BRRRR in Colorado still doable?

[Charles Phanumphai]

Cost to buy anything is Colorado is so high now that by the time you add rehab expenses and then have rent taper off on the other end BRRRR starts to no longer make financial sense. Maybe I'm just inexperienced or not creative enough to make it work...

Anyone in CO willing to share how you are making BRRRR happen for you?

Anyone is other states willing to share recommendations on areas where BRRRR works and is still attractive? The last story I heard was from Atlanta area; $50k purchase. $50k rehab. Appraises for $200k after renovations, Refis, and pulls $150k out with $25k still in the investment... plus ~$1500/mo. In rents. I would do this all day long if they existed in Colorado!!!

Any input/recommendations are welcomed and appreciated.

Thank you!

[James Carlson]

@Charles Phanumphai

I guess the simplest way I talk to buyers and investors looking in Denver is this:

• If you're solely interested in cash flow, (the weakest of ways to make money in real estate) Denver's not for you. The price-rent ratios aren't as favorable as they are in the midwest.
• If you're open to looking at the other ways that real estate makes money, such as appreciation, then Denver's a potentially great buy. (Average annual home price appreciation from 1975-2016 in Denver was 6%. On a $350,000 house, that's $18,000 the first year. You're not getting that in cash flow most places.)

You can tell my bias from the above characterizations, but it's just a matter of your goals and what feels comfortable -- somewhat certain cash flow or somewhat certain appreciation.

Now, we haven't even mentioned doing a rent-by-the-room model (like house hacking without you staying there). If you self-manage a property like that, it can look real good for cash flow in Denver. I had two buyers do this in Aurora. They nabbed a 4/2 house in Aurora for $335,000. 20% down. All-in monthly was at $2050. Rents averaged $725/room or $2900/mo. 

Good luck!