How To Flip Houses In Colorado: Step By Step (2024)

Are you ready to capitalize on Colorado’s house-flipping industry? Whether you’re new to real estate investing or looking to diversify and grow your portfolio, this guide will teach you how to flip houses in Colorado, including:

• What Is Flipping Houses?
• Colorado House Flipping Statistics
• How To Flip Houses In Colorado (7 Steps)
• How To Find Houses To Flip In Colorado
• Do You Need A License To Flip Houses In Colorado?
• How To Flip A House In Colorado With No Money
• Best Cities To Flip Houses In Colorado
• Final Thoughts On Flipping Homes In Colorado

More and more people are choosing to call Colorado home; it has the sixth-fastest-growing population over the last 13 years. World Population Review expects The Centennial State’s population to increase by 1.26% over the next 12 months. Yet, despite population increases, home values are trending downward because the Fed decided to raise interest rates to combat inflation.

It is worth pointing out that the latest lull in housing activity and prices aren’t indicative of long-term headwinds but rather short-term opportunities. Combine Colorado’s increasing population and pent-up demand for housing with one of the country’s lowest unemployment rates, and you get incredibly favorable conditions for local real estate investors.

*Before we begin our guide, we also invite you to view our video on How To FLIP A HOUSE For Beginners (Step-by-Step). Host and CEO of Real Estate Skills, Alex Martinez, & Stan Gendlin share how to flip a house in Colorado as a beginner! 

Together, Alex & Stan have completed over 1,000+ house flips. What you learn in this video will give you the confidence and guidance to successfully complete your fix-and-flip project!

What Is Flipping Houses?

Flipping houses is a popular real estate investment strategy that leverages other people’s money to buy, rehab, and resell properties. On the surface, flipping houses is as simple as acquiring a fixer-upper, putting a little money into them to increase its value, and reselling them for more than has been invested. Beneath the surface, however, there’s a lot more to flipping a house.

To succeed, investors must navigate the process with precision, increasing profit margins and mitigating risk every step along the way. House flippers may increase their margins at the time of purchase by acquiring deals below market value. Next, home flippers may increase their margins by conducting renovations with the highest returns on investment (ROI). Lastly, home flippers may increase their margins by creating demand for the home and selling it for top dollar.

Each stage of the home-flipping process is optimized to produce returns. Still, investors need to know what they are doing when flipping a house; it is a complex process, and only those who have learned how to flip houses in Colorado will be able to realize success.

Are you ready to learn more about flipping houses in Colorado? Let’s start with a closer look at the local housing market.

Colorado House Flipping Statistics

Learning how to flip houses in Colorado requires investors to become students of local market indicators. After all, the more investors know about the Colorado real estate market, the more likely they will have an advantage over the competition. With that in mind, here’s a quick look at some of the state’s most important data and statistics:

• Average Home Value: $545,124
• 1-Year Appreciation Rate: -2.3%
• Median Days To Pending Sale: 10
• Active Listings: 23,256
• Months Of Inventory: 2
• Foreclosure Rate: One in every 6,512 homes
• Population: 5,839,926
• Median Household Income: $80,184
• Unemployment Rate: 8%

*All Colorado housing market statistics are as of Q2 2023.

How To Flip Houses In Colorado (7 Steps)

Learning how to flip houses in Colorado doesn’t have to be complicated. While the process will require acute attention to detail and a great deal of work, aspiring investors can get started immediately by following these seven steps:

1. Find A House-Flipping Mentor
2. Research The Local Housing Market
3. Find & Analyze Distressed Properties
4. Raise Capital To Fund The Deal
5. Close On The House
6. Renovate The Property
7. Resell The House

1. Find A House-Flipping Mentor

It is entirely possible to flip houses in Colorado alone. However, aspiring investors who seek the help of a mentor are given a significant advantage over the competition. For novice investors, the guidance of an experienced home flipper is immensely valuable in their development and can often mean the difference between success and failure.

While reading reliable sources and conducting thorough research is advised, it’s no replacement for what investors can learn from an experienced mentor. A truly great leader, for that matter, is the single greatest way for new investors to increase their flipping skills.

With a seasoned home flipper as a guide, novice investors can reduce risks, enhance efficiency, and significantly improve their chances of success. Moreover, a mentor is crucial in instilling confidence in new investors, empowering them to take that initial leap. Proper guidance makes the first deal more approachable and easier to navigate, which is all some new investors need to realize their true potential.

Read Also: How To Invest In Real Estate: The Ultimate Guide

2. Research The Local Housing Market

Learning how to flip houses in Colorado starts with listening to the most dependable resources. Here’s a list of trusted resources to start your research on the Colorado real estate market

• Zillow Housing Data Research
• Zillow’s Colorado Market Overview
• Redfin’s Colorado Housing Market Overview
• ATTOM’s Colorado Real Estate & Property Data
• Colorado Association Of Realtors
• Realtor.com Colorado Housing Market Data
• SoFi’s State Foreclosure Data
• U.S. Census Bureaus’ Colorado Data
• Bureau Of Labor Statistics’ Colorado Economic Data

3. Find & Analyze Distressed Properties

In the Colorado real estate market, investors are awarded several ways to find and analyze distressed homes. It is worth noting, however, that some methods are quite complex and best suited for seasoned veterans. Aspiring investors, on the other hand, are better off sticking with the 70% rule.

Not to be mistaken for a comprehensive analysis, the 70% rule simplifies analyzing deals for new investors. While it is lacking and shouldn’t be taken as gospel, the 70% rule provides a rough estimate of the maximum amount investors can spend on a deal while ensuring ample room for profitable returns. This approach allows new investors to gauge the feasibility of a potential investment without wasting too much time.

To apply the 70% rule to an impending deal, investors must first calculate the home’s after-repair value (ARV)—the estimated worth after renovations and repairs are completed. Without getting too complicated, the ARV is what the house would be worth after repairs are made to bring it up to par. The most dependable way to determine the ARV is by examining recent sales of comparable properties ("comps") in the vicinity.

Next, multiply the ARV by 70% (or 0.70), and deduct the estimated rehab costs. The answer to the equation becomes the maximum allowable offer (MAO), or the amount investors need to stay under when buying the home if they want to leave enough room for attractive profits.

Here is the formula:

ARV - Fixed Cost - Rehab Costs - Desired Profit = Maximum Allowable Offer (MAO)

4. Raise Capital To Fund The Deal

The next stage involves securing capital to finance the deal. While investors can utilize their own funds, borrowing money offers certain advantages. Firstly, borrowing funds from others means investors don’t exhaust their life savings and become financially constrained. Secondly, borrowing external funds enables investors to scale their businesses in a manner that would be more challenging if they used their capital.

The consensus among most home flippers is that raising capital is the optimal approach for rehabilitating properties, leading to the question: Where can investors find the necessary funds? While various options are available, private and hard money loans are particularly well-suited for home flippers.

Although both sources of capital come with higher interest rates, the additional costs are justified. By agreeing to pay a higher interest rate (sometimes 15% or more), investors can promptly access the funds, which is a significant advantage in today's competitive market.

5. Close On The House

As an escrow state, investors can expect the closing process in Colorado to follow these steps:

• Investors will negotiate their desired purchase price and terms with the seller. If both parties can reach a mutual agreement, a purchase and sale agreement will be drafted to serve as the foundation for the deal moving forward.
• Investors should conduct a title search to protect themselves to avoid future ownership discrepancies.
• Walking through the investment property to confirm its condition and address any potential issues is essential.
• If no further issues arise after conducting the title search or walkthrough, the deal will proceed to the closing stage. Both parties will prepare and sign all the necessary documents at the closing table.
• The necessary documents and funds will go through escrow until all the prerequisites are met.
• Once the terms of the escrow are met, the parties will receive their respective payments and ownership.
• The new chain of title will be recorded with the local Recorder’s Office.

6. Renovate The Property

Investors should emphasize cost-effective renovations that enhance the property's curb appeal and value. Above all else, investors must exercise restraint and avoid spending indiscriminately on renovations when flipping houses in Colorado. Instead, they need to concentrate on projects that offer the highest ROI.

By strategically selecting renovation projects, investors can maximize the potential value increase of the property.

According to Remodeling Magazine, the upgrades with the best returns in Colorado and the entire Mountain region include:

• Electric HVAC Conversion: An electrical HVAC conversion will recoup about 114.5% of the original cost.
• Fiber-Cement Siding Replacement: Replacing siding with fiber cement will recoup about 107.4% of the original cost.
• Garage Door Replacement: Replacing a garage door will recoup about 99.7% of the original cost.
• Manufactured Stone Veneer: Adding manufactured stone veneers will recoup about 96.7% of the original cost.
• Vinyl Siding Replacement: Replacing siding with vinyl siding will recoup about 92.9% of the original cost.

7. Resell The House

After the final repairs are made, or perhaps even before, investors need to begin preparations for reselling the house. Again, the ultimate goal is to sell the home for a list price higher than the total investment made. If the property was purchased well below its fair market value and the renovations have added substantial value, the investor should be able to generate an appealing profit.

Investors should consider seeking the assistance of a real estate agent. While their services and expertise may coincide with a large real estate commission, there is a strong likelihood that their guidance will result in a higher net gain for investors during the sale, surpassing their fees. When all is said and done, it’s fair to assume a good agent will sell the home faster and for more money than an investor alone.

It is important to note that investors will only retain part of the sale price. After successfully selling the home, the priority is to repay the lender (along with any accrued interest). Only after fulfilling this obligation will the final step be considered complete.

How To Find Houses To Flip In Colorado

The best ways to find houses to flip in Colorado include, but are not limited to:

• Real Estate Agents: Real estate agents and Realtors have valuable connections within the local market and possess firsthand insights into publicly listed and off-market properties.
• The MLS: The Multiple Listings Service (MLS) serves as the largest database of homes for sale in Colorado, making it an invaluable resource for investors who have been granted access.
• Foreclosure Auctions: Following the repossession of foreclosed homes (and in the absence of short sales), banks prefer to sell their nonperforming assets to investors at a discounted home price rather than keeping them on the books.
• Public Records: Distressed homeowners are public records, which means investors who know where to look can identify motivated sellers.
• Direct Mail Campaigns: A targeted audience can be reached by sending marketing material through direct mail to identify distressed homeowners.

Also, check out our in-depth video on "How to Gain Access to the MLS Without a License." We cover key insights and practical tips to unlock potential property opportunities you might have been missing out on!

Do You Need A License To Flip Houses In Colorado?

In Colorado, investors are not required to hold a real estate license for flipping houses. Nevertheless, obtaining a real estate license isn’t necessarily a bad idea.

Despite the need to pay annual fees and pass regular exams to maintain the status of a real estate professional, investors gain access to a nationwide network of agents and their most valuable tool: the MLS.

While real estate investors in Colorado don't need to become licensed agents, there are unique benefits associated with acquiring a license.

Read Also: How To Get MLS Access: The (Ultimate) Guide

How To Flip A House In Colorado With No Money?

Flipping houses in Colorado doesn’t require investors to use any of their own money. Instead, investors can (and should) leverage funds from other sources, such as private and hard money lenders. These individuals are fellow investors actively seeking profitable opportunities, and home flippers may offer just what they are looking for.

Private money lenders and hard money lenders take the place of traditional banking institutions. As a result, investors looking to secure money don’t need to jump through the hoops that have become synonymous with big banks or refinance their house to get the money they need. That means no minimum credit score or months of waiting on approval, only to be turned down and lose a deal.

Private and hard money lenders will each have their own rules, but investors can expect quick access to cash and a short-term loan. Therein lies the most significant benefit of using a hard money loan: the speed at which it can be obtained often translates to facilitating a deal.

Those who haven’t learned how to flip houses in Colorado can invest without using their funds. Another investing strategy, wholesaling, doesn't involve extensive renovations or substantial capital investment. In wholesaling, investors acquire the rights to purchase a property and then sell those rights to an end buyer for a fee.

This method offers a viable investment avenue that doesn't rely on personal cash resources.

Best Cities To Flip Houses In Colorado

The Colorado real estate market is full of opportunities, but the following cities may be the best places to flip real estate:

• Denver: Flipping houses in Denver is starting to look more and more appealing. At $573,189, the median home value in Denver is higher than the state average. However, demand remains persistent in metro areas like Aurora thanks to a strong and growing economy driven by diverse industries such as technology, aerospace, and renewable energy. As a result, a Denver property flip may be just what new investors need to get their feet wet.
• Pueblo: Less than an hour's drive south of Colorado Springs, Pueblo’s relatively low median home value has begun attracting bargain-conscious homebuyers for years. Affordable housing and unique potential for future growth make Pueblo the perfect place to learn how to flip houses in Colorado.
• Longmont: While not as well known as its neighbor to the south, Boulder, Longmont has started attracting investors' attention all over Colorado. With homes well below the median home value in Boulder, Longmont has seen an influx of potential buyers looking for more affordable and multifamily living situations. Investors looking for a rental property, in particular, may want to consider Longmont.

Final Thoughts On Flipping Homes In Colorado

The Colorado real estate market is brimming with potential. For the better part of two decades, Colorado has been one of the country’s fastest-growing states, and the trend doesn’t appear to be slowing down anytime soon. Thanks to a strong economy supported by technology, renewable energy, tourism, and outdoor recreation, the demand for housing is just getting started. As a result, now is as good of a time as any to learn how to flip houses in Colorado.

At Real Estate Skills, our team of experts is ready to provide you with the tools you need for flipping houses in Colorado. We're committed to providing the knowledge, resources, and support you need to successfully navigate a Colorado property flip. So avoid common mistakes and maximize your returns by leveraging our expertise.

Let RealEstateSkills.com be your trusted partner in turning your Colorado house-flipping goals into profitable realities. So get started with us today.