Author Topic: Moving to Denver for Work  (Read 4712 times)

attackgnome

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Moving to Denver for Work
« on: June 08, 2015, 09:15:23 PM »
Hi everyone, first time posting. I figured I would consult the collective Mustachian wisdom out there.

I am looking to move to Denver for work at the end of the month for my current employer. I will be working in the lo do area.

Currently I am trying to evaluate my options for housing. The way I see it, I have two possible options.

1. Shell out ~$1,000 a month for a rental within a reasonable distance (biking) from lo do.

2. Borrow against my 401k to scrape together a 20% down payment (no PMI) to purchase a home within the same area. If purchased, property must have decent potential as a rental property as relocation in 2-3 years is highly probable given the nature of my work.

Employment is relatively stable, and I figure I could pay back my 401k within a year without reducing my 401k contributions (18k a year). I know the prevailing wisdom is to not borrow against 401k balance, but it seems like it would be a decent approach to access my funds to diversify my holdings into real estate as long as I exercise discipline and rapidly repay the loan balance.

waltworks

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Re: Moving to Denver for Work
« Reply #1 on: June 08, 2015, 09:36:54 PM »
Unless my knowledge of the Denver RE market is totally wrong, you are not going to find a lot (ok, any) of good 1% rule rental properties. Buying using a 401k loan for a short term stay is about the dumbest idea I can think of. Just rent.

_W

Hi everyone, first time posting. I figured I would consult the collective Mustachian wisdom out there.

I am looking to move to Denver for work at the end of the month for my current employer. I will be working in the lo do area.

Currently I am trying to evaluate my options for housing. The way I see it, I have two possible options.

1. Shell out ~$1,000 a month for a rental within a reasonable distance (biking) from lo do.

2. Borrow against my 401k to scrape together a 20% down payment (no PMI) to purchase a home within the same area. If purchased, property must have decent potential as a rental property as relocation in 2-3 years is highly probable given the nature of my work.

Employment is relatively stable, and I figure I could pay back my 401k within a year without reducing my 401k contributions (18k a year). I know the prevailing wisdom is to not borrow against 401k balance, but it seems like it would be a decent approach to access my funds to diversify my holdings into real estate as long as I exercise discipline and rapidly repay the loan balance.

jsternitzky

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Re: Moving to Denver for Work
« Reply #2 on: June 08, 2015, 11:27:39 PM »


1. Shell out ~$1,000 a month for a rental within a reasonable distance (biking) from lo do.

2. Borrow against my 401k to scrape together a 20% down payment (no PMI) to purchase a home within the same area. If purchased, property must have decent potential as a rental property as relocation in 2-3 years is highly probable given the nature of my work.

1: not sure where you are looking exactly but I just rented on the south side by Centennial and I could touch much for less than $1600. But if you find a safe place for $1000 take it!

2: DO NOT borrow against you 401k. 1: your job is very stable until you lose it and that money is due shortly after. 2: you are robbing yourself of record gains in the market and that potential make the PMI you would avoid look like chump change.

Take your time. Get to know the area. Save like you have never saved before and in a year you will be in a house. The worse thing you can do is buy a house when you don't have money!

Kagey

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Re: Moving to Denver for Work
« Reply #3 on: June 09, 2015, 12:10:16 PM »
The RE market in Denver is incredibly tight right now. Two of my neighbors put houses on the market and had multiple higher-than-asking bids on the same day. I'm in a suburb, but I have heard it is the same in Denver proper as well. Don't get into a bidding war.

I second the advice to get a feel for the market first.

Beaker

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Re: Moving to Denver for Work
« Reply #4 on: June 09, 2015, 12:26:49 PM »
Yep, Denver real estate market (both purchase and rental) is incredibly tight. Everything is selling very fast and expensive, vacancy rates are very low (0% in Aurora last I heard) everywhere except downtown, and downtown only has vacancies because it's so damned expensive. I'd strongly consider renting somewhere off the light rail rather than downtown. Englewood or Littleton (near the relatively new West light rail line) are probably good candidates.

I'm sure there are deals out there, but not many and probably not quickly. Probably in the more working class neighborhoods like Elyria-Swansea, East Park Hill (if you're good with gangs), or Commerce City.

Edit to add: Who's the employer? Just curious since I'm in the LoDo area.
« Last Edit: June 09, 2015, 12:32:25 PM by Beaker »

gt7152b

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Re: Moving to Denver for Work
« Reply #5 on: June 09, 2015, 02:00:33 PM »
Family? If not, I'd find a room for rent or try to organize some room mates to go in on a reasonable house or apartment. Bank as much money as you can for now and plan for a house purchase once you are ready to settle down in one area for the long haul. Might even be post FIRE.

attackgnome

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Re: Moving to Denver for Work
« Reply #6 on: June 26, 2015, 10:42:08 PM »

Edit to add: Who's the employer? Just curious since I'm in the LoDo area.


Halliburton.


La Bibliotecaria Feroz

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Re: Moving to Denver for Work
« Reply #7 on: June 27, 2015, 10:52:18 AM »
Another vote for don't buy immediately.

And DEFINITELY don't borrow against your 401(k) to get to 20%. Mr. FP and I ran exhaustive numbers when we bought our house and 5% down no-PMI loan worked best for us--there are other options, but it just didn't make sense to do the 20% if you don't have the cash.

And yeah, the market is INSANE. $310K got us 1750 square feet (half of it a finished basement) in the still-kinda-sketchy part of NE Denver. And the market moves really fast. We missed out on good properties because people were offering more than the asking price and doing stuff like waving the appraisal or offering cash. Get your boots on the ground and go from there--and for 2-3 years, probably don't buy at all.

attackgnome

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Re: Moving to Denver for Work
« Reply #8 on: June 27, 2015, 01:23:17 PM »
Another vote for don't buy immediately.

And DEFINITELY don't borrow against your 401(k) to get to 20%. Mr. FP and I ran exhaustive numbers when we bought our house and 5% down no-PMI loan worked best for us--there are other options, but it just didn't make sense to do the 20% if you don't have the cash.

And yeah, the market is INSANE. $310K got us 1750 square feet (half of it a finished basement) in the still-kinda-sketchy part of NE Denver. And the market moves really fast. We missed out on good properties because people were offering more than the asking price and doing stuff like waving the appraisal or offering cash. Get your boots on the ground and go from there--and for 2-3 years, probably don't buy at all.

I'm pretty familiar with the area, I've spent over 7 years living in the area on and off in the past 12 years.

I was't aware you could get away without paying PMI for anything less than 20% down; 5-10% down with closing costs I could easily pay out of pocket.

2-3 years is my best guess on how long I would live in the area, could be longer/could be shorter. I wouldn't necessarily be planning to sell, just turn the place over to property management company to handle until I returned to the area at a future date.

At any rate, renting seems to be the way to go at the moment. When Five Points starts getting gentrified, its probably a sign that the market is close  to its peak.

La Bibliotecaria Feroz

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Re: Moving to Denver for Work
« Reply #9 on: June 27, 2015, 01:34:23 PM »
We did have to accept a higher interest rate, but it is still a conventional mortgage. That was the kicker for us--we did not want to accept the terms of an FHA loan. Everyone's mathematical situation is different, of course, but it's good to know options!

Roboturner

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Re: Moving to Denver for Work
« Reply #10 on: July 08, 2015, 03:12:03 PM »
Where the heck are you finding rent for 1000 within biking distance of lodo?

joeh

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Re: Moving to Denver for Work
« Reply #11 on: July 08, 2015, 03:52:52 PM »
Where the heck are you finding rent for 1000 within biking distance of lodo?

It's pretty easy to bike down the Cherry Creek path to LoDo (unless its flooded, which has been happening a lot). Just a quick look at PadMapper, and there are a few rentals <$1000 around DCC and near Wash Park then more as you head out towards Glendale. More in Cap Hill & Cheeseman area but those are probably smaller. Not sure if those qualify as biking distance - but I do that bike ride regularly.
« Last Edit: July 08, 2015, 03:54:51 PM by joeh »

Beaker

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Re: Moving to Denver for Work
« Reply #12 on: July 09, 2015, 03:25:50 PM »
Where the heck are you finding rent for 1000 within biking distance of lodo?

It's pretty easy to bike down the Cherry Creek path to LoDo (unless its flooded, which has been happening a lot). Just a quick look at PadMapper, and there are a few rentals <$1000 around DCC and near Wash Park then more as you head out towards Glendale. More in Cap Hill & Cheeseman area but those are probably smaller. Not sure if those qualify as biking distance - but I do that bike ride regularly.

You can also find some out in the RiNo/Five Points/City Park West area sometimes.

attackgnome

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Re: Moving to Denver for Work
« Reply #13 on: July 10, 2015, 12:22:51 PM »

Not sure if those qualify as biking distance - but I do that bike ride regularly.

Anything within 6-7 miles for an easy under 30 minute ride.

Roboturner

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Re: Moving to Denver for Work
« Reply #14 on: July 10, 2015, 01:40:30 PM »
Where the heck are you finding rent for 1000 within biking distance of lodo?

It's pretty easy to bike down the Cherry Creek path to LoDo (unless its flooded, which has been happening a lot). Just a quick look at PadMapper, and there are a few rentals <$1000 around DCC and near Wash Park then more as you head out towards Glendale. More in Cap Hill & Cheeseman area but those are probably smaller. Not sure if those qualify as biking distance - but I do that bike ride regularly.

ah yes, Padmapper, I forgot about that guy

and apologies for the previous post, you and I both wrote biking, yet my brain registered walking!

Like "Ah yes I shall just pop out of my $1000/mo condo in LODO real quick and saunter a breezy 2 blocks over to my work"
« Last Edit: July 10, 2015, 01:45:06 PM by Roboturner »

Prepube

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Re: Moving to Denver for Work
« Reply #15 on: July 11, 2015, 04:24:25 PM »
Within six miles you have some cheaper options to the west along the W toward Lakewood or Golden.  Don't buy now.  Wait til at least next year.  This market is expected to remain hot though next year, though some real estate folks are calling a top this summer.  Average time on the market was 23 days last month.  Great for sellers...  Avoid NE toward the airport.  That will be the first area to decline (because it's toward the airport.  Focus south and west along light rail lines.

Cole

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Re: Moving to Denver for Work
« Reply #16 on: July 11, 2015, 08:11:23 PM »
1: not sure where you are looking exactly but I just rented on the south side by Centennial and I could touch much for less than $1600. But if you find a safe place for $1000 take it!

Literally the only rental you will find for $1000 is a 1bdr or studio in one of the mediocre areas around colorado blvd or in lakewood.

attackgnome

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Re: Moving to Denver for Work
« Reply #17 on: July 12, 2015, 01:52:22 PM »
Literally the only rental you will find for $1000 is a 1bdr or studio in one of the mediocre areas around colorado blvd or in lakewood.

Don't need more than a studio.

Prepube

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Re: Moving to Denver for Work
« Reply #18 on: July 12, 2015, 05:39:00 PM »