There has never been a better time to buy an investment property in Colorado as home prices continue to increase in the state. Colorado Springs has seen notable population and employment growth over the past few years.
Residents have access to countless outdoor activities and a vibrant downtown area. Being a landlord can have its challenges so it’s best to do some research before taking on the responsibility. Here are a few questions you need to ask before you jump in.
Is there a high rental population?
According to companies such as Cornerstone, Evernest, and Mynd, which provide property management services in Colorado Springs, the city has many homeowners. However, there are still a significant amount of renters (about 40% of the population) driving the demand for long-term rental properties. Many residents in Colorado Springs still find it more affordable to live in a rental home than to buy their own home, according to the price-to-rent ratio.
There is no guarantee that you will receive your rent each month but using a property management service can help. It’s necessary to stress the importance of screening potential renters carefully. It’s believed that landlords should be able to enjoy the predictable and steady rental cash flow.
What is the economy like in Colorado Springs?
Before the pandemic, the economy in Colorado Springs was strong, with many job opportunities and a good housing market. In the same way, as Coronavirus has taken its toll throughout the world, it has also had an effect in Colorado but thanks to the strong economy in place before the pandemic, property experts expect a quick recovery.
Builders are struggling to keep up with the demand for new housing. There are a number of new builds at varying prices. For example, there are some unlisted construction homes in places like Falcon starting in the low $400s.
What is the medium home price and average rent?
The median price in Colorado Springs is around $260,000 for a one-bedroom home. The average rent is about $1,000 for a one-bedroom home. In comparison, property management companies like JLL give the average rent for a one-bedroom home on a national level at about $1,600.
Always check the rents in an area and if the numbers don’t make sense to you, you should not invest.
There are a number of existing homes on the market and if you decide to buy a distressed property, you need to figure in the costs for repairs and remodeling. Many of the bargains you can pick up are in need of some TLC.
Is it a buyer’s or seller’s market?
According to Zillow, the Colorado Springs real estate market is a seller’s market. Most of the homes for sale receive many offers. Inventory is low and homes go under contract within hours. Many homes sell before listing so it helps to know a good agent.
You may think that building a home outside the city limits will give you what you want within your budget but taking this route can quickly become expensive and overwhelming.
It is important to keep resale value in mind even when you buy an investment property. You don’t know when you may have to sell and you will want to get a good price if you do
Which neighborhoods are the best ones to invest in?
Some of the convenient locations in Colorado Springs are those near military bases. Among the best neighborhoods to invest in include Peterson Air Force Base, Falcon, Powers, Briargate, and Northgate. Southeast, Southwest, Northeast, and Central Colorado Springs are all good neighborhoods to invest in.
The amenities in a specific neighborhood are likely to attract specific renters. They will want to know about gyms, parks, shops and entertainment close by. Summit Group Colorado promotes some of the awesome establishments in Colorado Springs on its website, such as Pikes Peak Lemonade, Colorado Crust Pizza Co and Rocky Mountain Soap Market.
If you can afford to wait to buy, the market in Colorado Springs slows down in the fall and you may be able to get a great deal. There is less competition and sellers are motivated if they want to move before the holidays. The weather is still warm and mild for visiting homes at this time of year.
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