Denver Apartment Investors

[Travis K.]

I am new to apartment investing and I'm ready to take down my first deal (in spirt, no actual deal yet). About me: SFH experience, working towards getting CO broker's license, wife is a residential broker, 10+ years of project management experience in heavy civil and commercial construction (projects ranged from $140M - $40k), degree in Civil Engineering, extensive business development experience, creative win-win negotiator, and I am ecstatic about buying apartments (it just makes sense on so many levels) I have connected with a local mentor/sponsor and we are looking for 50-100 unit buildings (Type C to B) along the Front Range. Finding a deal that pencils out is our biggest challenge at the moment. I am also doing market research in other parts of the country to identify markets on the rise and then set up networks that will support buying and operating properties in those areas. Currently, I have not fallen in love with any particular out of state market so my network is mostly made up of Brokers. If you have read this far...please let me know how I can help you. If you live in or are traveling through the Denver area, let's connect and grab a coffee.

[Marc C.]

So, why Denver? I don't find pricing there realistic at all compared to other markets. It's in the same category as Seattle, Portland, and California...way to expensive for those of us who like cash flow. 

Are there actually any deals there? Not that there are deals on Loopnet, but I have a search called "Colorado Multifamily" that Loopnet emails me when there are new MF properties for sale in the state. This week, they sent an 8-plex for $1.2M. Me: "Ha, ha, ha. Good one, listing agent! You must be a real comedian. Hey, here's an idea: If it's so great, YOU buy it and tell us how it works out." (If only he or she was watching here.) 

Just kidding around, but seriously, 6% cap rates? In an era of rising interest rates? How does that work out 5 years from now? Honestly, who finds such deals compelling, other than institutional investors and foreigners? 

I spoke to a broker in Denver who claimed they mailed every MF owner in the state every other month, and alternated with calls to every MF owner on the other months. Try competing with that as a private investor doing direct mail. 

Look at markets that are an easy non-stop flight away: Albuquerque, Kansas City, Oklahoma City, some TX markets. (I am finding no deals in TX, by the way.) 

OK, enough dissing of your home market, but I would really like to understand the psychology of overpaying for multifamily, as I sure see a lot of it going on nationwide. Personally, I am hoping for an interest-rate increase and slowdown so we can get back to more traditional pricing. Might never happen though.