How to avoid the next real estate bubble
When was the last time you found a reasonably priced, single family home in your area? Better yet, when was the last time you found a reasonably priced, single family home that didn’t require crazy amounts of work to get it up to rental condition?
We’re willing to bet it has been a while. Trulia reports a 3 bedroom home in Colorado runs on average of 318K. That’s a lot of money to spend when looking for a quick flip or income property.
Recently, Colorado Public Radio's Ben Markus reported on the tight rental market in Denver, on NPR’s Here and Now and potential tenants are feeling the burn too. One woman and her family have had a hard time finding a reasonable rental in the Denver area.
Markus reports, “she says it would be more like 90 percent of her income. [She]Orozco is not alone. A review of census data found that one in four renters in the Denver area are severely rent-burdened. That means more than 50 percent of their income goes towards rent. And like Orozco, many have to move in with family to make ends meet.”
That’s a staggering reality.
And it means two pretty obvious things for investors:
- Tenants can’t afford to rent single family properties and still provide for their families.
- Most real estate investors can’t (and shouldn’t) drop cash on a property that will likely sit vacant.
Sounds like what most cities in Colorado need are affordable housing. This is where a shift in investing strategy might just be the answer.
Have you considered renting small multi-family units? The strategy while different offers many of the same benefits on single family rentals but income multiplies. With more than one unit for rent it also allows landlords to offer more affordable rates to potential tenants.
Anthony Chara, main speaker at this month’s meeting says, looking for small multifamily properties is a great way to start exploring larger income properties. Many investors are too afraid to pick up a four-plex or 12 unit property because they fear the work or assume the price range is out of their budget. However, a quick search on Zillow and Trulia list small 2 and 4-plexs for 215k-280k.
With rental rates ranging from $890-$1400 a unit you could very easily come out on top—and help provide more reasonable housing in your community.
Want to learn more about multi-family properties and how to leverage this strategy to increase your income? Join us at the October ICOR meeting and let Anthony Chara show you how.
Tuesday, October 7th
Wednesday, October 8th
Denver Monthly Meeting - Getting to the Next Level with Your RE Investing: How to Increase Your Wealth Exponentially
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Thursday, October 9th
Northern Colorado Monthly Meeting - Getting to the Next Level with Your RE Investing: How to Increase Your Wealth Exponentially