• Skip to main content

Denver Investment Real Estate

Helping Investors with Denver Residential Real Estate

  • Denver
    • Start Here
    • Deal Analyses
    • Market Updates
    • Denver Podcast
  • Springs
    • Start Here
    • Deal Analyses
    • Market Updates
    • Springs Podcast
  • Education
    • Free Toolkit
    • Podcasts
    • Getting Started Guides
    • Courses
    • Books
    • Events Calendar
    • Blog
  • Spreadsheets
    • Rental Property
    • House Hacking
    • BRRRR
    • Fix and Flip
    • Return on Equity (ROE)
  • Services
    • Rental Properties
    • House Hack
    • Sell
    • 1031 Exchanges
    • Investment Consultation
  • Portfolio Analysis
    • About Portfolio Analysis
    • Portfolio Consultation
  • About
    • About Us
    • Team
    • Our Process

Out of State Investing vs Colorado Springs

November 6, 2020 • Jenny Bayless

This blog post chronicles the personal performance of two similar properties: one in a popular Midwest cashflow market, one in Colorado Springs. Both were ‘turnkey’/rent-ready and were held for ~2 years and then sold.

The purpose is to show why I transitioned from out of state investing to entirely in Colorado Springs. The is a self-reflection based on personal experience as a new real estate investor, and what works best for our personal investment strategy.

Three Learning Options!
  1. Listen to the podcast “#2: Out of State Investing vs Colorado Springs” on the Colorado Springs Real Estate Investing Podcast
  2. Watch the YouTube video (at the bottom.)
  3. Read the blog post. Note, the blog is an executive summary. Get the in-depth breakdown from the podcast or video.

Background

My out of state properties were in Indianapolis and Chicago in early 2016. My first Colorado Springs investment was in September 2016.

In mid-2017, I observed that my out of state properties had lower returns than the ones in Colorado Springs. By early 2018, I decided to sell our entire out of state portfolio and reinvest solely in Colorado Springs.

Indianapolis Pro Forma: Single Family Home (March 2016)

Pro forma for single family rental
Pro forma for single family rental

Key Takeaways:

  • High vacancy rate (8%)
  • Capex and Maintenance are higher than average (13%)
  • Appreciation not taken into consideration (0%)
Cash flow analysis of rental home
Cash flow analysis of rental home

A cash on cash return of 14.2% AND a cap rate of 8.6% are extremely positive and strong

Colorado Springs Pro Forma: Single Family Home (March 2017)

Pro forma for single family rental
Pro forma for single family rental

Key Takeaways:

  • Used 3% vacancy rate, standard for the area.
  • Budgeted for property management, even though I self managed
  • Price to rent ratio not at the 1% rule
Cash flow analysis of rental home in Colorado Springs
Cash flow analysis of rental home in Colorado Springs

A cash on cash return of 4.6% AND a cap rate of 6.2% are closer to average investments.

Indianapolis – 2 years of Operating Data

Operating Expenses for single family rental

Retrospective thought: I should not have relied so heavily on numbers prepared by others, and should have performed my own analysis.  However, you don’t know what you don’t know.

Colorado Springs – 2 years of Operating Data

Operating Expenses for single family rental

Retrospective thought: I should have used higher capex and maintenance figure, this property was previously flipped but there was some deferred maintenance.  Another aspect of me being fairly new to investing- I know more what to look out for now.

2 Years Comparative Data: Indianapolis vs. Colorado Springs

Sales Data:

Compare rental properties in Indianapolis vs Colorado Springs

Return on Investment Quadrant (ROIQ): 2 years of data:

Comparison of rental properties in Indianapolis vs Colorado Springs

Final Thoughts

Vacancy kills cash flow!

  • The Colorado Springs property had essentially a 0% vacancy rate over the last 2 years, whereas the Indy property was vacant for 3 months in less than 2 years.  This is likely due to demand of rentals and lack of supply of reasonably priced rental properties in Colorado Springs and vice versa elsewhere.

Personal introspective look: I realized I like control! 

  • By being able to be close to the property, even though I outsourced the majority of the work involved, there was a sense of control in that I could drive over to it, if need be which helped me to sleep better at night.

Strong economy = Strong performance!

  • The stronger growth economy of Colorado Springs helped significantly with the total return.  Even so, my cash on cash was still better than the property in a ‘cash flow market’.

YouTube Video: Out of State Investing vs Colorado Springs Investing

Podcast (colorado-springs-real-estate-investing-podcast): Play in new window | Download (Duration: 44:13 — 50.6MB)

Subscribe: Google Podcasts | Stitcher | Email | TuneIn | RSS | More

About Jenny Bayless

Jenny is an investor and investor friendly agent. She owns a handful of rental properties in Colorado Springs. She has performed value add methodology such as BRRRR to optimize the performance of her portfolio while efficiently managing it.  She has experience in obtaining deals through MLS, wholesale, networking, FSBO; and has experience with multiple different finance sources such as conventional, hard money, and seller financing (both sides). 
(719) 649-4478 | Jenny@envisionrea.com | Read more about Jenny...

Real Estate Investment Consultation
Creating your real estate investing strategy and putting together your team can be a daunting task. Schedule your free Colorado real estate investment consultation to start creating your personalized plan.

Envision Advisors Logo
Copyright © 2022 · All Rights Reserved

Envision Advisors at Your Castle Real Estate · 2755 S. Locust St #243, Denver CO 80222

Return on Investment Quadrant™, True Cash Flow™ and Nomad™ are trademarks of Real Estate Financial Planner LLC and used with permission.

denverinvestmentrealestate logo

Disclaimer:This information is designed to provide accurate and authoritative information with regard to the subject matter covered. It is offered with the understanding that the presenters are not engaged in rendering legal, accounting, or other professional services. If legal advice or other expert advice is required, the services of a competent professional should be sought.

Privacy Policy | Terms of Use | Disclaimer