footage is being added. Even then 30% profit is unlikely. The kicker is that people are still making good money flipping.

It's going to be really tough for someone from Aurora to flip in Pueblo. You can do it but I would say that if you can flip in Pueblo and make money you could flip in Denver and make more money with less risk.

Ultimately you have to decide what works for you. Look at your skills, abilities, and resources and see what makes sense for you.

Account Closed · Answer

My personal opinion is Colorado Springs may be a good area depending on the right deal.  It's going to take patience and tenacity in that area and It's tough to find the right deal there.  The issue with Pueblo and La junta is that houses have not really appreciated there in value in quite some time.  You absolutely have to force appreciation by finding distressed properties and fixing them up for the market.  My thoughts are you have to follow the jobs...there aren't many job options in Pueblo...check the popular websites (like Zillow) for housing values over the last 5 years or so and you'll see what I mean.

Robert Herrera · Answer

Chris H. Good job investing there.

I own 6 there now. 1 of which is a commercial property.

Cashflow is Through the ROOF. You can buy properties between 50-100K.

Mortgage will be around $300-$500/Month PITI. You can rent these out from $850-$1,000/month. We're talking $13K down (including closing costs) on a $50K house. $600/month cashflow. That's $7,200/year in profit. 2 years to get all your money back, plus equity of $10K sitting in the house.

The rental market is going up like crazy with everyone not being able to afford Denver.

ALL of my RENTERS are from out of state and other parts of Colorado.

Huge job push in Pueblo. go to PuebloRiverwalk.com

Watch the VIDS on that site.

HERE is the KICKER: $15hr/minimum wage in COLORADO increasing about $1 a year until it hits.

Now most of the people there are on the $8/hr minimum now. If everyone is making $15/hr, the rents are going to double, and the Home prices are going to SOAR!

Good luck and Happy investing!

Mindy Jensen · Answer

Chris H. , there's a meetup in a couple of hours at The Bicycle Cafe in Denver. 17th and Park-ish. If that is at all feasible, come to the meetup and chat with Bill S. (who is brilliant at finding deals in the Denver area) and lots of other awesome investors.

6-9 1308 E 17th Ave, Denver, CO 80218

Erich Martinez · Answer

Chris H. I'm actually doing a double closing on these locations* Pueblo CO (~ 1 hr 50 mins from Denver) - Single Family

* Fort Morgan CO (~ 1 hr from Denver) - DuplexI tend to look at online stats as well like population growth.  Pueblo CO (including surrounding areas like Pueblo West ) has about 165K people , whereas Fort Morgan has about 12K people.  After seeing Fort Morgan, it is a bit far, say there is a bubble, I do worry about the prices dropping substantially.  Its a smaller town, so I need to research more, but what attracted me were the higher rental rates, and values are going up.  I attribute this to the high demand in Denver and people looking for closer more affordable options.  Now I am a tech guy and I actually see Pueblo CO doing better (talking future) here, and here is why.  I work remotely and have an excellent job.  I believe people like me don't care where they live and want value for there money not higher prices.  I've worked in Software/Engineering for a while, and many co-workers telecommute, and I believe this is a trend many people overlook.  Pueblo was actually on the most affordable list of places to live (top 10 in the country), these kind of things get you noticed.  I.e. I was looking at buying a $400K house in Pueblo West that would cost be $4 million in Denver.  The reason I didn't move from my Denver home was my kids wanted to stay in school with there friends and we have all our family here.As far as comparison, Fort Morgan is a small city, but closer in proximity to Denver, so I'm still trying to grasp the job market there (from my understanding there are mostly Mill jobs), and am taking a chance.  Working with the Realtor/Property manager at this time it makes sense. However, looking at Pueblo, its a good size city, great internet (for people like me), low cost of living, they are expanding the Riverwalk the next 15 years, I wouldn't be surprised if we see a boom there.  Not sure if I can mention this, but the marijuana industry is growing pretty fast there, so there are jobs and don't see this fading away anytime soon. :-)I hope this helps in your endeavors, but that's what makes life fun.  I don't know if I will be around next year given I'm a Round 4 cancer survivor but believe you keep living, and in REI, make choices that fit your goals and make sense to you.

Take care and best of luck,Erich

Erich Martinez · Answer

Chris H. I believe it depends on your intent.  I'm fairly new in the Pueblo market but from my experience believe it is not ideal for flipping.  However, if your intent is to rehab and rent, then I believe Pueblo is a good market for that.  I know several investors in Pueblo, and they mainly do rentals.  Its not to say you couldn't flip, there is always an exception, but if your goal is to pursue the rental market, then Pueblo CO is a good option.

Erich

Jason Eberhardt · Answer

I agree with @Ed E. That Fort Morgan and Brush are good areas for up north. But I would disagree with his statement on the Pueblo market. ( and no I am not a homer lol ) I have been investing in Pueblo for a few years. And there are a lot of opportunities here. I just did a "flip" that I will live in for a few years and in 1 year we have over 65k in equity. I also do buy and holds and have had great success. Pueblo has not appreciated much that means it is still in the market price for investors.

Finding a good deal in the Denver Colorado market?

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