Denver Sale - looking for advice

[Lynn Fletcher]

Hi all - I own a 3/1 SFR in Denver free and clear. It currently generates $1350 in gross rental income. Current market value is approx 350k or more. It is under 900 sq ft and needs work, but I can easily sell it now as-is. Seems like a good time to sell but not a great time to buy.

I could also do a seller-carry to the tenants (they've been there for 10 years and most likely won't be able to qualify for a conventional loan)....

I'm 49 years old and want to put together a 10-12 year plan to generate as much passive income as possible (I'd be really happy if I could reach 8k/month net - is that totally unrealistic?) I've been thinking of doing a 1031 exchange into 1-2 new properties.  I am more interested in future appreciation than current cashflow.

Seasoned investors, what would you do if you were me?  Look at Colorado markets?  Look at out of state markets?  Buy one solid property in Colorado or a few out of state?

Would love to know your thoughts.  Thank you!

[Jeff White]

@Lynn Fletcher That's great you have that much equity in that property, sounds like you are a perfect candidate to redeploy that equity via 1031 exchange.  For your goal of 8k net per month, that is realistic over a period of time, but in the Colorado market (especially Denver metro), you will need to either be very creative (Airbnb/Rent-by-room strategies) or scale up. Cash flow isn't impossible here, but you have to think differently.  

I'm a huge Denver fan, and I like my properties near me. 

If you want to stay local, with 350k plus, you could easily get a solid 4-8 unit property for $700k-$1.5 million and probably cash flow 1-2k per month with a property manager. The benefits of a 4 unit would be residential financing and better rates, but the 8 unit would probably be a lower cost per unit, so there are pros and cons to each.

Another option to spread your risk would be to purchase 3 bed 2 bath condos/townhomes in east Aurora for 200-225k per property, and you would cash flow $300-$400 per property with 25% down payments x 5 properties = $1,500 to $2,000 cash flow per month w/property management. That's a pretty solid return on the money and spreads your risk out over 5 properties.