There is no one-size-fits-all answer, but it is safe to say that first-time investors should start with one or more. Denver is still an excellent residential rental investment market demanding rents higher than the national average. According to the Denver Post, The City ranks third behind Salt Lake City and Tucson as the most competitive rental markets in the West. Real estate investors should strike a balance when deciding how many rental properties to buy based on their risk tolerance, financial capacity, equity growth goals, and other personal goals.
Buying rental properties is a good fit for investors looking for long-term investments. Well-managed properties produce a steady income stream, allowing investment property buyers to cover their monthly mortgage and capture some profit after expenses. Denver homes, if held long enough, grow investor equity.
Financial Capacity
Lenders typically want 25 percent down to buy investment properties. The average closing price in Denver in August 2023 is $590,000. So, investors need about $150,000 to buy an average home here. More if they want to purchase homes located in desirable neighborhoods. Current interest rates in Colorado are over 7 percent for a 30-year fixed mortgage. So, rental cash flow must cover higher mortgage costs, maintenance, and taxes. Go to our recent blog, “Are Rental Properties a Good Investment in 2023?” for more information.
Invest a Windfall
Some investors inherit or receive a large amount of cash and seek a haven for this money. They should consider buying residential real estate because rentals are in high demand in Denver because of our growing population, strong job market, and lack of affordable housing.
About 50 percent of Denver residents rent, and the occupancy is 94 percent in 2023. Typically, rents increase yearly here, so buying residential rental properties will generate enough passive income flows to protect their investments.
Equity Growth
Some investors take a long-term view and want to grow their equity by appreciation. Investors who bought houses in Washington Park, areas around Denver University (DU), and Bonnie Brae in the 1990s have seen substantial appreciation in their investment over the last 30 years. An investor working with a knowledgeable broker can find suitable investment properties to purchase in Denver in 2023.
Invest in Quality
Rentals around Washington Park or DU will generate more rental income and appreciation compared to three condominiums in Aurora. DenCO Property Management (DenCO) recommends that investors buy in the best neighborhood because these units attract tenants who can afford higher rents. These renters want to be near attractive amenities such as parks, restaurants, shopping, and easy access to major highways. Rentals with a good location demand higher rents, making them a potentially lucrative investment.
DenCO offers complete brokerage services to investors. Since we have been in business since 1999, we know Denver’s neighborhoods. We can help residential real estate investors find properties that meet their financial goals. DenCO manages over 150 rentals in the DU, Washington Park, and other neighborhoods in the Denver area and has been in business since 1999. Call us at 303-722-9688 or click here to complete a contact us form.
Recent Comments