As a savvy investor, you know the importance of maintaining a diversified portfolio. It’s why you’re constantly looking for new ways to earn passive income. One of those ways, of course, is real estate.
There’s never been a better time to buy investment properties in Colorado. Granted, anyone purchasing a property assumes a higher level of risk these days. But the reality is that home prices continue to increase in our state, which is great news for investors.
Here are a few things to be aware of before diving into the rental property world yourself.
Location still matters
Don’t make the mistake of buying an investment property just anywhere in Colorado. Take the time to research popular locales for renters, both in the mountains and along the Front Range. Far too many real estate investors limit their search to the Denver area and that’s it.
So where is the best place to buy in our state? Let’s start with Colorado Springs, a city that’s seen notable population and employment growth since 2017. Residents have access to quality healthcare, countless outdoor activities, and a vibrant downtown.
Those interested in purchasing real estate in Colorado Springs will find a number of new construction builds at various prices. And if you’d rather scoop up an existing home, rest assured that there are plenty on the market.
Other cities on your list should include Aurora, Denver, Longmont, and Fort Collins. Potential mountain spots worth exploring are Breckenridge, Vail, and Steamboat Springs. You’ll quickly realize that real estate prices vary significantly depending on the location in Colorado.
You may need to get another mortgage
Seriously. In normal circumstances, real estate investors have little problem paying for a house with cash. But we’re in uncharted territory, and sellers are no longer content with accepting the first offer they receive.
So yes, you may have an easier time financing your investment property than attempting to purchase it outright. Our advice is to be flexible when the time comes to submit an offer, and don’t get discouraged if you fail to land your first home. You could also benefit from understanding the disadvantage of selling a house for cash.
We’re in a seller’s market
How is this possible considering mortgage rates have hit record lows multiple times in 2020? For one thing, homeowners are staying put during the COVID-19 pandemic, leaving housing inventory as scarce as it’s been in years. In a domino effect, buyers are engaging in more bidding wars — driving up home prices nationwide.
Here are several key housing metrics highlighted in the latest “Metro Denver housing market” report from REcolorado:
- A record number of homes sold in August as compared to this month in previous years.
- The average home price in Denver climbed to nearly $540,000 — a year-over-year increase of 11%.
- There were 39% fewer active properties on the market at the end of August than last year at this time.
- Denver-area homes spent an average of 23 days on the market in August, eight days fewer than this time in 2019.
You must act fast
Real estate conditions can change a lot sooner than you think. This is especially true with the upcoming presidential election and daily coronavirus updates. While experts may claim to know how things will shape out in the future, there are simply too many unknowns.
You may want to play it safe and start the home buying process now. Again, you will likely face some challenges in a seller’s market. But all it takes is the right realtor to guide you through every step of the journey.
Your real estate agent can be a game-changer
If you’re looking at buying your first investment property in Colorado, you’re probably in need of some assistance. Keep in mind that an experienced real estate agent can eliminate the stress from this process. That said, it’s important to avoid hiring the first realtor you come across.
Whether you’re purchasing a home to live in or rent out, your real estate agent should have your best interests in mind. This means taking your specific situation into account and answering any questions you have along the way. The last thing you want is for your agent to lead you astray.
At American Home Agents, we go above and beyond for our clients. Our agents have decades of combined experience serving the Denver metro area, and they know what goes into buying an investment property in this state. Experience the difference of American Home Agents for yourself.
Give us a call at (303) 695-5900.