Four years ago, Sam Saslow purchased a condo in Denver at the urging of his parents. It turned out to be one of the best financial decisions he’s ever made.
At first he was nervous about the $164,000 purchase. A bidding war broke out and he ended up going slightly over his budget.
“I was worried I was buying at the top of the market,” he said.
Turns out, his worries were unfounded.
He just sold the condo for $285,000, $121,000 more than he originally paid. That’s a nearly 74% price increase in just four years.
“I’m laughing now,” he said of his nerves as a first-time buyer. “I couldn’t possibly have timed the market better.”
The windfall allowed him to upgrade from the 685-square-foot condo to a 2,700-square-foot home with a garage and basement that he and his wife recently purchased for $402,500. The profit from the condo sale allowed them to put 20% down and still have money available to furnish the home and cover renovations.
“I don’t think I will ever see an investment as good as that. It set me up for pretty major wealth creation long term.”
The Denver housing market is one of the hottest in the country, with 8.4% year-over-year price increases in March, according to the latest S&P CoreLogic Case-Shiller Index.
The rapid rise in home prices does give Saslow some hesitation with his new purchase. “We all saw what happened to the housing market and I lived in Florida and saw a lot of people get caught with their hand in the cookie jar.”
But he said the lack of buildable space and the steady inflow of new residents makes him feel the city would be “insulated” from a potential slowdown.
Saslow was 29 when he purchased the one-bedroom, one-bathroom condo in Congress Park. He put down 3%, and the purchase cost him $7,000 out of pocket. To outbid the other buyers, he had to raise his offer twice.
“Rents were rising so quickly and I was still pay way less on the mortgage than the people renting the same units in my building.”
As a homeowner, Saslow watched as other units in his building sold at higher price points and saw his tax assessment steadily rise.
When he decided it was time to put the condo on the market, he originally thought about pricing it in the $250,000-$255,000 range. But his agent wanted to go higher at $275,000.
“I thought that was crazy,” he said. “But we’ve worked together and I trusted her … we went for the top of the market.”
They got four offers on the condo. The first offer came in within 48 hours of the listing hitting the market, and they didn’t have to hold an open house. They got three offers on the condo that they considered.
Every bid offered a 20% down payment and a personalized letter. The winning bid offered $285,000 with a guarantee of $280,000 if the condo didn’t appraise.
“There is no way I could have afforded that house if I hadn’t gained equity and that condo hadn’t appreciated that way.”