In Denver’s rising SoBo neighborhood, which has been transformed from a transportation corridor to a vibrant hub of boutiques, music venues, and restaurants, a rundown 1963 duplex sat waiting for a developer to tear it down for a $1.5-million-plus new build similar to so many others popping up around it. But an offer for the two units, each a two-bed, one-bath floor plan, never came.

Instead, savvy investor Brian  saw an opportunity to polish the well-placed diamond in the rough. He was able to put a freshly-renovated home on the market well below the median price for the urban submarket—and he made more than a $180,000 gross profit on what he describes as “one of the best value–add investments I’ve ever done.”

Finding the Diamond in the Rough

Not all great deals are off market: Brian found the property on the MLS. Listed as “land” by an agent who deemed it unfit for renovation, other flippers overlooked it. By using the keyword “development” in his search, Brian discovered the listing and recognized its potential.

“We negotiated on the place for four months,” Brian said. “They were selling it as a development opportunity but were missing the mark. They thought somebody was going to come in and offer the moon, but it was right as interest rates were turning and developers were sitting on their hands. I told them, ‘I can save this thing. I don’t need to tear it down.’”

Originally listed for $629,900, Brian bought it for $504,900 in March 2023.

Located in Denver’s rising SoBo neighborhood, the duplex was situated in a highly desirable residential location. Brian surmised he could bring something new to the market at a much more affordable price point, allowing someone “to get into this area without having to spend a million bucks on half a duplex.”

Strategic Planning and Financing

Brian’s experience in construction allowed him to identify most of the necessary repairs during his walkthrough (e.g., a new roof and cosmetic updates). Knowing the importance of infrastructure, he also included a sewer line inspection in his offer. A Backflip loan of $562,000 covered most of the purchase and all the renovation costs.

Modernizing

Brian and his wife designed the renovation, opting for a modern aesthetic with a touch of tradition. They hired a general contractor to oversee the project but actively participated in the process. The seven-week renovation was extensive, encompassing a new roof, sewer line, windows, flooring, drywall repair, updated cabinets with quartz countertops, new appliances in both kitchens, bathrooms with tiled showers, vanities, toilets, and landscaping. Essentially, everything was brand-new, ensuring move-in readiness for buyers.

“We flew through it. I hosted an event with Backflip at the house while we were doing the renovation. I wanted to grow my local network. So, I was happy for the opportunity to share how I found the place and try to help others looking for the same thing,” Brian said.

A Profitable Exit Strategy

Brian initially planned to hold on to the property and generate rental income. After realizing he would be moving out of state, he chose to sell instead. Listed for $799,000 in May 2023, the property sold at $809,000 within weeks—an impressive 30% increase in value over Brian’s cost basis.

The property’s walkable area and its two separate units, perfect for young professionals seeking a convenient and trendy location with top-rated eateries and shops and a vibrant nightlife, undoubtedly contributed to its swift sale.

The new owner of the property lives in one unit and rents out the other for $2,350 a month  (11% below area average). With the rental income, the owner’s monthly overhead is around $2,100. Two households are able to live in a neighborhood where the PITI (principal, interest, taxes, and insurance) payments on a new construction are closer to $5,000 per month.

Look Beyond the Obvious

By combining strategic thinking, skillful negotiation, and a hands-on approach, Brian’s Denver duplex renovation exemplifies the upside for savvy investors who recognize value where others might see only a teardown.

“Don’t be afraid to look beyond the obvious. You can still find deals out there,” Brian told the audience at his Backflip event. “And focus on affordability to keep your options open.”