The Colorado housing market is one of the best states to invest in real estate for 2020. In fact, according to Mashvisor’s real estate market analysis, Colorado landed the following rankings:
- 3rd best state for low property taxes
- 8th best state for high traditional rental income
- 8th best state for high Airbnb rental income
Check out the full list of the best states to invest in real estate.
But where do Colorado real estate investors earn the highest return on investment on a rental property? What are the best cities in Colorado to buy a rental property? Because Mashvisor’s real estate database houses information on rental properties across the Colorado housing market, we can easily show you where you should start your investment property search today.
5 Best Cities to Invest in Real Estate in the Colorado Housing Market 2020
Below, we have listed both the traditional and Airbnb data for the 5 best cities in Colorado for real estate investing. However, it’s important to note that in some of the cities, Airbnb may not be legal.
For example, in the Denver real estate market, non-owner occupied Airbnb rental properties are not permitted to operate. An Airbnb host must live in the rental property as a primary residence in order to use it as a short-term rental. Non-owner occupied rentals are not allowed to operate in residential zones in the Colorado Springs housing market. So be sure to read up on local Airbnb regulations before buying property to rent out on Airbnb in any of the following locations.
#1. Aurora Housing Market
- Median Property Price: $375,503
- Price per Square Foot: $221
- Price to Rent Ratio: 16
- Traditional Rental Income: $1,899
- Traditional Cash on Cash Return: 1.5%
- Average Airbnb Daily Rate: $116
- Airbnb Rental Income: $2,577
- Airbnb Cash on Cash Return: 2.9%
- Airbnb Occupancy Rate: 66%
The Aurora housing market is the most affordable location on this list. It is currently a cool buyer’s market. Since Q1 2000, Aurora real estate has appreciated by a total of 99%, at an annual average rate of 3.45%. Currently, the renter population sits at 41%, meaning there is a demand for traditional rental properties in the city.
#2. Denver Housing Market
- Median Property Price: $534,888
- Price per Square Foot: $343
- Price to Rent Ratio: 23
- Traditional Rental Income: $1,959
- Traditional Cash on Cash Return: 1.5%
- Average Airbnb Daily Rate: $152
- Airbnb Rental Income: $2,677
- Airbnb Cash on Cash Return: 2.0%
- Airbnb Occupancy Rate: 60%
The Denver housing market is a cool buyer’s market. Denver real estate has increased in value by 133% since Q1 2000, at an annual average rate of 4.26%. This makes it one of the best cities for real estate appreciation on this list. The renter population is quite high in the Denver real estate market – 50%.
Related: How to Calculate Real Estate Appreciation
#3. Colorado Springs Housing Market
- Median Property Price: $446,256
- Price per Square Foot: $185
- Price to Rent Ratio: 24
- Traditional Rental Income: $1,557
- Traditional Cash on Cash Return: 1.4%
- Average Airbnb Daily Rate: $137
- Airbnb Rental Income: $2,426
- Airbnb Cash on Cash Return: 2.9%
- Airbnb Occupancy Rate: 53%
The Colorado Springs housing market is a very hot seller’s market right now, meaning real estate investors will find competition when looking for a Colorado investment property in this city. Colorado Springs real estate has appreciated by 92% since Q1 2000, at an annual average rate of 3.28%. 41% of the population lives in a rental property.
#4. Longmont Housing Market
- Median Property Price: $636,448
- Price per Square Foot: $257
- Price to Rent Ratio: 26
- Traditional Rental Income: $2,041
- Traditional Cash on Cash Return: 1.3%
- Average Airbnb Daily Rate: $97
- Airbnb Rental Income: $2,856
- Airbnb Cash on Cash Return: 1.8%
- Airbnb Occupancy Rate: 61%
The Longmont housing market is the most expensive on this list of best cities in the Colorado housing market. But it is a cool buyer’s market, so you may be able to negotiate a good real estate deal. Local home values have gone up by 90% since Q1 2000, at an annual average real estate appreciation rate of 3.23%. The renter population stands at 39%.
#5. Fort Collins Housing Market
- Median Property Price: $504,339
- Price per Square Foot: $237
- Price to Rent Ratio: 23
- Traditional Rental Income: $1,865
- Traditional Cash on Cash Return: 1.2%
- Average Airbnb Daily Rate: $152
- Airbnb Rental Income: $2,856
- Airbnb Cash on Cash Return: 2.5%
- Airbnb Occupancy Rate: 58%
The Fort Collins housing market is a cool buyer’s market in 2020. Real estate has appreciated by 115% in Fort Collins since Q1 2000, at an average annual rate of 3.86%. Around 47% of the population resides in a rental property.
Now that you know where to invest in real estate in Colorado, what next?
Conduct a neighborhood analysis on the city of your choice using Mashvisor’s Real Estate Heatmap. Once you find the best neighborhood to invest in real estate, you can easily find a high return investment property for sale using our Investment Property Calculator. Sign up today to access our tools.
Related: 5 Best Real Estate Investment Tools for 2020
A Closer Look at the Colorado Real Estate Market 2020
Colorado State Flag
You could dive right into your investment property search in one of (or even all of) the cities listed above. But it’s a good idea to learn a little bit more about the Colorado housing market first. How is the housing market in Colorado doing right now? Has the coronavirus slowed things down? Let’s take a look at some of the current market trends and the Colorado housing market predictions for 2020.
The Colorado Housing Market Is Bouncing Back from the COVID-19 Slowdown
Most of the US housing market suffered a slowdown during the coronavirus in March and April of 2020 and the Colorado housing market was not spared. Some areas held up better during this time like the Denver and the Boulder housing market.
However, May brought with it signs of recovery as COVID-19 restrictions began to ease and buyers returned to the market. Home listings remain very low. However, with low inventory and demand returning for Colorado homes for sale, a housing market crash is unlikely. Those who believe there is a Colorado housing market bubble, and that the coronavirus would burst it, can rest assured that the market is in recovery.
Although COVID-19 cases are back on the rise in Colorado, most experts still see the Colorado housing market as faring well in 2020 and even 2021. The West Coast real estate market was hit pretty hard, but experts deemed many counties in the Colorado housing market as the least vulnerable during this health and economic crisis. Additionally, housing market predictions for 2021 named the Colorado Springs real estate market one of the top 10 strongest housing markets – those where property value would continue to rise rapidly despite COVID-19’s impact on housing.
So if you were worried that now may not be the best time to invest in Colorado real estate due to COVID-19, this knowledge should ease your fears. The Colorado real estate market is holding up and recovering.
Colorado’s Economy Is Also in Recovery
Not only is the local housing market recovering, but the economy is also bouncing back. Colorado’s economy has actually recovered faster than most of the US. In May, the unemployment rate for the state of Colorado was a whole three points below that of the national average. The rate has continued to drop since then, reaching 10.5% for June 2020 compared to the 11.1% rate for the nation.
Local officials and analysts believe it is the diverse mix of industries that has helped the economy recover so quickly. Real estate investors know that, when choosing a location to invest in, they should always look for a city with a diverse economy that doesn’t rely on one major industry. Colorado has proved why this is so important.
Of course, there is still a ways to go and some industries, like the hospitality and tourism industry, continue to suffer. Still, the economy is in recovery, making it a safe place to buy a rental property.
People Continue to Move to the Centennial State
The population continues to grow in Colorado. Forecasts show that the local population is expected to reach 5,842,076 by the end of 2020. If this forecast comes to fruition, Colorado’s population will have grown much faster than most other states in the nation.
As seen from the list above, the renter population is high in many major cities in the Colorado housing market. Overall, 37% of the population resides in a Colorado rental property. As the general population grows, it’s likely the renter population will follow. So in the right city, you should be able to easily find tenants for your Colorado real estate investment.
A Colorado Rental Property Generates a Good ROI on Average
Looking at Mashvisor’s Colorado real estate market statistics, it’s clear that rental properties perform well in the state:
- Median Property Price: $589,983
- Price per Square Foot: $556
- Price to Rent Ratio: 25
- Traditional Rental Income: $1,935
- Traditional Cash on Cash Return: 1.4%
- Average Airbnb Daily Rate: $207
- Airbnb Rental Income: $2,764
- Airbnb Cash on Cash Return: 2.3%
- Airbnb Occupancy Rate: 57%
Airbnb Colorado rental properties perform better on average, but again, legal issues may make it difficult to take on the Airbnb investment strategy in Colorado.
It’s a Good Time to Invest in Colorado Real Estate, So Get Started Now
Buying property in Colorado is a smart move in 2020. To make sure you are successful in this investment venture, be sure to:
- Invest in one of the best cities in Colorado for real estate investing
- Conduct a neighborhood analysis to find a good area to buy rental property
- Analyze any investment properties for sale before making an offer
- Use Mashvisor’s real estate investment tools along the way
To start looking for and analyzing the best investment properties in your city and neighborhood of choice, click here.
