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Updated about 9 years ago, 11/19/2015
Pueblo the Detroit of Colorado??
I live in Colorado Springs and often struggle finding deals that are good enough to jump on. It is certainly not that they are not out there just not fitting the 2% 50% etc. Sooo, I started to look at Pueblo, holy cow- deal after deal after deal where the numbers work even with a company managing the rentals. Please note that I am running the number through the analysis calculators and my goal is buy and holds on multi. One example but there are probably 10 just like it........a 4 plex grossing 1800 for 90k. Cash on cash return is 25% if I use the Brrrrr method Whaaatttt?? Nope, not gonna get that in the Springs. So, I keep hearing about crime and meth and and and. The fact is that when I run things through the calculators I put 0 for appreciation. Do I need to go back through all the pod casts and see exactly why Brandon says no to Detroit? Hellllpppp what am I missing before I pull the trigger here??
@Paige Kelsey when you ONLY follow the numbers you end up with junk properties in the 'hood.
The best advise I ever got with investing is, "figure out what kind of tenants you want to rent to and then only buy property they will rent."
Hiring a property manager is not a way around that axiom. Either the property manager won't know how to manage the property you purchase or you like the property manager less than you will like the tenants.
If you think that meth is going to be a problem, you should do some reading about what is required to mitigate a property contaminated by meth. The short answer is that, for some properties it costs more than the house is worth.
Proceed with caution.
It's not THAT bad, it's just worse than the rest of Colorado so its reputation keeps people away.
I've bought five houses here so far, and they're making money.
There are problems with drugs, and mental illness also, more so than other places. But there are plenty of normal people who pay reasonable rent.
However, watch which neighborhood you're looking at. The "east side" of Pueblo is considered the least desirable and most problematic. That's the area north of 96 and south of the lower 50 spur, east of 25.
And yes, zero appreciation is correct.
Originally posted by @Sam Dangremond:
It's not THAT bad, it's just worse than the rest of Colorado so its reputation keeps people away.
From what I hear, there has been a decent amount of marijuana money headed down there for farm operations. Can you speak to that at all?
Oh ya, there's lots of marijuana here. Pueblo is trying to position itself as welcoming to the grow industry. So that provides a few jobs, but honestly not a ton.
There's also the retail side. Pueblo doesn't allow shop inside city limits (yet), so the shops are out in the county and in Pueblo West.
I'm not really a fan of that industry overall. The problems it causes with useless people moving here outweigh the number of jobs it provides. Plus, other states are going to legalize and Colorado will lose it's edge in that regard.
So ya, don't invest in Pueblo because you think the weed industry is going to shore up the economy.
But do invest in Pueblo if you understand it's pure cashflow at reasonable buy-in prices.
Paige Kelsey
I would keep focus on the Springs. Last year, I am moved from Austin, TX. It was gut wrenching to leave, but after settling into the Springs and researching all the development that is to occur, I feel that it is a safe bet.
For example, I did direct mail and found a deal that I could get a 3/2 1900 for less than $100K in the 80907, which by the way is a great area.
Let me know if you find anything and we can see if we can work together on something. I am always looking to find partners. Take Care.
Bryan
@Sam Dangremondwhat kind of #s are you getting with your 5 properties? Sounds like a really interesting area.
I haven't held my properties long enough to vouch for specific numbers, but it is relatively easy to hit the 2% rule and get 15% cap rate here in Pueblo.
There will be extra work involved, tenant hassles and repairs etc. ... but the money is there IMO.
Originally posted by @Sam Dangremond:
I haven't held my properties long enough to vouch for specific numbers, but it is relatively easy to hit the 2% rule and get 15% cap rate here in Pueblo.
There will be extra work involved, tenant hassles and repairs etc. ... but the money is there IMO.
So why are investors ONLY willing to pay $100,000 for a possibility to collect $2,000 rent. High expenses, management problems, decreasing values? 2%
If the market is only willing to pay $66,667 for a possible $10,000 NOI then it must be very risky. 15% cap rate.
I don't personally think so.
The real estate market isn't "efficient" the way the stock and bond markets are. Well maybe in big cities the real estate market is, but Pueblo is in the middle of nowhere... has no major industry... and has a bad reputation that precedes it.
There just isn't any "big money" investigating the returns for real estate investments in Pueblo that would push the returns down to the risk/return efficient frontier. The market is almost universally Pueblo local people. As shown in this thread, not even people 45 minutes away in Colorado Springs want to invest in Pueblo.
So, on the one hand: the more the rest of you keep away, the better returns for me personally with my investments!
But on the other hand, this city could use more investment in its housing infrastructure... so please come invest!
Show me the deals and I will come and invest :)
I appreciate that.
I'm not really a "deal maker" sort of guy, I just do buy-and-holds.
If you're interested, the best Realtor for investors here in Pueblo is Kevin Cooter. He holds this open session once per month:
http://www.meetup.com/Pueblo-Real-Estate-Foreclosures-and-Investors-Education/
thanks for the contact!
I have a friend that is a very active wholesaler in Pueblo with extremely good deals. He knows the area area well and is a trustworthy individual. His name is Colm McCormick. I am not sure if I am allowed to list his phone so just send me a message if you want it. Or someone that is more aware of the rules on BP, let me know and I will post it. You can get on his buyers' list. Thanks, Nancy
Yup, Colm is a great source.
http://candshomes.com/
Hi Guys, I Grew-up in Pueblo. And I am good too. I just gave Colm one of my properties to rehab. If you want to be on my Buyers list, here you go. Email me at: [email protected]
I buy my properties at $50,000 and get $990/month rent
and $35,000 and get $600/month rent ~Thank you, Sheryl
Thanks for all your thoughts everyone!!
Sam Dangremond super helpful although turns out two of the deals that I was looking in was in the bad area. I will be calling some of the recommendations on the list. Not that the Springs doesn't have good deals but I feel like with those numbers I need to definitely continue to think about Pueblo. On another note I just listened to one of the last pod cast in which the investor was talking about how he invests from a distance and just uses property managers/ agents to be his boots on the ground. When asked if he had ever seen the property he said he did not because he knew it was not a place he wanted to live in and he felt like if he saw it, it would color his view and he may not have bought. In the end, he trusted a property manager who knew he or she could lease it end of story. I thought that was interesting as I always have thought with our properties, if that was where I would be willing to live. This move to investing in Pueblo would be about money. I would hope to buy and hold and have a good ROI. Good luck to us all and maybe we have found our very own profitable Detroit of the Rockies!!
My pleasure.
Still, even in the "bad area" you can still make good money - it's just important to understand what exactly you'd be purchasing.
I am on Sheryl's buyers list, and can vouch that she has good deals.
She has a fun variety of deals, Colm has more "here's yet another house for $20k that needs lots of rehab." So it depends what you're looking for.
Thanks @Sam Dangremond and @Nancy Allen. I appreciate the compliment.
Yup, I live in Colorado Springs and have been flipping in Pueblo since 2006.
It's very easy to loose money in Pueblo because the ARVs tend to be low. It's dangerous to look at a deal from only a percentage view alone and it is wise to also consider your straight flat rate dollar return.
About flips, often outside investors come to Pueblo and rehab based on what the market/buyer they left (NY, CA, TX, Colo Spgs, Denver, etc) would want a rehab to look like and not what a Pueblo buyer will expect. Don't over fix it!
About rentals, it comes down to managing the residents with firm and clear expectations, which begin with making it hard to get into a place upfront. We reject several applicants before "allowing" someone to live in one of our units. Having done this, our evictions are low and renewals high. Because the buy prices are low & rents are strong in Pueblo the ROI is high. Wonderful rental market!
Shoot me an email if you would like a 1- 2 hour tour of Pueblo neighborhoods and look at past deals we have done. We also have plenty of whole sale deals to flip to you.
Is there a good property manager any of you can recommend in Pueblo?
I use Jones Healy.