All Forum Posts by: Steve K.

 It's not really an old vs. new issue as you can have the full range of quality in both older and newer properties. The only issue is when rent is too low to maintain a property, which is more a function of the properties location than age. In a lot of cities the highest rent areas also have the oldest properties, but rent is plenty high enough to offset any additional maintenance due to the age of the properties. Despite being older those properties will still have better returns overall than newer properties that rent for a lot less due to being in less desirable locations.   

Not at all what we’re seeing on the ground in Denver. Open houses were slammed and most new listings went under contract last weekend. All the agents I know are busy. Lenders report a huge uptick in new loan applications. Showing schedules are filling up for new listings. Multiple offers and over asking price offers are back. It’s shaping up to be a strong seller’s market with steep appreciation this year here in CO.  

Look at some recent comparable sales in that location, see who sold them, and hire that agent. They may already have a buyer for you. 

The best part of out of state investing is that agents in popular markets for out of state investors get to sell the same properties to new out of state investors every 2-3 years. 

Quote from @Shiloh Lundahl:

Hey@Steve K. i'm sure we've had this conversation before on BIggerPockets, but remind me, where is your property in Costa Rica? We have three properties out there. One just south of Tamarindo, one near La Fortuna, and one between San Ramon and Esparza up in the mountains.

Dominical. 

House hacking in Denver would be my recommendation. But I wouldn’t be focused on a multifamily in your situation as they are pretty rare to find in an entry-level price point in this area and if they are under ~$1M it’s probably going to be in bad condition or in a bad location (with some exceptions of course, but harder to find that a single family home in a good location that will appreciate better). I’d look for a housemate house-hack situation. Or if you need more privacy than that, look for something with a walkout basement that can lock off and function like 2 separate units. 

I know a lot of people who have made a lot of money in real estate here in Colorado. I don’t know a single person who has regretted owning property here (I’m sure there are some of course, but pretty rare and probably their own fault they didn’t succeed, not the market’s fault). I know 1 or 2 people who live here and have done well investing out of state. However I know many, many more people who have tried that and have failed miserably. Probably 9 out of 10 people who I know that have tried investing out of state have run into the same problems: turnovers costing too much, cap ex, tenant issues, management issues, etc. have erased anticipated cash flow and they have ended up losing money every month instead of making money, then sold after a few years. Some have made money on the sale and were lucky that the market had moved in their favor. Others broke even, most lost money. And that was when market conditions were much more favorable for this type of investing than they are now. A few friends of mine were just straight up taken advantage of and ripped off and lost a lot of money even despite the market moving in their favor. It’s possible but a lot harder and riskier to invest in real estate out of state and succeed. Many reasons for this. Also the small percentage of people I know who have had success with it have deep connections to the markets they invest in: they used to live there or grew up there, travel there often or have close family members living there. Also they are the type of people who would have been successful anywhere. They survived despite the additional challenges of investing remotely, but arguably could have done much better just investing locally, and it would have been much easier. I wouldn’t do it unless you have plenty of capital to spend on things like capex issues and turnovers. And if you have plenty of capital, why not just invest here…. Just my .02! 

Welcome to BP Christopher! A great strategy in this market is value add. Buy the worst property in the best location you can afford, fix it up to the quality of the surrounding properties, and you can force a lot of appreciation quickly that way. If you’re handy which it sounds like you are, and are able to source and negotiate good deals  (which by being a long time local with an existing social network makes that part easier) then these skills will help you save money on rehab costs and by buying right (critical). This isn’t an “off the shelf” cashflow market but cashflow comes over time with rent increases. None of the properties in my portfolio cash-flowed on day one but they all do $500-2,000 per door now. In fact the properties I bought here specifically for cash flow (multi families in mediocre locations) did not end up performing as well as my other properties over all, so I sold them and put that money into more properties with less upfront cashflow on paper but better overall returns. Location, location, location are all I really look for in a new purchases now based on my investing experience. Worst house on best block, that’s really the secret. 

We have a lot in common I love Mexico and crypto as well. I have never pulled the trigger in Mexico but have property in Costa Rica. The finance piece is always tricky with foreign investing so it ends up being an entirely different strategy. Development, short term rentals, and value add can be very lucrative but it’s a whole different animal. Anyway I’d love to chat if you want and welcome to BP!  

Quote from @Tom Grieshammer:

Ok. This has swayed me against the D class neighborhoods. And I hear what you’re saying about getting a primary residence first. But with my situation, I’m switching jobs so I’d prefer to wait to know where I work before I get place to live for a year. And even though an investment property will eat up a lot of my liquidity rn I’ll be able to save a good amount of money living at home for another year. Am I missing something that still makes a primary residence as a first property more attractive? Thanks for your help.

The advantages of house hacking/ buying a primary first over an investment property are that your down payment can be much lower (3-5% instead of 20-30%), and your interest rate will be much better with an owner-occ loan also (usually at least 1% less than investment loan). Also you typically get rid of rent by buying a home, and rent is basically 100% interest, but that doesn't apply if you'd be living with your parents and not paying rent. 

 Add me to the list of people saying to buy in a better location. The best deals I have done were all the least expensive houses in great locations. Buying an ugly fixer-upper for a good price that is surrounded by much more expensive properties and fixing it up to the median is the best way to force appreciation quickly and set yourself up for success IMO. Location, location, location! If I could go back and start over I would buy less properties than I did, and focus only on the best locations I could afford.  

Quote from @Rachel Weiss:

Thanks to everyone who took the time to answer. The explanations I got are about 1- the value and 2- the expenses, self-employed, no health insurance/vacation.

I have a question though. The process/work is the same with every transaction; it doesn't make a difference if the house is 100k, 500k, 1mm, or 2mm. The fact that commission is percentage-based is weird because why would someone doing the same thing make double as someone else? c

In other words, I do understand when the realtor fee for a 400k is $20k. but when I sell a home for 2.2M and I pay a realtor $110k things start to not make sense. Yes, I do flip homes for this price. average Americans earn this amount in a full year! 

For those asking, staging is paid by us. 

If you are flipping $2M homes, providing repeat business for an agent in the $2M price point, then I'd recommend building a relationship with a great local agent and negotiating a mutually beneficial arrangement. Commissions are negotiable.