One of the brightest up-and-coming state markets is the Colorado real estate market. The recent and consistent success of The Centennial State is helping to build Colorado’s reputation as the best state to invest in real estate. Why should you invest in the Colorado housing market? Here are four great reasons!
Related: 6 Reasons Why Income Property Location Is So Important in Real Estate Investing
Why You Should Invest in the Colorado Real Estate Market
1. Population Growth
A growing population is a clear indicator of real estate demand. Luckily for Colorado real estate investors, the Colorado housing market is experiencing high population growth. Colorado is currently the 7th fastest growing state in the US. Its expected growth rate for 2019 is 1.37%, which is more than double the US average of 0.6%. Much of this tremendous growth is due to the state’s rapid urbanization. For instance, over 2.7 million people, which is more than half of the state’s population, live in the Denver-Aurora-Broomfield Metro area. Colorado’s population growth and urbanization significantly increase the demand for a Colorado rental property. These two factors help to boost up another key feature of the Colorado real estate market, which we will discuss next.
2. Booming Economy
A growing population and a booming economy often go hand-in-hand. When they do, real estate investors benefit from increased demand from tenants. This is certainly the case with the Colorado rental market, which is ranked as the best in the nation. The state has a 5-year GDP annual growth rate of +2.7%, which is the 4th largest increase, and a 5-year annual employment growth of +2.4%, which is the 5th largest increase in the US. The job growth rate for 2019 is expected to be 2%– one of the highest in the country. The state’s top-tier economy acts as a huge incentive to start investing in Colorado real estate.
3. Landlord-Friendly State
Another reason to invest in the Colorado real estate market is that it is among the most landlord-friendly states out there. Only a few states allow landlords to access their rental property without an advance notice requirement, and Colorado is one of them. The eviction process is also simpler in the state as law enforcement takes the side of landlords. Even though a compliance notice is required, for example, it’s limited to 72 hours in which tenants can pay off the rent or restore the property to the landlord. An eviction will then occur within 48 hours after the demand for the compliance notice expires. The appeal of being a landlord-friendly state will definitely attract anyone planning on becoming a landlord in the Colorado real estate market.
4. Top-Notch Tourism
The Colorado real estate market also benefits from the state’s buzzing tourism industry. The state is renowned for its outdoor activities, cultural events, and arts and culture. Skiing, in particular, is a staple of Colorado tourism. The state is the top ski destination in the country, accounting for 21 percent of all overnight ski visits.
But what about Airbnb Colorado? Is Airbnb legal in Colorado? Fortunately, Airbnb is legal across the state. In some cities, like Denver, however, the property must be your primary residence. This makes it illegal for real estate investors to rent out non-owner occupied properties. We’ll mention the specific Airbnb regulations for a Colorado real estate investment for each Colorado city to be mentioned.
Best Cities to Invest in the Colorado Real Estate Market
So, what are the best cities in Colorado? According to Mashvisor’s investment property calculator, which you can learn about by clicking here, the best cities in Colorado are Denver, Colorado Springs, and Fort Collins.
#1 Denver
The capital of Colorado, Denver is at the top of the best cities to invest in real estate. As seen from Mashvisor’s data below, the statistics for a Colorado investment property in this city are extremely impressive. The average real estate investment is profitable for the traditional rental strategy- a common feature in the Colorado real estate market. As previously mentioned, Airbnb is legal in Denver for homeowners. The most notable Airbnb regulations are the primary residence requirement and a 10.75% Lodger’s Tax.
Not only is Denver a premier location in the Colorado real estate market, but it is also a top location in the overall US housing market. It landed in the top 10 cities for overall real estate prospects in a report by the PwC, further solidifying its real estate status.
Pricing
- Median Property Price: $515,440
- Price per Square Foot: $303
- Price-to-Rent Ratio: 21
Traditional Investing
- Rental Income: $2,0.32
- Cap Rate / Cash on Cash Return: 1.6%
#2 Colorado Springs
Another top city in the Colorado real estate market is Colorado Springs. The city has the most affordable Colorado rental property price average of the cities on this list. The city’s affordability is its most stunning feature, as the average price of homes for sale in Colorado is $550,216 which is well over the national average. Colorado Springs is a very profitable city for both rental strategies. Airbnb is also legal in Colorado Springs. Some of the most noteworthy Colorado Springs Airbnb laws are a sales tax license and a short-term rental permit.
Pricing
- Median Property Price: $396,148
- Price per Square Foot: $163
- Price-to-Rent Ratio: 21
Traditional Investing
- Rental Income: $1,552
- Cap Rate / Cash on Cash Return: 1.8%
Airbnb Investing
- Rental Income: $1,982
- Cap Rate / Cash on Cash Return: 2.3%
- Occupancy Rate: 49%
#3 Fort Collins
The last, but definitely not least, of the best cities in the Colorado real estate market is Fort Collins. Fort Collins’ statistical performance is somewhat similar to Colorado Springs’. Both cities are profitable for Airbnb and traditional investment properties. Both cities are below the state average in median Colorado investment property prices. And, of course, both cities have legalized Airbnb. Some of the Fort Collins Airbnb requirements include a 3% Lodging Tax and a short-term rental permit.
Pricing
- Median Property Price: $448,004
- Price per Square Foot: $204
- Price-to-Rent Ratio: 21
Traditional Investing
- Rental Income: $1,825
- Cap Rate / Cash on Cash Return: 1.4%
Airbnb Investing
- Rental Income: $2,712
- Cap Rate / Cash on Cash Return: 2.6%
- Occupancy Rate: 54%
All in all, the Colorado real estate market is one of the top performers in the US real estate market. To start searching for investment properties in this wonderful market, click here to start your 7-day free trial with Mashvisor!