As part of a major licensing department overhaul, landlords in the Denver real estate market will now be required to obtain licenses for long-term rentals. The Denver City Council passed the new law earlier this month in a unanimous decision by its members.
However, the law won’t take effect until 2024 for owners of single-family houses, while property owners who rent out homes with two or more units must be licensed by January 2023. There is also a chance for early licensing by January 2022.
Why is a new long-term rental law being passed for the Denver real estate housing 2024?
When the Denver City Council began plans to introduce a long-term rental license, many Denver renters feared it would have an impact on their rents. But, according to the Council President, Stacie Gilmore, the licenses are beneficial to both landlords and tenants.
For tenants, the policy is a way of stabilizing the housing system in the Denver real estate market 2024 and beyond. This is such that the city can easily gather rental data and share this information with tenants while solidifying the relationship between landlords and renters.
According to Joe Mivshek, an experienced real estate agent in Colorado:
While Colorado as a whole is pretty landlord friendly, the City of Denver is continuing to push focus to renters. In many cases, a fair approach to keep landlords responsible for habilitabily, in other cases, a lot of loopholes to go through. For example, in landlord friendly Texas, the City of Dallas has an almost identical license registration in effect.
How will property owners get licenses?
Based on this Denver real estate market news, prior to receiving a license, landlords must have their rental property inspected by the city’s certified examiners. According to the new rule, 10% of any Denver income property’s units will be randomly inspected.
Property owners will also pay two fees under the new licensing policy. This includes an application fee of $50 and a licensing fee. The payable licensing fee depends on the type of rental property. But it will generally range between $50 for single family homes and $500 for multi family homes with over 250 units.
These licenses must be renewed every four years, coupled with inspections.
The Denver rental market remains landlord-friendly
The Denver housing market, in specific, and the Colorado housing market, in general, have always been landlord-friendly real estate markets. For instance, the property taxes are fairly low, something that Joe Mivshek echoes in a recent episode of the Mashvisor real estate podcast.
Most of the elements of what makes Denver traditional rental properties a great proposition remain the same and are even getting better for property owners.
Landlords in the Denver real estate market already cater to one of the U.S. cities with a really active renting population, with 51.2% of the residents renting homes rather than owning them. As of 2019, the city is the top location for high-income renters in the U.S., a very active segment of the renting population.
Also, according to NeighborhoodScout.com, the annual Denver real estate appreciation rate in the past ten years stands at 7.5%. This puts Denver in the top 10% markets in the nation for real estate appreciation.
The Denver job market is also looking attractive
Lots of people are moving from other parts of the country to the Denver area. This includes popular locations like Chicago and Aurora. Job availability is one of the major reasons for this migration. As a result, the Denver population is increasing. Also worthy of note is a housing report by StorageCafe, which shows that the capital of Colorado ranks as the 9th top city in the U.S. for where renters are currently moving. These real estate market trends make a long term Denver rental property one of the most profitable real estate investing opportunities in the U.S.
Landlords in the Denver real estate market are therefore expected to continue reaping the rewards of this strong job market as more people will be moving in. At the moment, Denver is the third strongest job market in America, only behind Austin and Nashville.
In the grand scheme of things and based on the Denver real estate market forecast, this new law is not expected to negatively impact the Denver rental market.
Read More: Long Term Rentals: Why You Should Invest in Them
Top Neighborhoods for Denver Long Term Rentals
As a landlord preparing to invest in traditional Denver rental properties, understanding of the new law is not all you need to get started. Other information such as the fact that it is a seller’s market is also important. Or the most profitable neighborhoods for investment are equally important. According to Mashvisor, a real estate analytics company, these are the most rewarding neighborhoods in Denver:
- Median Property Price: $367,335
- Price per Square Foot: $277
- Traditional Price to Rent Ratio: 19
- Average Traditional Rental Income: $1,644
- Average Traditional Cash on Cash Return: 4.55%
- Median Property Price: $211,975
- Price per Square Foot: $201
- Traditional Price to Rent Ratio: 11
- Average Traditional Rental Income: $1,570
- Average Traditional Cash on Cash Return: 4.19%
- Median Property Price: $484,967
- Price per Square Foot: $536
- Traditional Price to Rent Ratio: 16
- Average Traditional Rental Income: $2,518
- Average Traditional Cash on Cash Return: 3.72%
- Median Property Price: $587,500
- Price per Square Foot: $435
- Traditional Price to Rent Ratio: 16
- Average Traditional Rental Income: $3,123
- Average Traditional Cash on Cash Return: 3.54%
- Median Property Price: $420,250
- Price per Square Foot: $208
- Traditional Price to Rent Ratio: 18
- Average Traditional Rental Income: $1,936
- Average Traditional Cash on Cash Return: 3.42%
Investing in Long-Term Rentals in Denver
Based on real estate data from Mashvisor, Denver landlords should still expect good gains from investing in the Denver real estate market despite Airbnb being the more profitable rental strategy in some areas. However, more people should feel confident to move into Denver for long-term rentals as the COVID-19 vaccine continues to be rolled out across the country.
So, one thing looks clear: the long-term rental law won’t stop legal property owners from investing in the Denver real estate market. If this is you too, one of the best ways to get ahead is by leveraging real-time data from a trustworthy real estate analytics tool. Mashvisor is the industry leader for analyzing profitable properties in neighborhoods across the U.S. It takes into account real estate market analysis metrics such as rental income, occupancy rates, cash on cash return, cap rate, and so on to help you make the best investment decision.
To start looking for and analyzing the best Denver traditional rentals or any neighborhood of your choice, click here.