Buy SFH/MFH in Colorado, or look out of state?

[Account Closed]

This is my first post, finally! I'm very impressed by this community and look forward to connecting with people. The information is overwhelming so I'm hoping for some early guidance. I would like to start my investment journey conservatively by buying and holding a SFH or multi-family within a couple hour drive of Longmont. We are not considering house hacking given our young kids. I have read dozens of posts to make me question even starting this search in Colorado for a reasonable deal on these property types. Would you recommend any markets/areas with a reasonable cash flow to start my search or would it be better to look for a market outside of Colorado? Thanks!

[James Carlson]

Reading BP is drinking from a fire hydrant, especially when it comes to investing in Denver and Colorado Springs. I'd try to keep it simple. The tree of factors, in my mind, goes like this:

Is cash flow the most important factor? Or are you up to slimmer cash flow (or even break even) but with strong appreciation upside?

• If cash flow is the end all for you, look at the Midwest. 
• If you're open to the appreciation-plus-break-even-or-a-touch-of-cash-flow game, then look in the outer rings of Denver or in a secondary market. 
  • The outer rings of Denver to consider (to name only a few): 
    • Barnum/Barnum West and Athmar Park, and Westwood to a lesser degree, all just southwest of downtown Denver.
    • Westminster, northwest of Denver. Small 3-4br homes relatively affordable.
    • East Colfax, straight east of Denver on ... well, Colfax. We have a few clients who've bought some reasonable homes out there, including some investors doing well with a modified house hacking/rent-by-the-room investment out by the Anschutz Medical Campus.
  • The secondary markets to consider
    • Longmont, Firestone, Frederick. I'm interested in any place along the front range where I can get a SFH home for the early $300k range. Long-term, I think this is a good play
    • Pueblo: Less interesting to me, because I don't understand what industry will keep that appreciation going, but there are a lot of snowbirds buying in Pueblo West.
    • Colorado Springs. My personal favorite right now. We bought two places here in the last year and are looking for a third and fourth (after selling a downtown Denver condo early next year). Yes, Colorado Springs has seen a ton of appreciation over the last few years, so don't look at the last sold price of anything you buy here unless you're a sadist. But this still has a lot of upside potential. The whole downtown is getting built up with new hotels, new apartment buildings, new restaurants and other developments along the southern side. Amazon is building one center by the airport and is believe to believed to be building two more delivery/shipping facilities.

Once you know the areas, then think about the model you want to pursue. Straight-up long-term rental? Medium-term furnished rental? Short-term rental. (Airbnb as an investment property is only allowed in a full way in the two Denver suburbs of Arvada and Littleton, currently.) These follow a spectrum of more revenue/more work on the STR side down to less revenue/less work for a long-term rental.

In the end, real estate is a long-term play. In our cheesier moments, my wife likes to say, don't wait to buy real estate, buy real estate and wait.

Good luck!