📍 📍 📍 Welcome back to another episode of raising the flipping bar. I'm your host, Derek Marlin, and we're going to do
📍 a mid year update for Metro Denver. I thought it'd
be perfect timing. We are recording this in the very beginning of June. It'll come out right away. So it'll be literally almost like smack dab right in the middle of the year.
so we're going to do some, some market updates and mid year updates, and then I'm going to put my crystal ball together, so we will definitely look back and say, man, he was a, Complete and total moron and we were way off or, or things are close ish. but we're going to really dive into some data to you guys know that I'm a data nerd.
We're going to look at April data. Cause it's always 30 days trailing typically, and then some real world stuff that we've just seen this past May of what's going on in our business.
So let's jump into today's episode.
Welcome to raising the flipping bar, the go to podcast for aspiring and seasoned real estate investors. I'm your host, Derek Marlin, and I'm the CEO of Elevation. We're a real estate investment company based right here in Denver, Colorado. We'll dive into smart investment strategies, market insights, and essential tips for scaling your real estate ventures.
Whether you're making your first investment or your hundredth investment, this podcast is your blueprint for success in the ever evolving world of real estate investing. Get ready to elevate your real estate game and begin your journey with me.
Um 📍 📍 📍 we're also going to talk a little bit about our current inventory. And so what I want to do is paint a picture for you.
We just sold one of our. I would say my top three most favorite projects. It was a beautiful home in Sloan's lake. We got it actually from our friends at 📍 the home buying guys. two great investors in Dallas.
They wholesaled it to us and, literally it took us almost to the day one year. We'll let that sink in regular single family home, decent size home, you know, 3, 100 square feet, but it was a rehab.
This is not a new build. This was not a scrape. I got a little sad because one of our other friends, Jesse and Rachel Jane, our homes, part of the elevation family. I think they freaking almost finished a new build as fast as I did a rehab, and it's because we got stuck in permit purgatory. So, we ended up selling this house for
📍 just shy of 1 million dollars 150, 000.
it was hands down again, one of my most favorite flips. The design was spot on. it was actually a mid century modern property and it was a five bedroom, four bathroom house. Think of it this way,
you wake up, get your cup of coffee in the morning. You have a perfect view of Sloan's lake,
four houses away from the lake, or you could sit on your front patio in the evenings and you could look out across and see the mountains.
fast forward to what actually happened is it's the worst loss we've ever taken. So that's going to be a whole nother episode. every single thing that possibly could have gone wrong did. We're now eight years into this business So the takeaway there is
sometimes you can be as strategic, as smart, as proactive, as hardworking as you want, you can bust your ass in any way possible and you might still lose your ass.
So, we're going to talk about that here again in another episode. the other interesting thing about this deal is with the NAR settlement, there's a lot of talk of people that, Hey, nobody needs a buyer's real estate agent. Well, the buyer that we actually sold this property to was an unrepresented person.
They lived in the neighborhood and they were actually just walking their dog and actually
📍 came into one of our, I think this was like our seventh open house.
It does show you that every once in a while, an open house actually does help sell a home. Again, that's a whole nother episode.
But, there is going to be so much content that we'll be able to deliver to you of how challenging it was working with a buyer who is unrepresented. I would have gladly paid a commission because technically I made more money, you know, air quotes, if you're listening and not watching, but it was a total train wreck in dealing with this buyer.
So again, another episode. I'll give you a little bit of stats on this house too, as well.
Our average days on market, which is how long do you have a property listed before you go under contract is, well, back in the day it used to be like three because we would sell everything in the first weekend.
Then when the market normalized and corrected, we were roughly 10 days on market. We would sell it typically or go under contract the second weekend. This one actually sat on the market for 📍 94 days. We
listed it, right after January 1st. So kind of that next week you always want to avoid New Year's. We had 42 showings on this house, And I had one offer and we obviously that offer. we were then under contract for
📍 45 days, which is a long time,
because we had so much other things to do and sadly we even had escrow $10, 000 to get the deal closed to do roughly $1, 000 of ridiculous ticky tack work.
I'm in the process of doing that now. Again, we'll share all these details with you guys here in a little bit. The other interesting thing was, is we essentially dealt with two buyers, and the reason why I say that is the person who found the home was the adult child, and he was buying it for, actually I should say his parents were buying the property, but he was buying it for them in cash.
So wealthy family. They were going to then sell one of their other family homes and then probably pay their kid back or something. So you're appeasing what we ended up finding out is not two parties, but in all honesty, four people, mom and dad, kiddo, and then his wife. And there's going to be a hilarious part in this next episode when we talk about insomnia.
So pin that it was ridiculous.
So really, again, just wanted to give you some feedback on what's going on in the market. We want to share the wins and we want to share the losses, but when you're working with, you know, that price point of over a million dollars. The other thing that I'm finding is in Denver, truly luxury is probably 2 million and above.
Because our median home price is $615, 000 right now. So if you scale up to that next level of what people are buying for their second home, you're not far off of a million dollars in a lot of different places. So the tough thing about, I think the 1 million to 2 million price point range is it's a big stretch for a lot of people.
It's, I mean, don't get me wrong. That's a lot of money. 1. 1 million, 1. 5. That's a lot of money, even if you have cash. And so people, this house had every permit. Even the city and county of Denver said how nice it was when they were inspecting this property, and it still was a total train wreck.
So as we close out, you know, kind of the intro story to this episode, the takeaway is obviously 2022. the first half was extremely hot. 2023 was still fairly strong because interest rates were about, you know, full 1 percent less than they are right now. the average days on market. For the first quarter of 2024 was 42 days.
But again, if you look at luxury stuff was sitting a lot longer. So again, we were in this weird, perfect storm. We thought we underwrote the deal conservatively and, priced it conservatively, which was a hundred thousand dollars under what we thought we could sell it for a year ago. Cause again, the market is efficient.
You can't just think, Oh, we spent more money. We took more time. Let's just price here and see what happens. That's code for you're going to lose money or you're going to lose time. So we price it efficiently and, over 1 million homes, the days on market is closer to 80 days. So we were still even like two weeks longer than that for this just immaculate, beautiful house.
we actually even had five families early on the first two or three weeks who quote unquote, love the house. They were going to write an offer because there was a bit of extra inventory in the market where in the past there never had been. They looked at a couple other houses. They actually found smaller houses.
Um, we're a little bit less expensive, not much. It was almost like we were weirdly too big of a bang for our buck. I don't know what the hell that means. but we had like five families that told us that. Again, it was affluent families. this was a little bit of our, what we thought was our first demographic was
mom and dad are wealthy folks and they were either redistributing wealth, in my opinion, which is good estate planning. And they're buying their kiddo, whether it's a 20 something year old person who went to Regis university close to the property, that was one avatar of buyer, or whether it was somebody in their early thirties, looking to move back to Denver.
Mom and dad were going to buy that house. Again, they loved it, but then we knew which house they ended up buying because it went under contract that next weekend and we saw that deal close. So it was weird. We just missed out on a bunch of things but again, that's kind of the takeaway of where is the market going right now?
So what I want to do is jump into some data. Everybody knows that I'm a bit of a data nerd and please check the show notes because we're going to cite three or four different sources, but I really want to give a shout out
📍 to Megan Aller, with first American title
and man, her data and her analysis is second to none.
they do a great job on the closing side. I use some of her, she does weekly market updates so I would highly recommend you sign up for those and use their company. They do a good job.
📍 let's talk about, the Denver Metro Association of Realtors.
That's another piece of data that we're looking at.
We're going to look at 2024 for April, cause everything is again, trailing for 30 days. And then I'm going to look at what it was for the month prior, and then we're going to really jump back about a year in time and see what are the big differences. So we can give you some kind of current snapshots of today's market and today's environment.
the median home price in Denver, actually I was off when I mentioned it earlier,
📍 as of April, it is $602, 550 bucks. So again, the median, not the average.
Cause in Denver, that's kind of out of whack where you've got, you know, a super cheap condo and then you've got, our boy Russ, Russell Wilson's $25 million house.
That that throws the average off. So the median, if you think back to your statistics class is kind of that middle of the bell curve. So like, what is the majority of these properties and where are they selling just over 600 grand that is detached homes that isn't condos, and actually, that's not townhomes that is up 1. 2 percent from last month. So that's a big jump.
looking back at 2023, 23, that same house was $565, 000. So these are fairly big chunks and big gains, even in what people are saying is the quote, the market's crashing, the market's going down. It is still leaning, in my opinion, towards being a seller's market.
even though it's a bit more balanced than it was the last two or three years. If we look at the number of closed deals, it's 3, 737 deals. of actually properties that closed. So again, that's up 1. 6 percent from last month. So slight increases and that makes perfect sense. Normally when you start with the beginning of the year, people list properties.
That magical time is post super bowl. in the past, January has been really good for us because there's been no competition. But now there's competition, and so you actually see a significant spike in showings post Super Bowl and also just purely from a Denver perspective, the weather still sucks in January, not great in February, but nobody wants to see a house when it's two feet of snow if you don't have to, because there are options right now
as far as inventory. So then if we look at that same number of closed deals for last year, it is $3, 790. So almost identical from April, April. I mean, we're talking about the same number of properties that closed. Here's where things get a little bit different is the number of active listings.
To me, this is honestly one of the most important metrics, supply and demand. Simple think back to your econ one on one classes. If there's not inventory available for sale, that just makes huge competition for the number of people that are buying. Currently, well, I guess again, current as far as Denver metro association of real tours is concerned, just under 7, 000 homes are for sale 6, 9, 9, 0 of active listings.
That is a big jump from last month to this month. Again, in the spring, normally there are always a little bit more homes for sale, you know, like leading up to July or August, and then it slowly kind of trails off. that is up almost 20%. So from March to April, there are almost 20 percent more new listings on the market, than there have been in the past. That is definitely a significant increase from last year.
Again, this is where I think there's this big jump of, things still flying off the shelf and it being insane in 2022. Healthy in 2023, where you might get a couple offers, and you might be able to get by if your house wasn't perfect. Now your house needs to be perfect because last year there were only roughly 4, 500 homes for sale and now there's almost 7, 000 homes for sale.
Again, perspective, big jump, but historically, if we look at like the last six years and we throw out COVID, cause honestly that was insane record low inventory. We're right on track. So it's not insane in, in a historical perspective, but from a year to year we have short memories and things change quickly.
The number of new listings was also a big jump. So in April, there were 5, 980 new listings, which was a 21 percent jump. So a big number of new properties hitting the market from March until April. Interestingly enough, that was similar to 2023. There were 5, 093 new listings a year ago as of April. So that was interesting, that was kind of the same.
the next big jump is weeks of inventory, which means that if nothing new would put on the market, how long would it take to sell every property available for sale, which is kind of a weird metric, but it does kind of make sense to show you where inventory is going. So right now, in April, again, there was seven weeks of inventory, which is up 12%.
If we look back a year ago, there was only five weeks of inventory. So again, more opportunities for people to buy equals less demand equals less people freaking out, feeling like they need to write in a media offer and properties are sitting a little bit longer. Here's a big one that actually decreased is from March until April.
The days on market, which is again, a property gets listed and how long is it until it goes under contract? There's only eight days. that's the median. So that number kind of surprised me. That seemed really low. That was not what we have seen. And that's not what a lot of my fellow investors and even our agent team has seen, but that's what the Metro Association of Realtors is reporting.
that was a big decrease actually from March. So properties were sitting a little bit longer in March and they were going under contract faster in April. That actually is down from 2023. So it was 10 days on market. In April of 2023. So those are some stats that I want you to consider. Again, we're really hypersensitive to data.
We look at it on a monthly basis, but again, tune into Megan's update each week, because you can accelerate that information and not that the real estate market moves as fast as let's say the stock market, but it is important.
So we're going to take a quick break and tell you about the next elevation Academy. If you're looking to dive deep into real estate investing, this is definitely the event for you. Our Academy features over a hundred step process to help you navigate every single thing from market analysis all the way down to every aspect of project management.
So this is tailored for both beginners and seasoned investors. And our one day intensive training will equip you with the strategies and insights needed to elevate your real estate investing game. Spots are definitely limited. So click on the link below in the show notes to sign up and transform your approach to real estate investment.
Okay. Let's get back to the episode.
📍 📍 📍 So we've got the market statistics that we've just went over. I really want to talk about what are we seeing in real time as well.
So we talked about selling our Sloan's Lake property. We had a second property that's over a million dollars, and we'll have another episode when we talk about truly getting back to basics, which for us is lower price points. But nonetheless, by the time this episode hits, this will be almost perfectly coincided with when we are listing our wash park property.
So almost the same thing in that we bought this property a year ago. It took us, man, it's going to take us just over a year to list it, and that's because the city and County of Denver threw us into permit purgatory where we had to fight with literally like fight city hall for three months to go over the attic that had been finished since the 1960s. They were waiting in permitting where we lost three months, which from a holding cost perspective, that's seven grand a month, just gone. Cause I'm paying hard money on this property. They had said, Oh, well, there was never a permit pulled and the above grade, or the attic space was, what they call conditioned space, meaning there's heating and there's air conditioning in there.
But they said that it wasn't on county records, and so we couldn't count it, and we would have to comply to a new code, which meant ripping off the roof, raising it like one foot, doing like $40, 000 of extra work. So we were fighting them, and one of my agents did a great job. Shout out to Dan Sullivan. He went back and researched and found that the city had been charging us property taxes for that total amount of square footage. They were saying that it wasn't grandfathered in, but they had been taxing it since 1964 or whatever. So we said, okay, if you want to refund all of those taxes over the last 70 years, magically they kicked it over to a different department and they found a permit.
We'll leave that and just let that sit for a second of how jacked up that is.
but any who that obviously sidetracked this project. So where we thought we could list it at 1. 25 million. We even thought conservatively 1. 3 when we first bought it for where the market was showing. We are about to list it for 1.
15 million. And so again, this is going to be a case study. Um, I hope that I have good news for you here in a couple of episodes because I'm actually listing this property at a loss. I've never done that before. Just think of that. I took an entire year. I paid interest. Again, this is probably one of the top three most beautiful properties we will ever do.
My thought process is I want to get the money back. We always talk about the velocity of money or like how fast can we turn over our money? We are seeing again, from a lot of Megan's data and from what the market is telling us, you have to have a couple of things.
📍 One, you have to have a perfectly finished house.
There can be no corners cut. There can be no details. You cannot rush it to market because at that price point, people have options and they're picky and they should be, you're spending over a million bucks and they have time. They will, you know, essentially question your quality of work. So it has to be perfect and you have to spend obviously more money on marketing.
You have to have amazing photos. We stage everything anyway, so no big deal there, but way nicer staging. We're doing drone photos and video. the other thing that we did is actually, we just did it yesterday is we toured two of our main competitors because they looked really good in photos, and I wanted to see again, when somebody is looking for a house in wash park, probably between 1 million and 1.
5 or a million and 1. 3, this is the competition. So we wanted to know how we stacked up. So we're pricing it slightly under that one because they came out these other two people about a hundred grand more within about the last 40 days and they're sitting. I'd rather not sit. There's also data that shows, and I'm going to scroll down and look at my notes, um, that if you price it right, and your house is perfect, then there's a 42 percent chance you might actually go over asking.
So again, this will be like my perfect timestamp and everybody can see if this was a good move or if this is the worst move ever. We'll see. price it low. In my opinion, comps can justify 1. 2 million all day long, but we're doing it 1. 15 and I hope to get a run up. Maybe you get multiple offers, maybe you get a cash buyer.
Again, it's all about generating that huge excitement in the first two or three weeks. And for us, that's, that's, that's, That's worth it. So that's where we're seeing the market. the cool thing about this house too, is with where we are at and wash park, it has dual primary suites. And so that's something that a lot of the competition doesn't really have.
All these houses in that part of town are definitely very unique, but the other thing is again, every aspect was permitted, even though it took us forever. that's going to be a whole nother episode, but that's what we're seeing right now in the market. You have to have your properties spot on. You feel like, you don't want to just arbitrarily go over your budget, but if you can spend a little bit of money, like we probably spent an extra $5, 000 on landscaping on this property, because it was going to be ready, obviously May, June, perfect time, people are really valuing outdoor space, and so we just wanted it to be perfect and it really does stand out compared to the rest of the competition. So who knows, fingers crossed. We'll see, hopefully I don't eat my words but I think this is the right move. Cause I want to just get the money back and we want to get back to doing less expensive homes.
So where does this lead us for the market today? Again, this is where kind of our crystal ball is going to come in.
I want to give you guys the playbook for elevation, at least for the second half of the year. Again, we talked about two huge factors for success. It's pricing it appropriately right out of the gate and making sure that. Everything is perfect. So if we do that, we can turn our money faster. We're going to get back to basics.
We're going to focus between $400, 000 and $800, 000. So ideally, if you remember back to our first, almost masterclass, our first 12 episodes, if you think about the spread of how much are you buying it for, How much are you selling it for and making the numbers work in between? You're typically on average for our more cosmetic properties in nature, we're at about $150, 000 in spread.
So again, if I'm buying it for 400. I'm selling it for five 50 and we should be able to maintain our profit margins. If it's a more major rehab, we're finishing basements. We're pulling permits. We're doing the whole thing again. We are getting away from those monster jobs. We just finished in Denver. The only thing I would do is let's say, finish a basement or do something in a suburban home that's not in Denver.
So we love where we're at in Inglewood, Littleton, Centennial, Arvada, any of those, Essentially counties outside of Metro Denver, then, or the city and county Denver, I should say, we're going to do those. We're going to really try to get back to what was our average from 2019 to 2021, our close to close, which means the day we buy it, all the fix up.
listing it for sale, going under contract and then selling it. So again, like close to close was 97 days. That was before we got into our larger projects. We are 100 percent getting back to that, and the cool thing about that is it gets us to our number one metric, which is dollars per day. If we remember that one is net profit divided by how many days you're doing a deal.
We're going to try to get back to 500 per day net profit. That's been kind of our goal. That's been something that we've, we've attained in the past and we want to get back to that.
again, the ROI will be probably slightly lower, but we'll be churning and burning through projects quicker and a larger number of projects.
The other thing is essentially when you're doing these million dollar homes, even though I was borrowing hard money, you're going to. They kind of take up the same amount of capital as two projects. So I could have theoretically done four projects and I kind of turn that money, and even if I only made 10 grand and things went horrible in our opinion, and you make a 4 percent return on investment, it's at least positive it's done in a quick amount of time and you're rinsing and repeating.
Again, no permitted projects in Denver. We're going to get back to doing three or four projects at once, but then we're still a hundred percent wholesaling to our clients and our cash buyers. I want to see where the market goes. I personally don't want to have so much capital out where most people like, Oh, scale and grow.
And I want to flip 20 houses at once. That's not us. We a hundred percent want to add value to our clients. Do our three or four projects at once. That's not us. Build the different divisions of the business, help a lot of clientele, and then really see where things go through the rest of the year, and then really just set ourselves up for success for 2025.
Get with us. If you are an investor, you want to be on our cash buyers list. There are deals that we would take down ourselves, but we want to just essentially wholesale those deals. We actually call it transparent wholesaling. Cause you know exactly what we're going to make, um, which is on average between $5, 000 and $20, 000 bucks.
Then deals, good deals. We're not lighting the world on fire. We want to provide value to people. So takeaways and conclusions again, short episode today, but we wanted to get you guys exactly what we feel like is going on in the market. Almost smack dab in the middle of 2024. We want to learn, as they kind of say is you either instead of win or lose, you either win or learn.
Again, this is super painful with wash park kind of listing. We'll see where that goes. Sloan's Lake was rough, of losing the most we'll ever lose. Look at the pictures again. It's the most beautiful house ever, but you still have to have that growth mindset or else what's the point. And I would love to, again, we always say, like, and follow and subscribe, but more importantly, connect with us.
And I want to hear your feedback. I want to also see what data are you looking into? Again, I really lean back on my wall street experience. So I try to evaluate as much of that data as possible. Again, shout out to Megan. Actually, we'd love to have you on the podcast. Look at her information on a weekly basis.
It is super spot on. so we wanted to thank you guys and we'll catch you guys on the flip side.
Thanks for tuning into this week's episode of raising the flipping bar. If you found value in our insights and stories, let's keep the conversation going, connect with me on social media, and be sure to share this episode with friends or colleagues who might benefit your feedback and reviews, help us grow and reach more listeners like you.
So please, if you enjoyed this episode, leave us a review. Thanks again to the elevation Academy for sponsoring today's show. If you're interested in learning more, click the link in the show notes below. And remember every property. Tells a story. Every deal brings a lesson. Keep reaching for those goals and we'll catch you on the flip side.
Hey everybody. Thank you so much for listening and watching raising a flipping bar. Just a basic overall disclaimer is that a, this is not legal advice. B, this is not tax advice. See, this is not financial advice. I hope you get the gist, but I'm obviously not a lawyer, not a CPA. Hell I'm not even a real estate agent actually, but in general, we hope you get a ton of value out of this, but there is a bit of a disclaimer.
Please consult a professional if you have any questions whatsoever. Thanks for tuning in.
