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The Best Places To Invest In Colorado

by | Sep 27, 2022 | 0 comments

Asset Based Lending are experts in the local real estate markets that we lend in, and we leverage that expertise to help our borrowers stay informed on market conditions. Today we highlight the Colorado real estate markets, using raw data from the housing market and state economy to showcase the best places to invest in Colorado.

The Centennial State is experiencing a booming real estate market thanks to strong local economies and a large uptick in new residents moving to the area. With open land and affordable home prices, along with a huge increase of high paying industries placing their main or secondary headquarters in the state, the state’s population more than doubled between 1980 and 2020 with a 15% increase over the last ten years. This has led to a demand on Colorado housing that outpaces the current supply as well as the planned residential new construction, which has caused average home sale prices and average rent prices to rise significantly. The state’s strong economy overall that has fully recovered from the economic woes brought on by the pandemic and is back on pace for year over year growth, with an unemployment rate hovering at 3.4% and an overall labor force participation rate of nearly 70%, which makes is the second highest labor participation in the country. Colorado also has the eighth highest average income in the country at $70,764 per person, meaning the real estate purchasing power of the average Colorado citizen is quite high compared to the rest of the country.

Currently, the average home sale price for the state is $591,500 which is a nearly 9% increase year over year and just slightly below the five-year-high. Homes are spending an average of only 16 days on the market, which highlights a fast-moving seller’s market that greatly favors real estate investors. Only 6,850 homes sold during the month of July, which is a nearly 30% drop from the previous year and further highlights the lack of supply relative to the ongoing demand. That said, Colorado recently achieved a state-wide housing inventory equivalent to three months of supply, which is one additional month of inventory higher than this time last year and a sign that the market is becoming more balanced. For context, a three month supply of housing inventory is considered the absolute minimum for a market to be balanced in terms of supply and demand. More than 40% of homes are being sold for above the initial asking price, with the average profit for Colorado fix and flips in Q1 2022 reaching $58,100. With healthy profit margins and fast-moving local markets, fix and flips in Colorado are an excellent investment opportunity.

Local state governments are providing incentives for the construction of new homes with different low-interest loan programs combined with various tax credits, totaling hundreds of millions of dollars invested into this new construction push. The concentrated effort to have developers build quickly and at affordable price points will lower the average home sale price for the state, but is designed to meet the rising demand as much as possible and benefit real estate investors willing to flip or build homes that match the local economy’s price points. These incentives for Colorado new construction means local governments may be more relaxed with zoning codes and documentation requirements, reducing issues and headaches that builders and developers occasionally go through on their projects.

Colorado’s rental markets have also seen positive upward trends over the last few years, specifically the Denver metro area which is currently ranked as the 16th most expensive rental market in the country. The average rents for the area increased 20% year over year with a rental vacancy rate hovering around 4.3% in Q1 2022, which is more than a full point below the national average. Colorado Springs is another top rental market in the state, with more than 41% of the population renting versus owning and an average monthly rent of $1,553 which marks an 11% year over year increase. Colorado’s statewide tourism is another huge boon to the local rental markets, boasting a record 86.9 million visitors in 2019 which drew a record $24.2 billion for the local economy. These short-term visits mean short-term rental property like Airbnb or Vrbo are excellent options for real estate investors looking to start or build their portfolio.

Asset Based Lending did the research and compiled it here to help highlight the best places to invest in Colorado real estate. Data for the best places in Colorado was sourced from reputable sources such as Redfin, Rent Café, AirDNA, and local public records in Colorado. Please note that these Colorado investment suggestions are based on the most recent available data as of August 2022.

Denver

Its no surprise that the capital of Colorado is also one of the best places for investing in real estate- not just in the state, but in the entire country. Denver is constantly ranked as one of the best places to live in the country which is certainly having an effect on its overall growth. The city has been the recipient of a huge population boom over the last two decades, highlighted by the over 19% growth that occurred between 2010 and 2020. That level of city growth far outpaced other popular metro areas in the country, and was heavily influenced by the numerous Fortune 500 companies that began taking up residency in the area. The mix of well-paying jobs and population surge created a white-hot real estate market that is continuing to grow month after month and year after year.

Right now the average home sale price in the city is $585,000 which represents a nearly 5% increase from the previous year and is just two months removed from the five-year-high for the area. Homes are spending an average of only eight days on market, with homes that are highly desirable selling as quickly as four days and achieving sale prices approximately 4% higher than the listing price. The rise in prices has slowed down a bit compared to the market swell of 2021, but demand still far outpaces supply and Denver is still among the favorite places for Millennials and younger to move to, making it an excellent real estate investment opportunity for fix and flip investors. 100% of the homes sold in the last month received their asking price at a minimum, with approximately 30% of home sales receiving final bids that are above the initial asking price. This fast-moving seller’s market is perfect for experienced fix and flip investors that want to finance their rehab, quickly complete their work, and exit the deal in just a few months so they can move forward to their next one.

With the push for Colorado new construction coming from local municipalities, Denver is one of the major benefactors. The city is in the top 15 markets nationally when it comes to building new residential property, with 13.2 single-family building permits per 10,000 people. Denver is also currently a top 10 metro area in the country for new construction, meaning the real estate market is set to continue its growth for the next few years at a minimum. Some of the hottest trends amongst Denver new construction are fenced back yards, custom cabinets, and covered decks. Homes with these amenities are receiving more attention on their listings and selling for up to 7% above asking price. Builders and developers can implement these into their new builds to take advantage of market conditions and ensure the highest possible price point for their project, catering to local demand and planning their end products around the stats.

As stated earlier, Denver’s rental market is one of the strongest throughout Colorado, with a 20% year over year increase in average monthly rent and a rental vacancy hovering around 4.3% as of Q1 2022. While housing supply continues to lag behind demand, the rental market is going to continue to flourish. Short-term visits have become normal for Denver over the last decade, which has caused a rise in Airbnb and Vrbo rentals. More than 31 million visitors came through Denver during 2021, with the majority of those visits lasting less than one week, which benefits short term rental owners. There’s approximately 5,178 active short-term rentals across Airbnb and Vrbo, boasting an 81% occupancy rate across all listings with an average monthly revenue of more than $3,000. Whether you’re looking for long-term buy and hold rental property or are more interested in short-term Airbnb rental property, ABL rental loans can help you get started on your Denver rental portfolio.

Colorado Springs

South of Denver sits the second biggest city in the state and the 40th largest city in the country, Colorado Springs. This city has seen a population growth of over 15% between 2010 and 2020, supported by major companies such as Lockheed Martin and Progressive Insurance bringing well-paying jobs to the area. Its also one of the most visited cities in Colorado, with tourism being the third biggest industry in the area thanks to the 23 million visitors in 2021. These steady short-term visits make Colorado Springs Airbnb property an excellent investment option for people looking to start or build their Colorado rental portfolio.

Currently the average home sale price in Colorado Springs is $450,000, which is more than 8% higher than the previous year. Homes are spending an average of 18 days on market with the most competitive homes selling as quickly as six days and selling up to 3% higher than the initial listing price. A little less than half of the homes in the city sell above asking price, meaning negotiations still favor the seller in this market. To help highlight the demand in the local real estate market, the amount of views that home listings receive in the area has risen by nearly 82% year over year. Fix and flip investors love to see a fast-moving market to keep their business moving as quickly as possible, getting out of their hard money loans in a few short months and retaining more of their hard-earned profit.

As most areas of Colorado are experiencing, there’s a strong push towards residential new construction. Building permits issued are up year over year across all build types, including single-family up through four-unit multifamily. The most popular home trends in Colorado Springs include media rooms, sun rooms, and solar panels. These kind of home amenities highlight the type of home buyer that prefers to live in Colorado Springs, and builders can utilize that information in their home plans to ensure their project sells quickly and for the maximum possible price. As real estate investors know, understanding the local markets you’re working with is extremely beneficial to the bottom line. By learning what home buyers in the area are looking for and including those interests and needs in the final product design, investors can maximize the interest in their project and have the best chance of receiving a top-tier sale price.

The Colorado Springs rental market has seen significant growth over the last few years, especially with housing supply being unable to meet the demand. Right now the average monthly rent is $1,200, which is a 10% increase year over year. Approximately 40% of the city’s population rents versus owns with a rental vacancy rate hovering around 3.3%, meaning tenants won’t be difficult to find. On the horizon, more than 1,000 new units of affordable housing are opening for Colorado Springs renters in Q4 2022, doubling the pace of rental construction from recent years. This level of increase is fueled by the tax-credit incentives from local government, with a jump from 3,000 tax-credit financed units to approximately 6,100. The focus on affordable rentals will slow the rise of the average monthly rent, but will also provide many investment opportunities for those looking to being the BRRRR method of real estate investing.

Fort Collins

Moving north of Denver is the midsize college town of Fort Collins, a beautiful town whose consistent real estate growth is supported by the presence of Colorado State University. There are many large businesses in the area that help fuel the strong local economy, namely companies like UC Health, Hewlett Packard, and Anheuser-Busch, which bring well-paying jobs to the area and makes the town a centerpiece for northern Colorado business. The university’s presence means a steady boost to the annual visitor count and keeps a steady stream of student and post-grad tenants for apartments in the area.

Right now, the average home sale price is $571,000 which is a nearly 17% increase year over year and just one month removed from the town’s five-year-high. The average home spends 29 days on market, up a single day from the previous year’s average. The most desirable homes are selling as quickly as eight days from the initial listing date and receive upwards of 4% above the asking price. Additionally, homes are receiving an average of four offers before being sold, meaning this seller’s market is very advantageous for fix and flips. These fast moving deals and competitive offers should entice real estate investors looking to quickly rehab and flip homes for a healthy profit.

New construction is ramping up in Fort Collins to help meet housing demand, with projects focused on the southern sections of the city. Its important to track market trends when looking to invest in a new construction project, so you can build to meet the demands of buyers in the area. For example, Fort Collins homes that have a large kitchen, front patio, and fire pits are receiving significantly more views on their listings and are selling above asking price at a rate much higher than the homes that lack these key amenities. New construction investors have an advantage over fix and flip investors by incorporating these types of amenities with the initial build, allowing them to match the market and ensure they receive the highest possible sale price for their investment. By using our hard money new construction loans, investors could minimize the capital they need to complete their project in such a competitive real estate market.

Fort Collins’ local rental market has seen steady growth over the years but has picked up significantly in the last year thanks to lack of available housing, Currently the average monthly rent is $1,550 which is a 24% year over year increase. 42% of the population rents their home instead of owning, combined with a vacancy rate hovering just below 6%, which means finding tenants for desirable and well-priced rental property shouldn’t be an issue. If you’re looking to start or expand your rental portfolio in Fort Collins, Asset Based Lending can help finance the BRRRR strategy across Colorado.

Boulder

Ranked as one of the happiest places to live in the United States, combining a mix of city life along with direct access to beautiful mountains and luscious green hiking trails, its no surprise that Boulder’s real estate market is booming. As one of the wealthiest and most popular areas in Colorado, along with the University of Colorado calling the city home, there’s no shortage of investment opportunities. The city has seen an 11% jump in its population between 2010 and 2020, fueled by large tech, aerospace, and pharmaceutical companies bringing jobs to the area. Major employers for the area include Google, IBM, and Microsoft, providing a slew of high-paying tech jobs that correlates to the robust real estate market, providing far more purchasing power to home buyers in Boulder County.

Currently the average home sale price is $955,000 which is more than 6% than the previous year and by far one of the most expensive markets on our list. Homes are spending an average of 34 days on market, up three days from the previous year, with the most desirable homes selling as quickly as 16 days from their initial listing date. The most desirable homes sell as quickly as 18 days and achieve final sale prices upwards of 2% above asking. As one of the most expensive places to live in Colorado, the competition is less than previous entries on this list but also requires much more capital to begin the investing journey. Asset Based Lending provides fix and flip loans that cover 100% of rehab costs and asks borrowers to provide between 15% and 20% of the purchase price, so real estate investors could use our fix and flip loans to make their Boulder fix and flip project a profitable one.

The push for affordable housing is Colorado-wide, and that push can be felt in Boulder as well. Plans for multi-million dollar condos are facing intense pushback from local communities and government, looking to replace these types of development plans with affordable multifamily units that will help soothe the housing demand while inventory continues to lag behind.  Zoning is being looked at and adjusted in many cases to allow for more housing units to be built, meaning multifamily new construction should be a top priority for builders and developers. With the current average home sale price being so high and a strong demand for more affordable housing, mid-priced new construction projects could fill a niche that sells quickly and remains highly profitable based on the purchasing power of Boulder residents. Homes that feature a walk-out basement, game room, and are energy efficient are receiving far more attention on their listings and tend to sell above asking price, in some cases as high as 10% more. Real estate investors looking to build or develop new construction in Boulder should look at these features and use them as a guide for their project’s final plans.

Until more affordable housing options enters the market, rental property is going to remain an excellent investment opportunity. The average monthly rent for the city is $2,148, which marks a 19% year over year increase and makes it the highest average monthly rent on our list. Its a very balanced population between renters and owners, with 48% of the city’s population renting their home and a rental vacancy rate hovering around 3.5%. Such a low vacancy rate and a large renter population means finding new tenants to fill your rental property won’t be a problem, and places Boulder in the top tier for investing in Colorado rental property.

Longmont

Nestled in between Boulder and Fort Collins is one of the smaller cities on the list, but a hidden gem among Colorado real estate. Longmont has seen consistent population growth of more than 1% annually year over year, attracting residents who want out of the busier Denver lifestyle or are priced out of the more expensive Boulder counterpart. This strong local economy is boosted by being right outside the Denver metro area, while maintaining its own identity with a variety of health- and tech-based jobs. As a more affordable option for people looking to either purchase homes or rent long-term, Longmont provides a variety of opportunities for real estate investors.

The average home sale price is $565,000 which is almost 6% higher than the previous year. Homes are spending an average of 25 days on market, down one day from the previous year. The most desirable homes are selling as quickly as six days from their listing date and are receiving up to 3% more than the asking price. A common pattern throughout Colorado’s real estate markets is that these are seller’s markets, meaning they’re very investor-friendly and are favorable for projects that benefit from quick sales such as fix and flips.

Local government is actively pushing for different levels of new construction given the increasing diversity of needs in Longmont based on family size and income levels. The town is looking to incentivize the build of small multifamily properties as well as affordable single-family homes, meaning there’s niches to be filled by builders and developers depending on their skillset. Focusing on home buying trends in the area can improve the likelihood that your new construction investment sells quickly and for the highest possible price. On that note, the homes that are receiving the most attention and consistently selling for above their asking price are homes that feature vinyl siding, large walk-in closets, and tile kitchens.

As of now, the average monthly rent for the area is $1,529 which is a 17% year over year increase. There’s a lower rental population than other markets on the list, with only 36% of the population renting their home instead of owning. Since tourism isn’t a huge factor in Longmont’s local economy, the short term visitor count isn’t a major factor in the local real estate market. However, if you’re looking to get started with your first Colorado rental property, then investing in Longmont could be a good starting point for your eventual portfolio.

Rifle

The only town on our list that isn’t located near a major metro area and the only town on the western side of Colorado, Rifle is another hidden gem for real estate investors. The type of resident differs greatly from others on the list, as this area is for young middle-class families or retirees looking for more peace and quiet. This Garfield County town is one of the biggest in western Colorado and a prime location for new real estate investors looking to get their first deal done. Being a more private community means less big-time business and more local employment sources, such as hospitals, schools, retailers, and local government jobs. This lowers the overall purchasing power given the average income for the area, but more practical and straightforward new construction or simple renovation fix and flips can perform well in this area.

The average home sale price reached $430,000 which represents a 16% year over year increase and a five-year-high for the town. Homes are spending an average of 11 days on market, which is down a staggering 44 days from the previous year and highlighting the fast-moving activity of this under-the-radar Colorado market. The most competitive homes in the area are selling as quickly as three days and typically receive upwards of 1% above their initial asking price. As a less competitive market compared to other areas on the list and more affordable price points, this could be a great starting market for new real estate investors looking to complete their first fix and flip.

New construction projects in the area are on the rise but still unable to keep up with demand, much like everywhere else in Colorado. Following the trend of other Colorado counties, Rifle is set to receive a new influx of affordable housing throughout 2022 and beyond. Homes that feature amenities such as walk-in closet, fenced yards, and extra storage are receiving significantly more views on their listing and are consistently selling for above asking price. By understanding what home buyers are looking for in this town, as well as the factors surrounding the push for affordable housing, can help set expectations for new construction projects and allow your product to be competitive without pricing yourself too far above the market.

Due to the nature of the town, most available rental units are small homes rather than apartment units. Currently, the average monthly rent for the area is $950, which marks a 6% increase year over year. As one of the most affordable rental markets on our list, it could be a great starting point for real estate investors looking at their first rental property. Starting your rental portfolio with a low-pressure buy and hold is a smart way to get your foot in the door and begin the learning process for how to manage rental property.

Final Thoughts

Colorado is making a strong case for being one of the best overall states for real estate investors, offering a wide variety of investment opportunities depending on the market you’re looking at. Whether its the booming rental markets in Denver and Fort Collins, or the fast-moving home sales in Colorado Springs and Rifle, there are plenty of money-making options across CO real estate. With government-backed programs and incentives combined with using a Colorado hard money lender, real estate investors could bring minimal cash to their project and receive enough financing to cover the remaining purchase and construction costs, maximizing their potential profit margins.

Asset Based Lending is the premier hard money lender for real estate investors across Colorado, providing loans for fix and flips, new construction, cash out refinancing, and loans for rental property. With loan approval as fast as 24 hours and average loan closing in just 10 days, we deliver a five-star loan experience from start to finish. ABL uses flexible underwriting to ensure our borrowers receive the best possible loan for their project, whether they’re looking for lower interest rates, maximum leverage, zero points, or something else. Contact us today if you’re looking to finance your next successful Colorado real estate investment.

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