Becoming a property owner is a substantial, long-term commitment. Therefore, sound decision-making should dominate this process. Many people buy homes on an emotional whim and come to regret the decision later.
Buying a rental property should be an even more business-driven decision than purchasing a residential home. A clinical approach serves landlords well as they must choose a property with the potential to yield sufficient revenue to justify the transaction.
If you have been toying with the idea of investing in Denver property, here are some things you should know:
Engage professional services
Some property owners might have zero interest in the day-to-day minutiae that being a landlord requires. They typically choose a property management company in Denver with advanced services as its agents take care of them on their behalf. Property management agents ensure that tenants pay rent, adhere to their rental agreement, and do not become problem renters in any way. While property management companies charge a percentage fee, landlords without sufficient time to be hands-on find them invaluable and worth every penny.
Having a property management company acts as a buffer between them and their tenants is something some landlords favor. Additionally, these companies also oversee most maintenance and repair operations.
Understanding Denver’s property market
Denver’s property market is fiercely competitive, according to Colliers International. Statistics indicate that residential properties spend little time on the market before being snapped up at above-market prices after having multiple offers made on them. Therefore, potential rental property investors should be prepared to act quickly if they find residential real estate that interests them.
The average price for a home in Denver sits at just over $500,000, above the national average. The same applies to rental rates, which average at $1,650. In areas like Cherry Creek, Belcaro, and LoDo, renters are expected to pay more than $2,000. Barnum, Mar Lee, and Westwood have lower rental prices of just above $1,000.
Proximity to schools
According to agents at Real Property Management Colorado, families are attractive rental prospects as they tend to become long-term tenants, wanting to provide a stable upbringing and education for their children. Any parents looking for rental property will inquire about nearby schools and evaluate them according to their reputation.
Would-be buyers are advised to establish which local schools students in an area attend according to zoning regulations. Some simple online research or speaking to residents will give them some insight into the quality of education offered at nearby schools as this will factor into a purchasing decision.
Rental property investment in neighborhoods near local universities and colleges is also bound to be a winning proposition. Demand for student accommodation is rising as on-campus facilities cannot house everyone.
Among the top colleges in the area are the University of Denver, MSU Denver, and the University of Colorado Denver. While student accommodation can be a risky venture due to the transitory nature of rental tenure and students’ tendency to cause more damage than other renters, sound property management could be the solution.
Public transportation routes
Renters may value access to public transportation if they do not own private vehicles. Denver is a sprawling city, and not having a personal vehicle could affect a tenant’s decision to enter a rental agreement. The area is rated as very bikeable and has some public transportation options. Neighborhoods like Capitol Hill, Five Points, and Lincoln Park have excellent transport infrastructure.
Investors should consider looking for neighborhoods close to or offering efficient public transport to major employers in the city. This would make a rental property more attractive to a broader market of renters.
Denver’s largest employers include the University of Colorado, Lockheed Martin Space Systems, and Western Union. Major corporations have founded regional offices in Denver due to its centrality.
Home prices and rental charges have remained stable in the last five years, although some landlords would agree that 2020 was a difficult year. However, with the American economy expected to bounce back after the crisis presented by COVID-19, the tenant pool is expected to increase substantially.
Denver remains a lucrative investment opportunity for real estate investors. Home prices are expected to continue appreciating, meaning that sellers will likely see a profit after a sale transaction. It additionally means that rental prices should also experience reasonable increases, making it possible for landlords to keep up with the rising costs of maintenance and repairs.
Since employment prospects in Denver remain positive, landlords should not experience a shortage of potential tenants. However, finding those that will be good renters can be a challenging process for private landlords. Property management companies have better screening processes that ensure the elimination of potentially delinquent renters.