Cash Flow is the Name of the Game—But You Must Get Creative
The powerful tool for investors to cash flow in Denver and other high-priced areas.
Everybody wants cash flow. But if you're investing in Denver, you either bet on appreciation or you get really creative. The classic strategies? They're drying up fast. I can't tell you how many out-of-state investors come to me, clinging to the "1% rule" like it's gospel. I usually tell them to forget Colorado and look at the Midwest instead—unless they're ready to put down 30% or embrace co-living (where you rent by the bedroom instead of the whole house).
But what if I told you there’s another way? A strategy that’s gaining traction as interest rates stay stubbornly high? One that lets you snag a 2020-level mortgage rate?
It’s called assuming a government-backed loan.
Patience Pays—Literally
Before we get into the magic of assumable loans, let’s address the biggest hurdle: time. The median time to close on one of these deals? 90 days. Could be 30, could be 180. And that’s where patience comes in. As Jean-Jacques Rousseau said:
“Patience is bitter, but its fruit is sweet.”
And in this case, that fruit is a 2.5% mortgage rate.
Yes, you read that right. Some assumable loans have interest rates as low as 2.5%—the kind of rate that had people waiving inspections and offering $50K over asking in 2020. And guess what? You don’t have to be a veteran to assume a VA loan as an investor.
How It Works
When you assume a loan, you legally take over the existing mortgage—including its ultra-low rate. No “subject to” deals, no messy agreements where the seller stays on the loan. Just a clean transfer of debt and title.
The biggest challenge? Covering the seller’s equity.
If a homeowner has built up $500K in equity, you’ve got to come up with that cash. But not every deal is like that—some properties have less than $100K in equity, making them more attainable than the typical 20-25% down payment on an investment property.
Sweetening the Deal with Seller Financing
Here’s where things get even better: you can negotiate seller financing or a secondary loan for the down payment. That means your blended rate (the mortgage + second loan) is still far lower than today’s market rates.
My take? Interest rates aren’t coming back down to 4% anytime soon. If you want cash flow in high-cost markets like Denver, these lower rates are your ticket in.
Who Can Assume What?
Investors: VA
Homebuyers: FHA
Veteran Homebuyers: VA and FHA
Case Study: Assumable Loan in Action
Let’s look at a real deal.
🏡 5 bed / 2 bath in Denver
💰 Seller’s VA loan at 3%
🏷️ Asking price: $494,900
Now, let’s compare costs:
Market rate (6.75%): PITI = ~$3,000/month (with 20% down)
Assumed loan (3%): PITI = ~$1,900/month
Monthly savings: ~$1,000
This property has $175K in equity, meaning you'd need a higher down payment. But with seller financing, you could get in with very little cash up front.
Now let’s talk cash flow:
Long-term rental:
Rent: $2,900/month
Expenses: $2,300/month
Cash flow: ~$600/month
Co-living strategy:
Rent per room: $850
Total rent: $4,250/month
Cash flow: ~$1,800/month
Not bad for Denver, right?
Final Thoughts
Assuming a loan isn’t a magic bullet—it takes patience, persistence, and negotiation skills. But it’s one of the few ways to find cash-flowing deals in a high-cost market.
As my mentor always says:
“If it was easy, everyone would be doing it.”
If you want to learn more, hit reply—I’d love to chat.
or you can schedule a time with me to learn more.