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Risks and Rewards of Investing in Denver, CO Real Estate

Risks and Rewards of Investing in Denver, CO Real Estate

Investing in real estate anywhere is going to bring some great opportunities as well as some complex challenges. The Denver real estate market has its own unique trends and nuances. If you’d like to buy a rental property in Denver – congratulations. This is an excellent market for a lot of reasons. But, like any real estate market, it’s full of potential pitfalls. Make sure you’re working with an expert real estate and property management company before you buy. Smart investors know that it never makes sense to do everything by yourself. Whether you’re investing in your first property or adding to a growing real estate portfolio, be aware of these potential risks and rewards.

Denver’s Population and Economy are Growing

Let’s talk about some of the rewards of investing in Denver first. The economy is strong, and there are new job opportunities being created every quarter. Industry in Denver includes healthcare and bioscience, aerospace, and oil and gas. There’s also a lot of tourism. Because of the thriving economy and the incredible quality of life, there are a lot of people moving into Denver. The population is projected to grow faster in Denver than in the rest of the U.S. over the next few years. This is excellent news if you’re thinking about investing here because it means a strong and reliable tenant base.

Home Values: A Risk and a Reward

In Denver, home values are stabilizing. This isn’t alarming, however, because real estate has been appreciating steadily over the last five years. So, investors need to know that they risk not earning a lot of appreciation in the next two or three years. But, if you’re planning to hold onto your property for the long term (at least five or 10 years), you’ll be rewarded with a higher home value. And, you’ll have enjoyed years of tenants paying down your mortgage and covering your property expenses.

Denver Has a Lot of Fixer-Uppers

One of the risks is that plenty of properties in and around Denver are cheap. Why is this a risk? Because it can be tempting to buy a home for less than $100,000. What many excited investors don’t seem to realize is that it could take thousands of dollars and several months to fix that property up and get it ready for the rental market. So, you might have saved some money on the purchase price, but if you’re sinking tens of thousands of dollars into repairs and renovations, you can’t be sure you’ll recoup all that money. And, the work will take time, which means you won’t get the property onto the market right away. It’s an expensive investment. Stick to homes in good condition that can rent right away.

Buy the Right Denver Investment Property

Another risk is that you’re buying the wrong home. Remember that you’re not looking for a property that you’re going to occupy yourself. It doesn’t have to have a large master suite and granite counters. Know your market and your neighborhood. Tenants want a clean, functional property in a good neighborhood. That’s what you should be looking for; not the perfect home. 

We can help you find the right Denver investment property and walk you through the particulars. Our team can establish a projected rental value, estimate what kind of work will need to be done, and help you market and lease the home to great tenants. Contact us at Walters & Company.