DENVER (CBS4) – Real estate prices in the metropolitan region rose in April and showed increases compared to the previous month and the previous year. Inventories hit a record low, according to a report released on Wednesday. The rising cost of buying a house resulted in two childhood friends buying a house together instead of trying to find houses separately. By buying a larger property, they can rent rooms to cover the cost of the mortgage.
“As Denver is now and how expensive it is, I think, like we did, when buyers can familiarize themselves with the investment idea that is to buy an asset,” Abe Bobb told CBS4. “You can get a very marketable or rentable property that you could live in for a year or two, but if you ever wanted to move, you could easily rent it out to cover the mortgage plus profit.”
Bobb is from Colorado and returned to Denver after 11 years in California. He didn’t want to keep paying rent and didn’t feel that a condo was the right investment for him. The money needed to make a down payment to the homes he wanted didn’t fit his budget.
“If you want to go into your own house, one you have to have the money and two, I think when you take out a loan, a lot of people think, ‘Oh, this will be my house forever? Said Bobb outside his new home in the Country Club neighborhood. “If you buy a three or four bedroom, like a big one or a decent one, and don’t rent it out, and you can afford it, great for you.”
So he decided to go buy a home with his middle school friend, Nick Brown. Brown already lived in Denver and had rented for years. He was also ready to buy a house. He found similar challenges trying to find a home within his budget as the sole owner.
“We realized that if we teamed up, pooled our resources and took out a mortgage, our money would go much further,” Brown told CBS4.
The two friends will be moving into their home later this month as new figures from the Denver Metro Association of Realtors suggest that soaring prices are unlikely to slow down anytime soon. The median for single family homes sold in April was $ 585,000, up more than four percent from March and more than 23 percent year over year. Data likely to have been part of the motivation for these two young professionals to move into home ownership sooner rather than later.
“You have to operate in the times you live in. We can all say it would have been great to buy five years ago when I first returned to Denver,” Brown said. “So you are living and building equity at the same time for less than necessary to rent a comparable place.”
Brown had already looked at the concept of “house hacking”, in which a homeowner rents out additional rooms in order to generate an income that helps to cover the purchase price. As joint investors, they could not only get into a more expensive Denver neighborhood near Cheesman Park, but they could also buy a bigger house. The house has six bedrooms and they plan to rent two out so they can manage their new mortgage.
“The good houses move fast so you have to be flexible and ready and able to move in as soon as you see a house you want because it will likely be gone in a few days,” said Bobb. “For how much money we bought it when I lived in Denver, I would have thought I could have gotten more, a bigger house.”
Their search began in January and required the couple to look at around 40 homes and make several offers, all of which were above price, before finding the right property. Despite their unique strategy, they did not stand above the competition for profit in the seller’s market. But since receiving the keys and moving into some furniture, they believe that this approach is already paying off as an investment and securing their future home.
“I think it’s going great. I mean, we’re thrilled to be under contract. We love the place we have,” said Brown. “Know what you want, put together a good team, act quickly, and take a deep breath because it can be frustrating and challenging.”
Another unusual move the duo took was to make an offer on a Sunday night and they said they got a response hours later. Just one of the many steps necessary to meet the ever-increasing property prices and historically low inventory levels.
“I thought our dollar bought a little more, but Denver is booming,” said Bobb.