A friend asked me this question yesterday: "What's the rental market like now....and is it a good time to purchase an investment property?"
In my opinion, it is a good time to purchase an investment property, especially if you would have to finance it.
Since there are still a lot of foreclosures in Denver's northern suburbs, and unemployment is staying stubbornly high in the Denver area, I believe prices may go down a little further, especially in the lower-priced neighborhoods. But if you wait for lower prices, you may pay more with higher interest rates.
And a lot of signs are pointing toward the fact that we are at or near the bottom of home prices (read my previous post by clicking on the blue text). Some homes between Denver and Boulder have actually appreciated slightly.
If you're paying cash for an investment property, you can get the best deals. The big bad corporations (banks) who make the decisions on these 'distressed' sales really like not having to worry about whether you can get your financing or not.
As far as the rental market goes, I recently had a rental property become vacant, and I had at least 6 calls a day on it. I was determined to wait for the right tenants, and not give in for fear of having to pay that mortgage, so it took almost two months to find the right one. The main issue? Dogs. Not only did most people have two or three dogs, they were often BIG ones! This little house (with its original wood floors*) just isn't conducive to having a bunch of big dogs running around.
That's my personal experience, anyway.
For a more official answer, I would take you to the US Census, which releases national vacancy rates on a quarterly bases. This is nation-wide, of course, and they show vacancy rate going up and up, all the way to 11.1 percent in the third quarter of 2009, and they've been dropping slowly to 10.3 percent in the third quarter of 2010.
That's awfully high, but you need to look at local vacancy rates. I only included the national statistics because that may be the numbers you've heard on the news.
Locally, the vacancy rate is right about 2.9%.
Here's some articles you can read:
Vacancy Rate Drops in the Denver Metro Area Rental Market (It's at the lowest level since 2001)
Posted on December 20, 2010 By Scott Shields of Metro Brokers
Rental Housing Market Tight in Denver (Boulder and Broomfield Counties are at only 1.4%)
Posted by Paula Moore of the Denver Business Journal on December 7, 2010
If you're thinking about buying an investment property, let's sit down and talk about how you would explore the possibilities, pros and cons of various types of home, etc.
I hope that answered your initial question, please give me a call if you need more info!
*Geez, I sound like such a Realtor!
* * * * * * * * * * * * * * * * * * * * * * * *
I write posts on real estate issues and local events in the Denver metro area, especially those *communities between Denver and Boulder, as a public service. My hope is to give people an idea of the 'flavor' of our community, in case they're new or moving to the Denver area.
I am a residential real estate agent, happily helping folks buy a house or sell a house in the beautiful and friendly *suburbs northwest of Denver.
*Arvada, Broomfield, Lafayette, Louisville, Superior, Westminster; also Thornton, Golden, Wheat Ridge, Northglen, Lakewood
Find Homes for Sale, no Matter Who Listed Them, at Dream House Hunting.
Copyright © 2011 Joetta Fort