Keeping the Pulse on a Changing Market

As a seasoned real estate agent in Denver, specializing in buying, selling, and investing, I’ve seen firsthand how dynamic the market can be. In today’s world, navigating the complexities of real estate investing requires more than just basic knowledge. Questions such as “What makes a good cap rate?” “Which asset class is best for rentals?” and “Where is the path of development?” are all essential when deciding where to place your money. With decades of experience in the Denver market, I’m here to share some insights on how to approach real estate investing wisely, especially in an ever-changing landscape.

One key metric investors are focusing on lately is the expense ratio. So, what is an expense ratio? It’s the cost of operating a property compared to the income it generates. Managing this ratio efficiently is crucial because it directly impacts your profitability. For instance, we’ve seen a significant increase in operational expenses in recent years. Since COVID, expenses for property turns have grown by 87%, insurance expenses by 50%, and property taxes by 30-40%.

These rising costs are not just affecting landlords—they’re impacting renters and homeowners alike.  The expense ratios for our C class assets are going up to around 50%, making them unaffordable for our owners.  We are shifting investor capital to different asset classes and seeing a lot of success.  

This cost increase has contributed to what many refer to as a 'housing crisis.' In response, government regulations have shifted, making eviction laws more tenant-friendly and introducing more affordable housing requirements for developers. These actions, however, can also drive up costs for landlords, leading some to sell their properties, thereby decreasing housing supply and pushing up rents further. It’s a cyclical issue that affects all market participants, from investors to tenants.

With these challenges in mind, you may wonder, why would anyone invest in real estate right now? In fact, real estate remains one of the most stable and inflation-resistant investments you can make. Rental properties, especially in a market like Denver, offer substantial benefits.

Tenants are staying longer in homes, making property management less of a headache. Moreover, Denver has enjoyed an average appreciation of 5% per year over the last 50 years. When compounded, this can result in an annual return of 15-20%, depending on the asset.

Investing in rental properties also allows you to hedge against inflation. As the market ebbs and flows, the value of your property does too, protecting your investment. For example, a house valued at $550,000 today could be worth over $1.1 million within 15 years if Denver continues its 5% annual appreciation trend. This is a critical consideration for long-term investors, especially those looking to build generational wealth.

As I look at Denver’s future, I’m personally invested in securing homes not only for my portfolio but also for my family’s future. I want my children to have the opportunity to live in this beautiful city, and with real estate, I’m freezing today’s prices to safeguard their tomorrow. 

Whether you’re an experienced investor or just starting out, owning property in Denver is an excellent way to secure your financial future. If you’re ready to discuss your goals or explore new opportunities, feel free to contact me at 303-514-8491 for a consultation. Let’s work together to ensure your portfolio is ready for the next 20 years of market growth.