All Forum Posts by: Luke F.

I work with some large property management companies on the front range and I asked them about this recently. They all say most of the smart money is staying on the sidelines waiting for a correction. One large PM company in Denver hired a VP of acquisitions and he hasn't bought anything in 2 years. These companies serve some of the largest individual investors in the front range so I'm inclined to agree. I bought a property in the Springs this year and I'd love to own in Denver but I'm personally waiting for a correction. A lot of signs are pointing that way including flattening rents and increasing vacancies.

My wife and I are saving up to buy an investment property for buy and hold.  We live in Colorado and it is pretty expensive to do a buy and hold here but we would have the benefits of being close to the property and not having to hire a management company.  

Our other option is to buy something from a reputable turnkey provider in a state where it would make more sense to do a buy and hold.  With the prices of some of these markets we could afford around 2 houses while in Colorado it would be one so this is attractive of course.

We are curious to hear from more experience investors. 

What would you do in this situation with the goal being buy and hold?  Get a more expensive property locally or work with a provider in a better market?

Thanks and we greatly appreciate your feedback.

Kind regards,

-Nick

Last thing 

Generally speaking YOU CANT GO BROKE IF YOU DON'T OWE ANYBODY MONEY..... think about it. 

@Luke F. Cashflow is not everyone's #1 priority. There are four ways to make money in buy and holds: 

1. Cash flow
2. Appreciation
3. Principal pay down
4. Tax advantages

As @Matt R. pointed out, people have made a lot of money focusing on #2,3, and 4, versus just cash flow. Many people just focus on cash flow, but that's just part of the picture. Do some digging around on the internal rate of return (IRR) of properties and you'll see some interesting results.

Personally, I'll take a neutral cash flow property in a great long term market like Denver, over a cash flow positive market with not so great long term prospects. 

@Luke F. keep in mind the duplex has not sold. Well priced properties in the Denver area sell. While you can do better than the property you looked at, it will probably not be much better (maybe $400,000 vs $500,000). Lots of small multifamily (2-4) units go to owner occupants. They have down payment assistance programs and lower interest rates. In addition, if someone is also current paying a wad of cash for rent they don't mind paying a little more to get a piece of the pie. The bottom line is that in 30 years everyone will laugh at the price they paid for a property.