Unlike most other assets, real estate appreciates as time passes. For investors who go beyond buying a home for themselves and start buying rental properties, real estate is a great way to generate a solid income.
Becoming a rental property owner is a lucrative investment as renting out a residential home pays off a mortgage while still earning the landlord some income.
Colorado is a state that many experts advise real estate investors to consider, and Denver is among the most popular cities for rental property purchases.
Here is a guide for anyone wanting to invest in rental property in Denver:
Get expert advice
Buying and renting out residential properties can be a process fraught with complications and details. When people hear about nightmare tenants and struggling to find renters, they tend to be put off real estate investment.
However, those that find a property management company with smooth and hassle-free services in Denver find that being a landlord becomes simpler and less stressful.
Property management companies specialize in renting out properties and dealing with the minutiae that accompany the process.
Their agents ensure that rent is paid on time, repairs and maintenance are done seamlessly, and issues arising from a rental agreement are dealt with professionally.
Another service all property management companies, including the CBRE Group Inc., offer is tenant screening.
Verifying and finding out information about potential tenants’ employment and credit history is essential to find the right tenants, those that will pay their rent timeously and not cause the landlord any trouble.
Understand the area
Investing in rental property requires intensive research into the local area. Investors say that Denver is a great place to buy rental properties right now, and experts at Colorado Realty and Property Management Inc. back them up.
There is unprecedented growth in the city, and those looking to capitalize on it should not delay.
However, a property purchase will set an investor back a great sum of money as the city’s average home price is $500,000. Naturally, there are cheaper properties available, but they are for smaller homes in less desirable neighborhoods.
The reason for a rental income boom in Denver is its property prices. They have escalated to the point that many people cannot afford to buy homes, leaving rental as their remaining option. Tenants occupy nearly 50% of Denver properties.
Facts and figures
Rental property investment in Denver might be an attractive proposition, but buyers should ensure that they understand the realities of investing in a city with property prices higher than the national average.
Investing in real estate comprises a set of decisions that the head, not the heart, should rule. Choosing a property using emotion rather than rational thinking is a recipe for disaster.
Investors should research mortgage repayment rates and other expenses they should incur as landlords, such as property taxes, repairs and maintenance, and rental management company fees.
Weighing that against setting a market-related monthly rental fee will determine the viability of an investment. Renting out property at a loss is not ideal.
An examination of amenities
Single-family dwellings in Denver are potentially lucrative investments. However, getting the right tenants into them can be a challenge. Many landlords turn to rental management companies for assistance.
The ideal tenant chooses to remain in the rental home long-term. This renter demographic is typically families with children.
They want to offer their children a stable upbringing and education, making them inclined to want to stay put and extend their rental agreement.
To attract such tenants in Denver, investors are advised to look for property in middle-class neighborhoods that feature good schools and other amenities, such as parks.
Low crime statistics are also a primary variable that could affect a tenant’s decision to rent a property. Some preliminary research should reveal which neighborhoods fit into this category.
A growth center
Denver’s population has grown in recent years. Experts put this down to a sound economy with a stable employment outlook. Colorado’s central location has made Denver the perfect location for companies to station their head offices or regional branches.
An additional factor that builds into Denver’s growth potential is a booming tourist industry. Colorado has several popular destinations, and Denver acts as a gateway to many of them.
An influx of tourists leads to job creation and could also result in short-term rental contracts for landlords.
At a time when the jobs market seems depressed across America, Denver is a welcome employment oasis that continues to attract more residents.
As more people arrive in the area seeking rental homes, the prices charged are expected to continue increasing, which is positive news for Denver real estate investors.
While interest rates on mortgages are expected to remain stable, rising rental income charges will benefit landlords.