Are you asking the question, “Should I sell my property now or rent it and sell later.”
As a property manager working with a Denver property management company I would answer this question like this. If you don’t need to sell now, rent it and wait. All the stats show that inventory is almost at a record low in the month of January 2015 with only 3,863 current listing in the 7 Denver metro cities compared to a high of 32,000 in June of 2006. There were 3,631 homes places under contract in the same month of January 2015. These numbers equate to a 93% deficiency of inventory thus causing prices to rise. When you view real estate as an investment its simple, buy low and sell high. If you want to maximize your gains hold on for a year or two and watch your investment grow. All you have to do is rent it out, and rental properties are also in very high demand. These market conditions in 2015 are very favorable for good appreciation. I call this appreciation “THE WAVE”.
Average sold prices for single family detached homes in January 2015 was $371,261 up 10.4% over the prior year and inventory has declined 36.7% for same period. Average sold price for attached homes was $231,300 in January which is up 18.4% from prior year and inventory has decreased 31.6% over same period. This is creating a wave of appreciation.
To put this appreciation in terms of return on your investment; if your property was worth $300,000 last year at you gained 10.4% appreciation, this equals a $31,200 gain in property value. If your cash investment for that property was roughly 20% or $60,000 then just the appreciation alone, not including any positive cash flow from rents generating by your property management company, equaled a 52% return on your investment. If we see appreciation again this year like last year you will have more than doubled your investment in two short years.
Currently I am fixing up a duplex and I hired my son who is in between jobs to help with siding and painting. He obtained a mathematics degree (smart man) from CU Denver and is a generation Y, Millennial, and does not want the corporate job career after working a few corporate jobs. While working on the duplex I was explaining this concept of appreciation, leveraging and return on investment to him. I think it took him a day or two to for his math brain to grasp it but now he and his friend want to buy real estate. Hey, if you need a place to live anyway you might as well make it an investment. My passion has been real estate investing since I was 16 and it is not everyones passion and that’s OK. The real estate economy goes in cycles just like most things in life, and one key to success is understanding these cycles and let them work for you and not against you. Easier said than done. I lost more that a fair share of equity from 2007-20010. Its a Time/Balancing act.
Just 5 years ago we were still complaining about dropping prices in the Denver real estate markets and for the past 3-4 years we have seen a strong comeback. Of course we don’t want to overspeculate and this market will not stay this way forever. So, you have to determine your risk tolerance just like in any investment. But if your in tune with the Denver markets you will be looking for ways to capture as much of this appreciation as you can.
RIDE THE WAVE!
Business Development Manager