Have you ever thought about investing in Denver Real Estate? There has never been a better time to own rental properties in Denver with rental rates at an all time high, vacancy rates at an all time low and interest rates back near an all time low. While investing sounds very tempting, it can also be very intimidating and confusing. I've owned rental properties for the past 7 years in Denver so thought I might give some tips to help get you started.
First, just like every Real Estate transaction, it starts with figuring out where you are going to get the money to buy the property. If you have cash, that certainly makes it a lot easier but it is not always the best financial strategy so I always suggest speaking with a lender to get started. You can figure out how much you will have to put down, count on at least 20%, and what monthly payments are going to look like so you can start to understand how much rent you will need to cash flow each month.
Once you have a firm grasp on the financing, then it is about finding a property that works for you. When I start working with an investor, I always ask what their goal is with the property, to maximize cash flow or appreciation. There are lots of properties out there where you will see strong cash flow forever, but the home may not appreciate more than 10% in the next twenty years. Other properties may break even or slightly cash flow, but see 10% appreciation every year and five years from now you could be sitting on a ton of equity. Maybe you are looking for a combination and that is certainly something that an experienced Realtor can help you search for and find the property and neighborhood that best fits your investing goals.
Another question I ask my investor clients is how hands on do they want to be? An older home in the Highlands is going to rent for a lot, appreciate a lot, and probably require a lot more maintenance every year than a condo would. Are you willing to get calls in the middle of the night that the furnace is out or there is a leak? Or would you rather be hands off and rely on a property manager or a condo or town home which is almost maintenance free? I have both types of rentals and I can tell you the town home is much less mental strain than the Highlands bungalow.
Because of that, for investors who want to try it out and see if being a landlord is for them, I typically suggest starting with a condo or town home. I have a great little condo for sale right now in Capitol Hill that would make a great rental. It is turn key, ready to be rented and priced very attractively at $117,000 meaning your out of pocket expense to get started wouldn't be too crazy. Let's look at some numbers.
Based on comparable units that are leased, I would estimate this would rent for $1,000 a month. With 20% down, your monthly payment including HOA would be around $750 a month. So with an investment of $23,000, you would see a return of around $250 a month. That's a 13% return on investment from the rents alone. This unit is the heart of Capitol Hill at 1421 Pennsylvania so prices are only going to climb around there along with rents. And since it is a condo with no maintenance, a perfect starter investment property. If you are interested in this condo or the investing process in general, please let me know and we can talk more about it. Click here for the details on this condo.
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