Looking to buy out of HOT colorado

[Adam Parker]

Hi all,

I’m in the hot Denver market and want to pick up another property. While I love the equity I’ve gained I can’t use it anywhere here. Looking for ideas where to get involved. Ideally I have about 100k to spend

Multi families, SFH , townhomes maybe , not a fan of apartments

Any and all ideas appreciated :)

[Ben Rhodin]

Hey @Adam Parker! 

That is definitely a good position to be in. How are you utilizing the equity? Cash-out Refi? Heloc? Selling? and is this on your primary residence or an investment property? Depending on the situation there may be more than one direction you could go... and what is your reasoning for not investing here in Denver? The market is definitely Red Hot but that doesn't mean it's impossible, but I think you'll find the same conditions anywhere else you go in the US right now.

My first question would be regarding your current living situation. If this is your primary that you are in and have built up that equity, how about putting a HELOC on the property (while it's still your primary) and picking up a new primary residence? Either to house hack (multifamily, or creative single family) or just to move into and turn your current primary into a rental. This way you could utilize a low down payment loan, keep the rest of the equity for improvements, another property out of state or here, or for reserves. You'd get a cash-flowing rental, and if you house hacked you could reduce your living costs.

Or if house hacking isn't an option, but the equity is still in your own home, I would still go the HELOC route, and look at some more creative avenues here in Denver. If you assume you'll have to put 25% down on a property you are looking at less than $400k purchase price. This would put you in the realm to get a smaller property, that you could furnish and do either STR or Midterm rentals on. This is a pretty strong sector right now, and can produce some good cash flow!

You could also look into getting a second home mortgage (10%) here, or somewhere close to Denver. Some lenders are more flexible with what they require to qualify as a second home, or vacation home. Then you'd be able to increase your buying limit here in Colorado.

You could also put that money into a Flip if you wanted something more active, and create more funds to put towards a bigger buy and hold. There are endless opportunities, and I wouldn't count investing here in Colorado out until you've exhausted those options, as you can get the same if not better cash flow (if you are creative) and still have the appreciation. Which you won't see in a lot of the other out-of-state cashflow markets.

The reason I suggest the HELOC route is because of its flexibility. If you sell, or cash-out refi you will end up with a lump sum that you'll be paying for even if you don't use all of it, HELOC you only pay for what you use, and once it's paid for you can reuse it!

Hope that helps some!