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Updated almost 4 years ago, 02/02/2021
Spring 2021 UMN College Grad Moving to Denver Seeking Advice!
Hello Everyone,
My name is Mark Willson and I am graduating from the Carlson School of Management at the University of Minnesota this spring with degrees in Marketing and Entrepreneurial Management. I'm looking to move out west, preferably around the Denver area, and I'm seeking advice regarding where/what I could possibly BRRRR. I have been listening to the Bigger Pockets Real Estate Podcast for a bit now, but this would be my first real estate investment!
I don’t know many people in Colorado, so I’m also seeking any connections I can make. I’m an easy going (yet eager, hardworking) guy who enjoys playing golf and spending time outdoors skiing/hiking/fishing.
If you have any advice, or have similar interests, please reach out! Much appreciated.
Welcome! I almost did my undergrad in entrepreneurship but switched to finance and real estate. Do you have a job lined up? Depending on the field, you may or may not qualify until you hit the 2 year mark. I always tell transplants to rent here first to get the lay of the land. Then work on finding a place.
@Mark Willson Welcome to Denver! You will appreciate the winters here much more since we get 300+ days of sunshine. Unfortunately, BRRRRR is not a strategy that is most effective here, at least not in Denver. The median price for detached single family houses is $460k as of December 2020, so it is definitely very expensive to get into Denver, and that's the median house!
Also, you usually want to find a good deal where you can add 20% value, so basically over 80k at least, and that is very hard to do in this market when inventory is so low and demand is high. It isn't impossible, and some investors can do it, but they spend tens of thousands of dollars every month to market for off market deals and even then, it isn't that easy for them, and they have huge lines of credits available and deep pockets.
BRRRR is a great strategy for lower priced markets that sell houses in the 50-125k range since adding 10k-25k is much for realistic.
The best strategy for Denver is house hacking using the rent by room strategy by buying a large single family house living in the small room and renting out the other rooms. Other strategies that work well here are buying a house with a basement apartment and live upstairs, and Airbnbing the basement. Also, some people buy a house with a basement apartment and rent to travel nurses or normal tenants as well. Lots of strategies still work, you just need to find the right property.
Personally, I've house hacked four times in the Denver metro market, using the rent by room strategy, multifamily, Airbnb and normal rentals, and it has moved my financial freedom number much closer. Since you are coming from university, you probably have roommates right now, and if you have a great W2 job coming out, I would seriously consider house hacking and the rent by room strategy because you only have to house hack a few times to achieve a solid FI number to choose your passions.
- Jeff White
@Matt M. Thanks for the response Matt! I am still
working on finding a job. The plan was to rent until I have my feet under me, but I wanted to get a head start planning my first REI property! If you recommend any affordable places to rent from in/near the city, please do suggest. Thanks!
Welcome Mark, and congrats on graduating soon! I agree with Jeff that BRRRR generally works for lower priced homes, however I do get many loan requests for more pricey homes with really good ARV potential. Try to connect with a local wholesaler for off market deals. Many of my borrowers tend to buy and hold in your area as well. Not sure how long you plan to stay in Denver, but that could be a possible option if BRRRR is not conducive to your area. Let's connect! Best of luck, and feel free to reach out anytime!
Originally posted by @Jeff White:
@Mark Willson Welcome to Denver! You will appreciate the winters here much more since we get 300+ days of sunshine. Unfortunately, BRRRRR is not a strategy that is most effective here, at least not in Denver. The median price for detached single family houses is $460k as of December 2020, so it is definitely very expensive to get into Denver, and that's the median house!
Also, you usually want to find a good deal where you can add 20% value, so basically over 80k at least, and that is very hard to do in this market when inventory is so low and demand is high. It isn't impossible, and some investors can do it, but they spend tens of thousands of dollars every month to market for off market deals and even then, it isn't that easy for them, and they have huge lines of credits available and deep pockets.
BRRRR is a great strategy for lower priced markets that sell houses in the 50-125k range since adding 10k-25k is much for realistic.
The best strategy for Denver is house hacking using the rent by room strategy by buying a large single family house living in the small room and renting out the other rooms. Other strategies that work well here are buying a house with a basement apartment and live upstairs, and Airbnbing the basement. Also, some people buy a house with a basement apartment and rent to travel nurses or normal tenants as well. Lots of strategies still work, you just need to find the right property.
Personally, I've house hacked four times in the Denver metro market, using the rent by room strategy, multifamily, Airbnb and normal rentals, and it has moved my financial freedom number much closer. Since you are coming from university, you probably have roommates right now, and if you have a great W2 job coming out, I would seriously consider house hacking and the rent by room strategy because you only have to house hack a few times to achieve a solid FI number to choose your passions.
This is incredibly insightful - Thank you Jeff! I clearly need to do more research about the best strategies for the Denver area. I would love to connect and talk more about your personal REI business.
Hey Mark, congrats on your upcoming move to Denver! It's an awesome city. @Jeff White gave you some great advice and options to think about. I agree with his assessment that house hacking is one of the best ways to get started here. My current house hack in Denver is a 6 bed/3 bath single family home that has a basement apartment with its own entrance. I rent the bedrooms downstairs by the room and it covers the mortgage and utilities. I like homes like this one because it gives you the option of splitting it off and having your own unit if you'd like, or sharing your space with a roommate(s) to increase your profit. I always recommend running your numbers twice: 1) how will this change/improve your housing budget while you live in the house? 2) what is the cash flow for this property when you move out of the house? If you're working towards financial independence, both are important.
There are so many great neighborhoods in Denver, and so many projects in the works. You could sign a medium term lease (maybe month-to-month) upon arrival and use that time to scout neighborhoods. I closed on my first house here 6 months after I moved, and networking with other house hackers is what gave me the confidence to know I was analyzing the deal and projected rents correctly. Feel free to reach out anytime about real estate, hiking or skiing!