You don’t need to look sky-high to find great real estate investments–unless you’re interested in the Mile High City, Denver. Not only does Denver stand out for its overall quality of life, but it has the right fundamentals for rental property investing. Look at why Denver is a prime market for real estate investors looking to buy and hold.
Growth in the greater Denver metropolitan area may have been slowing in the last few reporting cycles, but the city is still one of the top 20 largest population centers in the US. The Census Bureau estimated as of July 1, 2020, the metro statistical area (MSA) population was 2.97 million people, making it the country’s 19th largest metro area.
Since 2010, the city has grown by a total of 21 percent, adding some 127,000 people. A Denver Post analysis from March 2020 showed the state capital led in numerical population growth. Metro Denver estimates by 2030, 3.6 million people will call the greater Denver area home.
More people are coming to Denver seeking its promising quality of life and active lifestyle.
Denver Job Market
A strong job market is key to attracting new residents and ensuring those residents can afford housing. Pre-pandemic, Forbes ranked Denver as the 4th best place for business and careers.
The city was forecasted to grow 45 percent over the next ten years. Projections have not been updated for the post-pandemic world, but Denver has a few advantages that make it likely to report job growth in the years ahead. For starters, it has a diverse economy supported by a range of industries. Look at the top 10 employers:
• UCHealth: University of Colorado Hospital
• Children’s Hospital Colorado
• United Parcel Service
• Sturgeon Electric
• Southwest Airlines
• University of Denver
• Charles Schwab
Other leading industries not represented in the top 10 include technology, mining and energy, and telecommunications.
A diverse job market is key to weathering recessions and encouraging growth during boom years.
Denver Housing Market
According to Real Estate Colorado, as of October 2020, the average closed price of a metro area home was $561,197. While that can be a steep financial commitment for a real estate investor when compared to other metro areas, keep in mind a few things:
• Average prices have been increasing, which means appreciation gains
• Denver’s average annual appreciation rate over the last decade is 7.5 percent
• Many suburbs and outlying counties offer lower median prices for real estate
• Colorado has one of the lowest property tax rates in the US.
Factor in demand for housing and population growth before writing off Denver as an investment opportunity. For long-term landlords, the rewards could be worth the investment.
Denver Rental Market
Housing in the metro area may be more expensive than in other cities, but real estate investors should note what Denver offers when it comes to rental prospects.
Just over half of Denver’s residents live in a rental property rather than own their home. The average rent for an apartment was $1,635 as of October 2020.
Demand for rental properties is high in Denver and its surrounding areas. This is good for the landlord’s vacancy rate and income stream.
Denver is Landlord-Friendly
Colorado’s legal structure leans toward a landlord-friendly state. The last few years have seen pushes to restrict the landlord’s rights, but many of these measures have not passed.
A few reasons why Denver is considered landlord-friendly:
• Colorado landlords have the right to increase the rent when they see fit.
• There is no set limit on what to charge the tenant for their security deposit nor is a receipt of deposit required.
• There are no limits or restrictions on tenant late fees.
• No property visit notice is required.
• To start an eviction, notify the tenant of the lease violation and give three days to resolve the issues. If it’s not fixed, start the eviction process.
Investing in Denver Real Estate
Add all the factors together: a growing population, diverse job market, high long-term appreciation rate, and a high number of renters. Top it off with landlord-friendly legislation. The sum proves Denver is a great place to invest in real estate, even with its higher real estate cost. Get creative with your financing. Talk to the partners at CapSource about rehab loans or rental financing options.