Where do you invest for cash flow in Colorado Springs?

Question

I'm a Bay Area investor but am bullish on Colorado Springs for a number of reasons and researching the market for potential investment.  I'm primarily  focused on long-term, buy and hold, cash flow investing preferably value-add multi-family.

Interested to hear opinions from local investors, agents, and others who have knowledge of the market. Thanks in advance.

Which areas of town would you focus on for cash flow investment?

Pulled a random house off of Redfin - what would something like this rent for?- https://www.redfin.com/CO/Colorado-Springs/911-E-W...

What areas of town do you think will likely see the most price appreciation?

I don't see a lot of multi-family inventory online - this fourplex came up - any multfifamily investors in the CS market care to chime in please do -   https://www.redfin.com/CO/Colorado-Springs/1018-Ma...

Jenny Bayless · Answer

Hi Account Closed

I really like the zips 80903, 80905, 80909, and even 80910 (people have mixed opinions on this zip, but I love it).  We have 9 SFH rental properties in the Springs, and hope to get some more.  Over the past year or so, properties have become really difficult to come by, so it is difficult to find a good match.

We cash flow decently on our properties, but I would say they all have commonalities to minimize costs:  we have put the upfront costs (which can be recouped through refinancing, etc) for the major systems, regularly perform maintenance, choose highly qualified tenants, and we also manage ourselves so we are able to keep vacancy costs low (with the help of the crazy market!).

Regarding appreciation, I'm not sure which will see the most over the next few years, but I can imagine the entire city will see really decent price growth :)

-Jenny

Account Closed · Answer

I grew up on the Bay Area (Hayward) and then as adult made my home in the Springs for almost 20 yrs so small world!

The springs has been a hot market for the last 2 yrs and the prices have risen to levels that I think are overpriced and will cause rents to reach levels that can no longer be afforded (cost of living is not keep up). I have been out priced in over a dozen offers sometimes more than 100k over asking price. I think this is caused by 1031 timing restrictions for investors who must buy at any cost or risk paying capital gains. And we have a lot of non-local investors who are unaware of the impacts their purchases are having on the local market which in turn hurts me as a local investor and tenants looking for affordable housing. (We have one of the hottest markets in the country thanks to Denver). The majority of investors are looking at the middle class 4 plex and smaller which causes big bidding wars. Cash is King in these situations. But there's 3 areas not receiving as much attention:

1) Low income/rundown areas needing work

2)  Units at 5 or more

3) New expensive multi-unit builds. Some of these duplexes range from 500k-1mil.

I'd love to see some of the low income get bought up and renovated so that it improves the neighborhoods overall. The biggest investors are doing just that. Buying up whole blocks, tearing them down and rebuilding.

The Mazatlan 4 plex you are looking at is in a lower income part of town but has potential if the neighborhood can be maintained by a good investor. 2/1 units can go as high as 850 if renovated (and if utilities are included) but generally you will be looking at lower income and section 8 tenants. Fair price rent would be better maintained at 800 or less for that location. That area of town can't go much beyond that without a major overhaul. It's all McDonalds, walmarts, pawn shops, liquor stors etc. And based on what I've seen, at that price it will sell if it's in fairly good condition. Depending on how you fund, it could make very good money. Or it could be a money pit. Inspection will help decide along with financing.

Account Closed · Answer

Welcome to t he Springs, prices are going up, up, and up. Cash flow properties might be better looked for in areas around South Circle and Platte avenue - maybe even push down to Fountain or Pueblo. I would only look at multifamily properties in those areas.

As far as buy and holds there are two districts that are most desirable here D12 and D20 people argue back and forth which is better but D12 is the best. You can see the borders and address lists for both via google and the school sites. Great school districts creates demand in your rental and if there are no multi-families you can look for mother in law suites for that extra income.

80903 has seen the most appreciation so far with the southwest area rejuvenation, as for whats coming next i don't know for sure. Ivywild is a neat area lots of older single families and the big Bristol Brewery right there. PM me if you have any questions.

Account Closed · Answer

Thanks @Carole G.

@Colin Smith - sent you a PM.

Colin Smith · Answer

Hey Account Closed,

I think it depends on what you are hoping to achieve? Are you looking for better ROI but willing to take on the lower tenant classes or do you want lower ROI but better tenant class? Single Family Vs Malt-Family?

Yes the four-plex prices have risen over the years but these are often still better ROI's I am seeing my investors achieve at this point in time. Step it up a notch to the small apartment complexes and you'll find a slightly better ROI depending. If you're strictly looking for Single Families then this will be tough to get cash flowing but its still possibly. If you're willing to take on some projects then you'll have more opportunities but may also have more cash into the deal after any renovations or repairs.

Are you looking specifically for four-plexes, single families, or going a bit bigger with the small apartment complexes?

Andrew Nisonger · Answer

The market is rough in this area, I know part of my side of town is in a flood zone, so ask your broker about that before you start paperwork on a place.  From what I've seen on the lower priced Multi's in the area, most of them are in really bad shape, I looked at 3 or 4 this last year with various issues that would be tens of thousand dollars  to correct. my budget was limited though and I was on a short time table.

I see a lot of reasonable deals in central Colorado springs but most of them are single family homes. The main advantage(or disadvantage) of the south side is the proximity to Fort Carson and the military population needing places to live.

Another factor is the Nevada restoration project currently under way in the 80905 area code. Ideally it will bring values up in the area over the course of 3 or so years.

The Ivy wild area was where I owned My first property and it went from 175,000 to 250,00 over 3 years. unfortunately divorce took most of my profit on that deal.

I'm not claiming to be an expert as I am still a rookie in the game, but if you can find properties under 200k, I would definitely take a look at them

Carole G. · Answer

I think the fourplex is over-priced, as far as what I look for anyway.  A few years ago, you could buy a 4plex in Co. Springs at a decent price, but the Denver growth has pushed prices up in the surrounding towns.  You might find an owner who is ready to sell at a decent price through direct mail.

Where do you invest for cash flow in Colorado Springs?

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