With its picturesque views, sunny climate, various types of attractions, and unique benefits, Colorado has long been a mecca for both tourism and a steadily growing population. Although any type of investment comes with some level of risk, investing in the Colorado real estate market could be a smart move for building your portfolio.
Why Invest in the Colorado Real Estate Market?
If you’re looking to diversify into real estate or build your existing assets, explore the possibilities in Colorado.
Strong Economy
Colorado attracts millions of visitors year-round, largely for the outdoor recreation industry, which makes it an ideal place for investing in vacation or short-term rentals. With its low unemployment rate, Colorado also attracts relatively wealthy homebuyers, so your investment property could reap rewarding returns in the future.
Strong Demand for Rentals
Whether you invest in condos or single-family homes, you can be reasonably confident that your property won’t stay vacant for long. Rental demand in Colorado is high, especially as new people move to the state. With a relatively high price-to-rent ratio of 32, Colorado is deemed one of the top 10 states to invest in rental properties. Colorado is also the state with the third-lowest property taxes in the country, which makes owning there less expensive than in some other states.
Hot Areas in the Colorado Real Estate Market
Always take the time to thoroughly research any city or neighborhood where you’re considering investing to confirm that it’s a good fit for your goals. These five areas might be a good place to start.
Denver
This urban market has a lot of opportunities for investment in condos or apartments, and with a high rate of tourism, it also has a lot of potential for short-term rental investment. The population growth rate in Denver is an indicator that people will continue to need housing, so demand will likely be there. Home values have steadily increased over time but have started to decrease in 2023 with the recent increase in interest rates. Paired with an increase in inventory, this makes it a good time to buy as it shifts away from being a seller’s market to a more balanced environment. Jump on this cooling market before it swings again.
Colorado Springs
This large city continues to grow with a high percentage of renters (40+ percent of the population) because of the high price-to-rent ratio. Easy access to Pikes Peak makes this a popular destination for tourists. If you’re an investor in short-term rentals, this could be a healthy market to consider.
Boulder
A large population of college students and young professionals looking to rent homes and apartments for a few years makes Boulder a good place to invest in rental properties. It’s also a popular tourist destination with strong short-term rental activity. Home prices are on the high side but are expected to continue rising.
New Castle
This fast-growing city is in close proximity to multiple tourist attractions and outdoor activities. With relatively moderate home prices, this market offers easy entry for investors and could be worth considering if you are new to real estate investing.
Aurora
As one of the top 100 best places to live, Aurora is close enough to commute to Denver and also close to the mountains. This growing city has continually increasing home prices, so the sooner you get in, the higher the potential is for returns.
Tips for Purchasing Real Estate in Colorado
Follow these best practices for investing in real estate in any market:
- Do your research. Every market is different, so it’s important to do thorough research before making an investment to ensure it aligns with your goals and risk profile.
- Be prepared to act fast. Real estate investing is competitive. Be prepared to move quickly and make an offer if you like the deal. Have a lender on standby so you can make informed decisions, and consider hard money so you can close fast.
- Give yourself an edge. Consider what sellers want: cash and speed. With a hard money loan, you can make a cash offer and close in as few as five days. This combination could be very compelling for sellers, even if your offer is lower than the competition’s.
Real Estate Loans with Socotra Capital
Socotra Capital is a hard money lender licensed in Colorado and 22 other states to provide equity-backed loans. Even if you have poor credit or an inconsistent income history, you can often get a hard money loan. Thinking of buying a property that needs renovations? We can help finance that too!
Check out How to Navigate the Real Estate Market in Any Economic Season to learn more about timing your investments.
