This short article aims to provide information on turnkey investing and taking a short glimpse into where the Denver market is right now.
What Is Your Vision of Retirement?
Have you ever considered what your vision of retirement would look like? Are you interested in leaving a legacy for your family and what would that be comprised of? Perhaps it’s life insurance or maybe the stock market, although honestly the volatility of that option can sometimes scare a few away. Perhaps real estate might be another avenue you would want to investigate. In our opinion, if you are investing for the long term, 5 – 7 years and beyond, real estate or “brick and mortar” is always a great avenue for additional revenue sources. Also a means to creating a legacy of wealth and a more stable long term option.
Let’s have a look at what the Denver market is looking like currently. These are statistics for 2018. To give you an idea, the average single family home (3-4 bedroom home) is about $460k. Some of the contributors for this increase in the house price is we are at an all time low for inventory. It’s a supply and demand thing, we do not have enough supply. So it is definitely a seller’s market.
An interesting statistic is that in the 1980’s, San Francisco was said to be at an all time high, with the average price for housing at $400k. Today those houses are over 500% greater in value. So 20 years ago that $460k house in Denver was probably about $200k, today it is $460k.
In fact, the average appreciation in homes over the past 5 years in Denver, Colorado has been just over 6%, which we think is a pretty decent return, all things considered. Let’s now take a look at the rental rates and what those comprise of. Interestingly enough the U.S. Census Bureau did a calculation on how many hours the average person needs to work in order to afford rent and they polled many large major cities across the United States. In that poll, Denver rivaled San Francisco, which means our rental rates are approaching those of San Francisco. The number one city with the highest rent was found to be San Jose, California. The census bureau predicts that Denver’s population is going to grow by around 50,000 people per year. That is a lot of people looking for homes to buy and since we have low inventory, they are also looking to rent. So what is the rental population composed of? We get this question all the time and there is a large part of the Denver rental market that are relocating folks, couples and families.
This is why single-family homes are in high demand for rentals right now, because we have a lot of families coming in for the new jobs. The single family homes also rent and lease faster than condos and townhomes.
The last area that our portfolio of tenants is are millennials, that would be the Gen-Y and now some Gen-Z are getting old enough to go live on their own and rent. They are seeking homes and many of them like to cohabitate.
What Is Preventing You From Turnkey Investing?
Might it be a fear of financing? The interest rates are going up people say “so why would you want to lock in a rate?” Well that is just it, they are going and the rates are still good right now so why not?
What about vacancy? Are you nervous about being vacant? And having a house payment?
How about property condition? Many think that they will wait for home prices to go down. The reality is that the history of the Denver market has shown over the last 40 years trends of ever-increasing or plateaus. In fact, over the last 48 years, there has only been three years that the market actually did a down turn. Every other time has been up or plateaued.
More importantly, this will not be an overnight correction. We have minimal inventory and it is not going to happen overnight. The idea of it becoming a buyer’s market where we have more inventory is going to take some time.
Next is property condition and maintenance, these are all great reasons to hire a qualified property manager to assist with these items. Hiring a property management company that understands single family homes is essential as they are very different from apartments and leasing apartments. They should also understand the importance of investing as well as cash flow to the owners and that’s what we here at Legacy Property Management pride ourselves in.
Questions To Ponder
If Legacy Property Management could help you find the right financing, would that encourage you to add to your Legacy?
If we came across the perfect investment opportunity, would you be ready to invest?
With our team of property management and real estate professionals, we all work together with the owner to find the right and best investment. We can provide you with investment worksheets that you can punch in numbers into. We love to provide rental analysis and rental run rates to see what we would list the home at. We can advise you on what you might want to do to your property to invest in it a little to capture a higher rental rate. Educate you on the time of market and create a strategic plan for that property and get you well on your way to leasing and management services.
Legacy Property Management would welcome the opportunity to explore what it would look like for you to expand your investment portfolio and create the retirement legacy you had thought about doing or hoped for.
Never hesitate to call us or our real estate team and just visit more on what it would look like for you. Does it feel comfortable for you, get some of our ideas on creative financing or ask us if we have any properties that are coming on the market or that we know of, or that we have seen on the market that might be a great investment to add to your portfolio.