Wednesday, October 10, 2007

Back to the Future, Again.

Denver is in a uniquely suited place in the national real estate market. Here is why:

Please remember, I started in real estate in 1985 (not the best time). By 1989 we were surrounded with foreclosures, short sales, the Savings and Loan Crisis and interest rates were in the ceiling somewhere. Then we slowly started to claw out of the basement.
By 1995 I was wishing I had bought some rental properties while the prices were low and I could have made a great deal. I just did not have the cash and was scared of the market and had never seen anything like it before. I still see homes that were on the market then for about 39k and now sell for well over 250k. Oh Well!

So you have already guessed the proposition here:
We have had 3 years of doom & gloom about foreclosures in Denver.
We have a branch of the credit industry going through an ordeal nationally.
We have short sales and foreclosures still in abundance in our market place.
We have builders with standing inventory of new homes.
HOWEVER, interest rates for non owner occupied homes are in the 7% range, not the 17% range. And what you need is cash, 10-20% to assure you cash flow before taxes.
OH, yeah, there is that too, the tax benefit of owning a rental home has not changed substantially, except the capital gains tax has dropped so much.

The philosophical speed bump seems to be “what if the market keeps going down?” That is one I cannot answer, but the glory goes to the winner, not those who thought about running. And where will that bottom be? I will only know, as will you, after prices start going up again.

Where to buy? My personal preference is to buy in the strongest market you can afford as I believe it is least likely to endure future shocks. One of the reasons for the crisis of foreclosures is the prior confidence folks had in neighborhoods and areas, yet to have proven themselves. In short the values there were artificially inflated due to “hinckey” financing.

So I would be buying in the south metro area of Denver. Almost any of the suburbs but in particular, Highlands Ranch, Littleton, Centennial, Englewood, & Lone Tree, Colorado. And I would be buying 3 bedroom, 2 bath, 2 car garage homes that have little or no fix up and deferred maintenance costs, and that can be rented quickly (did I mention rental rates are going up). Typically, you want these to be newer homes so there are less issues with maintenance like water heaters, furnaces and roofs, because I like the idea of low maintenance rentals. Townhomes with these attributes are also good investments, and may prove to be the best over a 10 year hold.

And do not forget the 1031 exchange as a tool to move that rental property in east omigosh with remote management, to the Denver area where you can manage it locally. Remember the old saying goes, Buy low, Sell High. Now is the time. And this is a great time of year for this type of purchase. We can help all the way through.

If this kind of service and advice could be valuable to you or your friends, let my 22 years of experience go to work for you helping you make good real estate investments. Whether it is Highlands Ranch, Lone Tree, Littleton, Castle Rock, Centennial, Englewood, Parker, Elizabeth, Larkspur, Franktown, Kiowa, or anywhere in metro Denver Colorado, we offer real estate advice, properties for sale, multiple listing service, property listings, mls, all available at Drop me a note to

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