Is now a good time to buy investment property in Denver? It is a question that considering the incredible interest rates and great deals on homes, I am honestly surprised doesn't come up more. The answer is, yes, for the right person. I will go into that further, but let's look at what Denver has to offer for investment property at this time.
Looking at year to date sales for investment property in the Denver Metro area, there is a 25% increase in the number of investment properties for sale. This make sense of course with people trying to tighten their pocketsand the number of foreclosures still on the market. The average number of sales per month has held steady for the entire year, but what is so interesting is the sales prices in comparison to the original asking price. Average sales price vs list price is an incredible 83% of list. This means investors are getting incredible deals right now.
Combine these great prices with the low, low interest rates, and you can see why buying investment property can be a terrific investment if you have the money tomake it work. Keep in mind that investment loans require more money down, typically close to 20% and the interest rate is going to be a little higher, around 5%. Compared to an average of 7to 8%a few years back, 5% is still a great rate and makes achieving a positive cash flow much more realistic.
A final factor to consider is the rental market in Denver. In a blog I wrote earlier this summer, click here, I noted how the vacancy rate in Denver is the lowest it has been since 2001. The future outlook for the rental market in Denver is great for apartment owners since so few new apartments have been built in the past ten years and there is going to be a shortage of rentals for years to come. In urban neighborhoods like Highlands, rents are the highest they have ever been and most homes and apartments rent in days. So to answer the question, now is an excellent time to invest in Real Estate.
Buying investment property to rent out is not like buying a home you are going to live in and not everyone is cut out to be a landlord and own investment property. When buying for investment, it is more important to look at cash flow, maintenance and how long it would take to find renters as opposed to the how you would view a home if you were living in it. Investors have to be willing to deal with renters and the issues that can arise from owning another home. With rates and prices as low as they are, it has allowed many investors who do not want to be hands on landlords, to hire a management company to handle the day to day care of the properties and eliminate potential head ache for the investor. These companies typically charge 10% of the monthly rent and can be a great option, especially for first time investors.
These great values and rates are not going to be around forever. If you believe in the value of buying low and selling high, there hasn't been a better time in Denver to follow this age old investing tip. To find out if investment property is an option for you, make sure to contact an agent who is familiar with investing and can help you find that perfect investment before it is too late.
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