Rental Market for 1 year leasing in Littleton, CO - requesting feedback

[Lee Jacobs]

I am an out of state investor considering acquiring a rental (SFH or Townhome) in Littleton for 1 year lease terms as a buy an hold property. Appreciate any feedback and pros and cons about the rental market in Littleton (or your alternate recommended Denver metro location).

[Brett Deas]

Littleton is a great location as a suburb of Denver, depending on the area you are in. I say the more southeast you get typically the better it is. Now don't get me wrong there isn't any terrible part of town but the north side is typically a bit rougher. I think for the foreseeable future rents will slowly rise with house prices as people who are moving here cannot afford Denver prices. 

[Ben Rhodin]

hey @Lee Jacobs! To accurately assist you we would need some further info. As far as location Littleton is a pretty prominent and desirable area in the Denver Metro. However, if it makes a good investment play will depend on your personal goals and situation. For a long-term rental, unless you put quite a bit down, you'll have a hard time finding a property that cashflows, and this is true for almost all of the Denver metro, especially in the single-family space. However, if you are more looking for the long term, want to capture the appreciation and future cash flow, and aren't as worried about year 1 then it could be a good purchase (once again depending on your goals). 

So I would ask you what you want this property to do for you. Is there a certain COC return that you want to hit? A certain total ROI? What makes a "good" investment in your eyes?

Also, are you stuck on the long-term rental or are you open to other creative strategies that may be able to increase your cash flow? Either MTR, rent by the room, corporate housing, etc...

[Lee Jacobs]

Hi Ben, thank you for the response. 

As I begin exploring this market, my baseline strategy is to purchase as a long term rental with 20-30% down with initial positive cash flow (5%+ COC) with long term rent increases and appreciation providing higher future returns. Sounds like that might be challenging but possible in the Denver area? My only personal experience is with long term rentals so that is my baseline for evaluation at this point, but I would not rule out other rental strategies.

[Tim Emery]

Hey @Lee Jacobs,

     The guys above have a lot of good advice. Littleton is a great area, but don't count out all of the Denver Suburbs. Englewood, Highlands Ranch, Greenwood Village and/or Centennial. 

Be careful of the south west part of littleton Ken Caryl area. Many properties have structural issues. 

You should be able to match the numbers you stated above, depends on how much you are going to buy for. Keep your eyes open for duplexes and small multi family. There are a few good PM companies here. Let me know how I can help.

[Ben Rhodin]

Quote from @Lee Jacobs:

Hi Ben, thank you for the response. 

As I begin exploring this market, my baseline strategy is to purchase as a long term rental with 20-30% down with initial positive cash flow (5%+ COC) with long term rent increases and appreciation providing higher future returns. Sounds like that might be challenging but possible in the Denver area? My only personal experience is with long term rentals so that is my baseline for evaluation at this point, but I would not rule out other rental strategies.

 Thanks for the additional information. and @Tim Emery is correct, that you shouldn't count out the rest of the Denver Area, there are a TON of great areas that will be prone to solid appreciation down the road. Your investment goals are certainly attainable, and if you choose to get creative then you could push well beyond those goals, but that depends on your comfort level and the team you build out. Personally, I always run my investments as LTRs to begin with, as I like to know that worst-case scenario I'm not going to lose this asset. You want to maintain numerous exit strategies, as the best way to lose money in real estate is to be forced into a sale.

Let me know how else I can assist, and Ill also send you a DM.

[Joe Garretson]

@Lee Jacobs, I'm curious why you want to invest in the Denver area in general? Your profile says AZ and there's not a big difference between the areas around Tempe/Phoenix and Denver in terms of value, ability to get reasonable returns, etc... Then when you consider what seems like your lack of familiarity with the area, the other challenges the Front Range brings (radon, settling, snow, etc), what are you trying to gain by investing in Denver instead of Phoenix?

[Lee Jacobs]

Hi Joe. 

In short, diversification. 

I have been investing in the Phoenix metro area for over 20 years for at least two reasons, I live here and thus know the area well and its been overall a good real estate market during that time. However, I want to diversify my portfolio by making future real estate investments in a different location. 

Why Denver? I am evaluating Denver as a second location because i have some family in the area and after visiting a number of times over the past few years I like it and am considering spending more time in the area in the future and as you state it also appears to be a good market with a strong future. I will need to learn alot in any new market I invest in, so I might as well learn about one that I would like to spend time in.