Denver market Multifamily or single family

[Adam Parker]

Hi all, i’ve got about 200k in equity in my newest property and I’m wondering everyone’s thoughts on taking out the equity and getting a multifamily (here in Denver 550-750) or buying a single family home (290-320)

My portfolio is my single family I live in, this new property which the main house is rented out per room and making 1400 more than the mortgage a month and an apartment making 100 more than the HELOC payment.

Thanks!

[Steve K.]

I'd go multifamily. Single families only really cash flow here if you're renting by the room or have some other alternative strategy. Renting by the room is a great strategy to get started for somebody working with limited capital, but too management-intensive to scale or continue longterm IMO so I'd jump to multifamily as soon as you can. It's still possible, although not easy, to find a decent 3-4 unit building in the 550-750 range. I'd find one in the best area possible that needs some work, put some sweat-equity in and increase rents to force appreciation and create cash flow. That's what I've been doing and it's been working well. It will be hard to have much positive cash flow initially from a multifamily in that price range unless you find a great deal or can employ a value add strategy. Or partner with somebody on something bigger. There are a lot more options that have immediate positive cashflow in the $1M+ range in the Denver MF market. $1-3Mish seems to be the sweet spot where it's a little less crowded than the low-end of the market but still too small for institutional investors.