Colorado LTR vs MTR cashflow

[Kyle Allen]

I’m new to real estate and I live in Denver. I’m interested in getting my first rental property somewhere in Denver metro so I could self manage the property and increase my cashflow. 

The issue I’ve found when analyzing LTR properties with BP Rental property and Rent calculator is my cashflow is negative (I’m using calculations based on numbers outlined in the BP Rental property webinar). 

Either there is a secret everyone else knows or LTR in Denver simply won’t cashflow with the current market prices and interest rates. If I want more cashflow should I be considering MTR in Denver, LTR in cheaper out of state markets, or another option I’m unaware of? 

[Kevin Smith]

@Kyle Allen

You're not wrong.  Without a large down payment, cash flow can be tough to find with a traditional rental right now.  You'll find that many investors in our area are opting for house hacking or MTRs.

Is house hacking an option for you?  This would require a lower down payment, and after a year, you could move on to another property.  If having roommates is not an option, you could still utilize this strategy with a small multi-family property.

Alternatively, a 2BD MTR might be the sweet spot for you.  These can do quite well in the Denver area if well furnished and marketed appropriately.  If you go this route, you'll want to make sure you budget for furnishings.

Some folks are venturing down to Pueblo if they want to go the LTR route, but in that case, you may not want to self-manage given the distance.

Finally, while it's understandable that you don't want to be losing money every month, don't lose sight of the long term gains from appreciation.  Many investors who focus too much on cash flow find they end up with properties that don't offer as much appreciation and give them too many headaches.