Not all investment real estate in Denver, Colorado is equal. As you look at Colorado investment properties all along the Front Range as well as Denver CO real estate, weigh in on key elements that will affect your immediate cash flow. Several factors will influence not only your cash flow but a lender’s maximum Colorado loan proposal and your Denver mortgage. Remember, cash flow is the month-to-month or year-to-year bottom line, not considering appreciation.
Location is a primary factor in the ability of a property to generate income. Statistics show that the Denver real estate that will be most in demand includes Colorado property in a resort or vacation location, and Denver properties near a university or large employment hub. Investors should look at the current supply-and-demand figures and shy away from condominium complexes, apartment buildings, and Denver single-family homes that are located in areas with few amenities and employment options, especially those in inconvenient locations—regardless of their lower price tags.
Another influential factor is the property management. It takes time and organization to effectively market the properties, screen applicants, collect and disperse rental monies, and to maintain the buildings and landscaping. Are you prepared to accomplish these tasks yourself? If not, will you hire a property management company as most investors do?
Most resort properties are short term rentals. If you plan to offer short-term rentals (1 day to 3 weeks), then you must hire an outside company unless you plan to live on-site or hire an on-site manager. Let’s think about long-term rentals (several months to years). If your Denver investment property is a large long-term rental complex (25 to 200 units or more), you will need to hire employees such as a full-time manager and one or two licensed property managers or to hire a property management company to handle your property.
If you want to maximize rental revenues, then investigate the management companies carefully. Check with realtors and local businesses and learn about a company’s reputation. Interview several of the best-sounding companies and choose one that offers the best qualities for your needs.
Let’s say you want a property in a resort that doubles as your vacation home. The closer to the slopes that property is, the better the income potential. Amenities and size of units also affect the cash flow. For example, is your investment a single-family vacation home with a pool, pool table, and access to hiking trails? Or, is it off the beaten path?
Non-resort properties such as studio apartments for student housing near a campus, will naturally bring less revenue in cash flow but will garner value over time through appreciation.
At the end of the year, your cash flow sheet could show a net loss. Several factors including size of mortgage payment impact the cash flow. If you put down more money, then your monthly payment will be smaller. For information about creative financing for your real estate purchase, contact Brad Wyatt at (720) 407-6338 or e-mail client care@MAC5M.com.
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