Buying Our First Investment Property

Justin and Sonya’s Story

Sonya and Justin explaining how they bought their first investment property
First time property investors Sonya and Justin

Yes, Denver’s real estate market is hot. More than 7,000 homes sold in the Denver metro area in July; that’s 21% more than the same time last year.  And yes, homes can be expensive here. The average sold price of a single-family home in July was nearly $540,000…a 9% increase over last year.



But what if you have a dream of investing in rental property? Is it possible in this market? Can it be profitable with these prices? The answers to those questions are ALSO yes and yes!

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In July, I helped my clients Justin and Sonya purchase their first investment property. They talk about the experience in this short video. Watching the video will give you an overview. For the real nitty-gritty of WHY and HOW they did it, read on in today’s blog.

Investment Property as a Way to Achieve Your Financial Goals

What financial goals are served for you by having an investment property?

We’ve been looking for a chance for passive income for a while. We didn’t want to have that savings sitting around not working in our favor. Investing in the property not only gives us passive income in the way of cash flow each month, but we are also generating equity with our tenants paying down the principal loan amount. We would like to retire at 55, and this is one step along the way to making that happen.

Did you turn down any other non-real estate investment options in lieu of real estate investing?

We certainly could have invested in many ways via the stock or bonds market, but for us this was a safe bet that would generate that passive income…and you can’t beat 15-16% ROI on a rental.

Affording Your First Investment Property

So many people are intrigued by the idea of owning investment property but have no idea how to afford it. Can you share how that was possible for you?

This is tricky! You certainly have to budget and save to ensure you have your 25% down payment on an investment property. We worked hard to become debt free (outside of our primary residence). We pay for our cars in cash, and we only buy larger items once we have saved enough to buy them. This allows our savings to grow. Eventually we had enough to start looking.

Finding an Investment Property

With the high averages sale prices in our market, many people feel like it’s impossible to find an investment property. Can you describe how you found one?

We looked for about a month and a half before the perfect property finally landed in our lap! Sometimes it’s about finding a property that has not yet hit the market. This allows you as the buyer to get an initial offer in before you’re in direct competition. We were specifically looking for a property in a good school district that offered the best total ROI with a cash flow of at least $150 a month.

Choosing the Right Investment Property

What factors were the most important for you when it came to choosing an investment property?

We wanted a property that would cash flow right from the start, so ROI was top of the list for us. But that’s not to say that ROI is everything. No matter how good the ROI looked, price was still important for us and we didn’t want to overextend ourselves.

The potential for appreciation was also important. We want to grow our equity by having our tenants pay the mortgage, but we also want the value of the property to be increasing each year.

Location was a big factor. Initially, we wanted something that wasn’t too far away from our own home. As our search went on, we realized that the school district of the investment property was also very important because it affects what we can charge for rent.

Finally, we looked at hidden costs. These are things like HOA fees that can reduce your ROI.

What condition was the property in when you purchased? What kind of work did it need? How long do you plan on keeping it?

The property we landed on was in good condition. We didn’t want to be wrapped up in a lot of renovation for our initial property. We were looking for a little less up-front work. We ended up replacing the flooring, fixing the plumbing, and putting a new coat of paint on the place. Our plan is to keep the property long term.

Advice for Other First Time Investors

Is there any other advice you’d give outside of what was in the video? You both talked about needing to have patience and be able to walk away from a property if it wasn’t the right fit; anything else?

When you haven’t invested before or done this type of a home purchase before, you don’t know where to start. So our biggest recommendation is to partner with someone who’s done this before and can guide you in the process. Jenny, you gave us lots of resources to familiarize ourselves with buying an investment property. We also liked that you were able to identify which areas had good rental potential and which areas didn’t.

Being patient is definitely important. Learn to be okay with the fact that you’re probably not going to get the first property you make an offer on. You’re going to make a LOT of offers – it was six or seven for us. Patience becomes even more important after the purchase. Everything feels rushed to get the property rented, but it’s best to take your time, update the property the right way, and understand that everything takes a little more time than you expect.

Understand that what you look for in an investment property is very different than what you look for in a property you’re going to live in yourself.

Be willing to move quickly when you find something that meets your criteria. We hemmed and hawed and hesitated too much on a couple of properties. You can lose the right one if you’re not quick to act.

Finally, ask ALL the questions! Don’t be ashamed about not knowing something. That’s why you have Jenny as your “guide on the side.” She knows so much because she’s purchased investment properties herself and has helped lots of investors.

Ready to Buy Your First (or Next) Colorado Investment Property? Call Me!

If the idea of buying an investment property appeals to you, I can help. I’ve purchased multiple investment properties as long-term rentals (currently own two) and have also done two as fix-and-flips.

BONUS #1: Here are five important steps to follow when buying an investment property, along with helpful resources and referrals.


BONUS #2: Watch this video of the five steps to buying an investment property. My guest is Kim Hubbard of Merchants Mortgage, a local Denver-area lender specializing in short-term loans for real estate investors.

I would love to help you buy your first or next Colorado investment property. Give me a call at 303-204-6494 or email me at jen@jmdenverhomes.com.

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