Types of Denver Real Estate Investments
No two Denver real estate investments are ever the sameWhen you're looking at Denver real estate as an investment, one of the most important criteria (aside from location, location, location!) is the type of property. Even within residential real estate, there are several categories:
• single family homes
• multi-unit buildings
Each type of real estate has a different set of drivers influencing its performance, and you can never assume that one type of property will perform well in a market where a different type is performing well.
Single-Family UnitsSingle-family units are highly desirable throughout Denver, and can represent a valuable investment from both a rent-producing, and a capital appreciation point of view. Keep in mind though, that investing in a single-family unit may increase your overall vacancy rate. Long-term tenants are always wonderful, but people do move. If you own a single-family unit and your tenant leaves, then you have no cash flow coming in from that unit. Multi-tenant buildings, on the other hand, are more likely to have at least one paying tenant at any given time. As such, if you choose to invest in single-family units, be sure to target more stable, residential areas where tenants are more likely to stay long-term. The best investments will be near more desirable Denver attractions, such as the downtown area, or the many beautiful Denver parks such as Wash Park, Chessman Park, and City Park. Regardless of where in Denver you are searching, you won’t be far away from a green space. With over 4,000 acres of parks and parkways, Denver has more parks than any other large city in America, which makes several of the Denver neighborhoods very attractive locales.
Duplexes and TriplexesTenants in duplexes and triplexes do tend to be a bit more transient than those who seek out single-family units, but these types of investments have a bigger advantage: Because there are multiple units, you are lowering your risk of not having any cash flow at all at any given time. These types of units can generate good positive cash flow, especially if they are in the right area.
Subhead: Multi-unit Buildings
Multi-family residential property generally delivers the most stable returns, because no matter what the economic cycle, people always need a place to live. The result is that in normal markets, residential occupancy tends to stay reasonably high. Another factor contributing to the stability of residential property is that the loss of a single tenant has a minimal impact on the bottom line, whereas if you lose a tenant in any other type of property the negative effects can be much more significant. However, a multi-unit building is more costly, and calls for more management overhead and work. You may want to start small and work your way up to these larger buildings.
Condominium DevelopmentsUnlike multi-unit, rentals, condo developments are designed to be bought and sold one unit at a time, and also make for very attractive rental units. Condo units can be very lucrative given the right circumstances. These tend to be in trendier Denver neighborhoods with a younger population, and in many Denver neighborhoods, condo units exhibit very positive appreciation rates over time.
The type of unit you do invest in will depend on several factors, including:
• Overall investment goals
You must also consider HOA (homeowner association dues) when considering a condo investment, as this may seriously impact your overall profitability. HOA costs may vary tremendously between developments, and may include things like routine maintenance fees, snow removal, insurance for the building, lawn care, garbage and sewer, and even heat and water utilities.
Give us a call at 720-284-4411 or email us at Sean@denverrealestatemoguls.com, and we’ll give you the inside scoop on what types of properties are producing the best returns in every Denver neighborhood. And if you want to learn more about the best Denver neighborhoods to invest, be sure to check out our “Real Estate Buyers” section to get the low-down on specific Denver neighborhoods.