Being real estate brokers, we get this question all of the time. It’s our job to be able to answer it. The problem is, right now is a really difficult time to give a solid answer. If all of the (re)development continues around the city, yes, right now is absolutely a good time to invest in Denver real estate. If the Ukrainian crisis spreads, if the EU falls apart, if our financial sector collapses again then prices and the momentum that has been created in the market will disappear.
This question also cannot be answered without knowing your goals as an investor. Are you looking for a quick flip? Do you want something that will give you steady cash flow over the long haul? What’s your minimum ROI? How risk averse are you?
As you can see, we could play the hypothetical game all day (which I love to do, btw).
So I think it would be better to tell you how I would approach the Denver market right now if I was going to invest. If this makes sense: I am risk averse when it comes to the actual structure (unless planning to demolish it), but willing to take a chance on a neighborhood that might be five to ten years out from widespread redevelopment (Globeville anyone?). Real estate is a terrible get-rich-quick scheme, unless of course you’re going to share your secrets on flipping houses with other people’s money for only $99!
If I were putting my money into Denver real estate, it would be into properties that can cash flow, or at least break even, for the next five years in the neighborhoods close to downtown that have not yet fully caught the (re)development bug. Those would be the aforementioned Globeville, Sunnyside, Edgewater, West Colfax, Baker (at least the properties that haven’t been picked over yet), Five Points and RiNo. I know that RiNo has become a buzzword in the last few years, but there are still large tracts of land in the Brighton Boulevard corridor ripe for development. The I-MX zoning that most of it has allows for almost anything to be built as well.
Assuming we don’t have a massive market crash, once five years is up it’s time to reassess. Complete turnover of a neighborhood most likely won’t happen in that time frame, so there could still be room for appreciation. There will no doubt be properties that need to be sold because they are more headache than they’re worth. Now it’s time to reno these places and get them to market. Time to add square footage (either by popping the top, a large addition of complete demo) and get this thing on the market. For those properties that are to be held, we’ll bring them up to standard finishes for the times (no sense in doing a high-end reno on a property you intend to rent when you first buy it; wait to see what the trends are in a few years and then bring it up).
At this point, we’re now on to the next project. Note that this strategy is for an individual investor looking to do things on a somewhat small scale. Want to develop those large tracts of land in RiNo or plop a large townhome development on a site in LoHi? Time for another conversation.