Looking for a place to buy a rental property in 2020? Well, if you’re hoping to end up with a positive cash flow property, then the Denver housing market is a great choice. Let’s explore the reasons why Denver is one of the best places to invest in the Colorado housing market and the US as a whole. We’ll follow that up by listing the best neighborhoods in Denver for buying investment property based on Mashvisor’s neighborhood analysis.
Why Should You Invest in the Denver Housing Market in 2020?
There are actually 5 reasons why it’s a smart idea to invest in Denver real estate this year:
Reason #1: The Denver Real Estate Market Has a Large Population
The Denver real estate market is home to one of the 20 largest populations in the United States. Although the population growth rate of the Denver metro area has been slowing down, the city is still seeing growth.
A large population is typically accompanied by a large pool of tenants that drive demand for long-term rental properties. And this is true of the Denver housing market. NeighborhoodScout reports that around 50% of the population lives in a Denver rental property as opposed to owning a home. This data is also backed by Mashvisor’s price to rent ratio for the Denver housing market which currently sits at 21.
Remember: A price to rent ratio of 21 and above means that the average resident finds it more affordable to rent a house rather than own one in a particular real estate market.
Reason #2: The Denver Economy Is Diverse and Strong
The economic environment in the Mile-High City is full of business and job opportunities. Forbes actually named Denver, Colorado the 4th best place for business and careers.
The unemployment rate is lower than the national average (this is in regard to pre-coronavirus unemployment rates) and the job market has witnessed a growth of 2.8% over the past year. In terms of the job market forecast, the next ten years are likely to bring with it a growth of 45% in the market, outpacing the national growth rate of 33.5%.
The economy is quite diverse and is made up of many different industries ranging from Technology and Telecommunications to Mining and Energy. A diverse economy is key to the success of any real estate market. In case one industry takes a hit or a major driver moves to a different location, Denver real estate investors can rest assured that the city won’t face a major economic downturn. Job seekers will have other industries to turn to. In general, a strong, diverse economy is needed to boost the housing market and keep demand high for local long-term rental properties.
Reason #3: The Denver Housing Market Is a Buyer’s Market
The Denver housing market is currently a cool buyer’s market, according to Zillow. So if you’re hunting for Denver houses for sale in 2020, you may have the upper hand when it comes to negotiations.
Remember: A buyer’s market occurs when the housing inventory is higher than the demand for it.
Reason #4: Historically, Denver Real Estate Has Appreciated in Value
Although the Denver housing market 2020 is forecasted to see a small drop in property values (-1.7% according to Zillow), this is likely due to the coronavirus. However, this negative real estate appreciation should not discourage you from buying property in Denver, especially if you plan to implement the buy and hold real estate investment strategy while renting out the property for positive cash flow.
Related: Top Six Real Estate Investment Strategies
Why? Because historically, Denver investment properties have appreciated in value greatly. Since Q1 2000, Denver property values have gone up 129%. And since COVID-19 has been a wildcard for most US real estate markets (most of which will also see a drop in home prices), it’s safe to assume that, once the US is in a full-swing recovery from the coronavirus, Denver home prices will continue to rise.
Reason #5: Denver Income Properties Enjoy a Good ROI
The combination of the last 4 reasons helps ensure that a Denver real estate investment produces a good return on investment when rented out. Mashvisor’s real estate data shows that owning a rental property in Denver is profitable, whether you rent it out traditionally or on Airbnb:
- Median Property Price: $499,198
- Price per Square Foot: $342
- Price to Rent Ratio: 21
- Traditional Rental Income: $1,998
- Traditional Cash on Cash Return: 1.9%
- Average Airbnb Daily Rate: $163
- Airbnb Rental Income: $2,600
- Airbnb Cash on Cash Return: 2.0%
- Airbnb Occupancy Rate: 62%
Remember: Non-owner occupied Airbnb Denver rental properties are actually illegal. But you can always try house hacking an Airbnb to benefit from the returns.
Related: What Is a Good ROI for Real Estate Investment?
Where to Invest in Real Estate in Denver
Where should you invest in the Denver housing market in 2020?
In general, the Denver real estate market analysis is a positive one. So if you’re looking to take the next step and start your investment property search in the city, you’ll want to analyze neighborhoods to find the best one. To make things easier, Mashvisor went ahead and pulled the neighborhood data and analyzed it for you. Here are the best Denver neighborhoods based on property type. Note that we have included the best neighborhoods for buying an Airbnb property in the Denver housing market if you choose to house hack.
The Best Neighborhoods in Denver for Airbnb for Sale
#1. Stapleton
- Median Property Price: $428,593
- Price per Square Foot: $208
- Average Airbnb Daily Rate: $168
- Airbnb Rental Income: $4,821
- Airbnb Cash on Cash Return: 5.5%
- Airbnb Occupancy Rate: 68%
#2. Barnum
- Median Property Price: $296,000
- Price per Square Foot: $661
- Average Airbnb Daily Rate: $105
- Airbnb Rental Income: $3,006
- Airbnb Cash on Cash Return: 5.1%
- Airbnb Occupancy Rate: 55%
#3. Highland
- Median Property Price: $725,000
- Price per Square Foot: $479
- Average Airbnb Daily Rate: $214
- Airbnb Rental Income: $5,285
- Airbnb Cash on Cash Return: 4.4%
- Airbnb Occupancy Rate: 58%
#4. West Highland
- Median Property Price: $657,083
- Price per Square Foot: $366
- Average Airbnb Daily Rate: $200
- Airbnb Rental Income: $4,412
- Airbnb Cash on Cash Return: 3.5%
- Airbnb Occupancy Rate: 59%
#5. Northeast Park Hill
- Median Property Price: $311,922
- Price per Square Foot: $210
- Average Airbnb Daily Rate: $98
- Airbnb Rental Income: $2,418
- Airbnb Cash on Cash Return: 3.4%
- Airbnb Occupancy Rate: 65%
Find the best Airbnb for sale in Denver.
The Best Neighborhoods in Denver for Long-Term Rental Properties for Sale
Because single family homes dominate the real estate inventory in the Denver housing market, Mashvisor’s traditional rental data mostly represents this type of investment property. So you can think of these as the best Denver neighborhoods for investing in single family rentals:
#1. Northeast Park Hill
- Median Property Price: $311,922
- Price per Square Foot: $210
- Price to Rent Ratio: 12
- Traditional Rental Income: $2,215
- Traditional Cash on Cash Return: 4.1%
#2. Stapleton
- Median Property Price: $428,593
- Price per Square Foot: $208
- Price to Rent Ratio: 11
- Traditional Rental Income: $3,205
- Traditional Cash on Cash Return: 4.0%
#3. Goldsmith
- Median Property Price: $189,725
- Price per Square Foot: $215
- Price to Rent Ratio: 12
- Traditional Rental Income: $1,330
- Traditional Cash on Cash Return: 3.5%
#4. Elyria Swansea
- Median Property Price: $297,340
- Price per Square Foot: $251
- Price to Rent Ratio: 14
- Traditional Rental Income: $1,814
- Traditional Cash on Cash Return: 2.9%
#5. Speer
- Median Property Price: $456,990
- Price per Square Foot: $362
- Price to Rent Ratio: 17
- Traditional Rental Income: $2,220
- Traditional Cash on Cash Return: 2.0%
Find the best long-term rental property for sale in Denver.
The Best Neighborhoods in Denver for Condos for Sale
#1. Gateway – Green Valley Ranch
- Median Property Price: $300,000
- Price per Square Foot: $224
- Price to Rent Ratio: 9
- Traditional Rental Income: $2,764
- Traditional Cash on Cash Return: 4.4%
#2. Stapleton
- Median Property Price: $200,866
- Price per Square Foot: $177
- Price to Rent Ratio: 5
- Traditional Rental Income: $3,205
- Traditional Cash on Cash Return: 4.0%
#3. Goldsmith
- Median Property Price: $191,333
- Price per Square Foot: $219
- Price to Rent Ratio: 12
- Traditional Rental Income: $1,330
- Traditional Cash on Cash Return: 3.5%
#4. Chaffee Park
- Median Property Price: $150,000
- Price per Square Foot: $206
- Price to Rent Ratio: 7
- Traditional Rental Income: $1,862
- Traditional Cash on Cash Return: 2.4%
#5. Speer
- Median Property Price: $329,580
- Price per Square Foot: $411
- Price to Rent Ratio: 12
- Traditional Rental Income: $2,220
- Traditional Cash on Cash Return: 2.0%
Find the best condo for sale in Denver.
The Best Neighborhood in Denver for Townhouses for Sale
#1. Chaffee Park
- Median Property Price: $380,000
- Price per Square Foot: $241
- Price to Rent Ratio: 17
- Traditional Rental Income: $1,862
- Traditional Cash on Cash Return: 2.4%
The Best Neighborhood in Denver for Multi Family Homes for Sale
#1. West Colfax
- Median Property Price: $475,000
- Price per Square Foot: $254
- Price to Rent Ratio: 23
- Traditional Rental Income: $1,762
- Traditional Cash on Cash Return: 1.0%
Find a profitable multi family home for sale in Denver now.
Related: How to Find a Multi Family Property for Sale
Start Searching for a Denver Investment Property for Sale Now
Ready to start your search for a Denver investment property for sale? While there are a few different ways to go about this, investors have found the most success using Mashvisor’s real estate investment tools.
Sign up for a 7-day free trial today and get access to:
- A real estate search app to customize your property search
- A heatmap analysis tool to conduct neighborhood analysis
- A rental property finder to find high return properties for sale
- An investment property calculator for analysis
- A marketplace to find Denver off market properties
- Homeowner data to find out who owns a house
Using these tools will allow you to find the best investment properties in the Denver housing market within minutes.
