All Forum Posts by: Chris Freeburg

@Ryan Reddy Congrats!

Change orders and subcontractor fees add up quickly. Make a plan and stick to it or be prepared to pay for changes. You may be able to line up your own subs that are cheaper than your GC if he/she is open to it.

Either way, you're on the path. If you view any additional costs as a "tuition payment" (the cost of learning), then it's a worthwhile investment.

@Erin Onsager I work with investor clients in Denver who run a family and friends investment group exactly as you envision (I'm happy to connect you. If interested, just shoot me a DM). I recommend structuring very similarly to what @Nathan Gesner describes. It keeps things clean and clear. You get paid for your labor. Capital investments are leveraged according to their share.

I recommend getting agreements down in writing (doesn't necessarily need to be approved by a lawyer, but it wouldn't hurt to get their input), and fastidiously track expenses and labor. Prepare as if submitting to the IRS. Working with family and friends probably has more risk than submitting your taxes to the IRS. There's more at stake to lose and relationships quickly sour when people feel taken advantage of or not treated fairly. Put things in writing and record every detail (receipts, miles, pictures, etc.) - it provides the transparency that's required for everyone.

@Hooman Arasteh

Welcome to BP! Denver is a HOT market right now, the hottest it's ever been, actually. There are less than 2 weeks of inventory (smallest amount on record), we're seeing offers 10-20% over asking, no inspection, cash appraisal gap. You get the idea - it's tough to get under contract.

That doesn't necessarily mean to look elsewhere. Projections are for the Front Range population to double by 2050, so the appreciation wave will likely continue. With a strong, varied economy and young population, I expect Colorado to remain a very healthy market for the foreseeable future.

And, there is no guarantee you will find an easier market elsewhere. I am hearing from agents all over the country that they are experiencing the same thing we are here in Denver. It's because there is so little inventory with people not listing their home due to COVID fears and mass migration from the new remote worker economy. With the freedom to work from home, people are ranking quality of life as the top factor in choosing where to buy a home.

You may find a softened market in California. I live in Denver and am looking for my next investment here. I like to invest locally where I know the neighborhoods, have insights into the real estate market, and have my team of builders and contractors already set-up. Plus, I like to use owner-occupied loans to get the best interest rate and downpayment terms. I house hack: I buy homes that have a separate living space and entrance. Then, I rent out the other space. $25k down payment on a $500k that will rent for $2000/mo while I live for free (or almost free)? It's the best cash-on-cash investment I know of.

That's my opinion.

@Lynn Fletcher Based on what we're seeing in the market, if you were to list right now you would likely get 10-20% over asking, as-is with no inspection. Definitely a good time to sell, even more so if it needs work that you don't want to do. You're likely to get MUCH more on the market (maybe more than you realize, the last few months have been especially crazy) than if you were to seller-carry to your tenants, but you are free to do what you like with your property.

As far as not a great time to buy: it's uber-competitive in deals under $800-$1 mil. As far as value goes, with interest rates so low, affordability is higher than it might seem due to the lower monthly payments. 

I think it's important to clarify if you want cash flow or appreciation (you mention future appreciation but also passive income). Denver is likely to continue to appreciate. We're expecting population growth to double by 2050. It is much harder to cashflow here, though not impossible.

Either way, it sounds like the best course of action is to sell, 1031 and redeploy your capital.

I do anticipate the market to soften a bit as more homeowners decide to sell as the vaccine rollout continues. Drop? Certainly not. But this environment where sellers name their terms will not continue forever.

"have a realtor already" and crickets... haha.

@Sloane Gerrity this market is so brutal that most of the realtors here are hustling for their clients 24/7 and twice that on Sundays. But there is solid advice above that might be worth re-reading.

Your realtor should be able to help you find properties on the MLS, but unfortunately there is not much inventory right now, especially in those neighborhoods. I've seen some value-add properties pop up in neighborhoods close by (Regis, Wheat Ridge, Lakewood, Chaffee Park). I'm also seeing a few lemons come along that are still going at/over list because of the craze. It's just the state of the market right now. That's why it's worth working with a realtor you trust.

If you're going to go wholesale, prepare to put $10k cash down, line up a hard money lender, know your comps and ARV. That option is out there, but it's a different game than buying on the MLS.

I expect more inventory to come on the market in the coming months as the vaccine rollout continues. Keep looking.

@Katelin M Barson

@Katelin M BarsonThe reality you're seeing is the same one everyone else is facing, so you're not alone! The reason the market is so tough right now is that inventory is 50% below where we were last year at this time. Buyers are moving here in droves from more expensive markets (think LA, Boston, etc.) and their equity goes a lot further. It's supply and demand

With remote working a reality for the foreseeable future, more and more people are moving to markets where they can get a higher quality of living (i.e. Colorado). The population on the front range was already projected to double by 2050 and with these trends we will likely be there much sooner.

As stated above, Denver is an appreciation market and even before the recent market craze, finding 1% deals in Denver was difficult. Now the appreciation wave is that much bigger (10-20% in just the last month)!

As mentioned above, Colorado Springs is a cheaper market, but we're seeing just as much competition there. Homes are closing for 10-20% over asking, as-is no inspection, cash appraisal gap coverage. It's just the state of the market with such limited inventory.

I echo @Jeremy Gaal and suggest putting your cash to use with an owner-occupied loan that only requires a 5% down payment.

There are cheaper entry points for townhouses and condos, but they may not appreciate as well or hold their value. When they're easier to buy now they are also harder to sell in a downturn.

@Zhixin Wei I use Cozy and like it. The free version delays payment by 5-7 days. I think you can pay to have it delivered immediately.

@Ryan Paull You're talking multiple properties with that cash flow target. I recommend focusing on one market and even a smaller area within that market. Become an expert there. Prices and value sometimes change from block to block. You'll know rental rates, types of tenants you can attract. Zoning changes in different localities. If you're hustling for deals yourself, then this advantage compounds with focused marketing targeting that area. 

@Zhixin Wei As others have mentioned, Zillow and Facebook are good. I also recommend Apartments.com. They'll deliver a sign out front so you'll get drive-by traffic as well.

Zillow might have rent collecting tools? I use their lease generator because it is state specific, but not as easily customizable which is a bit of a pain. I use Cozy for payments. Nothing fancy. Free version takes longer for rent to deposit, but I like the interface.

@Justin Kramp It's a great time in this market... if you want to sell!

Inventory is 50% below last year at this time and we were already deep in a seller's market. Homes are regularly going for 10-20% over asking with no contingencies. It's so cut throat because there is such limited inventory. I expect the market will soften and more homes to come on the market as more people get vaccinated. Do I expect prices to go down? No.

The Front Range population is expected to double by 2050. Areas like Colorado Springs and Pueblo are generally cheaper, but just as competitive.

I'm currently looking for my next investment property. It's just of matter of what fits your goals and strategy. Condos are cheaper but you can't push the price as well. There's just not the same demand as SFH. That being said, there's limited inventory there and things are moving quickly.

House hacking is lower risk because you're covering your own housing needs as well. Depending on your capital, that may be the best place to start. You're not going to find 280-350 in Denver. Colorado Springs, sure, but it's going to need a LOT of work.

Continue to educate yourself on the market, prices, etc. in your target area.