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The Types of Denver Homes and How They Sell

The overarching trend for Denver real estate in the last decade has been a soaring market. Homeowners can sell for more money, and buyers often embark in bidding wars and pay above-market-rate for the home they want.

While this is the general trend, there are interesting discrepancies worth knowing related to the different types of Denver homes for sale.

Types of Denver Homes for Sale

The team at Denver Realty Group wanted to assess these trends, as understanding the specifics of home styles can help you gain leverage as either a homebuyer or home seller in the competitive Denver market.

Traditional

“Traditional” homes refer to those built at the onset of World War II, when there was a need for more affordable housing. As mass-produced homes, houses in the traditional style usually have just one story, a simple square floor plan, and basic aesthetic components.

According to the data on Denver homes for sale, traditional homes have been consistently the most affordable home on the Denver market. After all, they were built during the war period for this very purpose.

Traditional homes also pervade the city, from the western suburb of Lakewood to the northeastern quadrant of the city. So, part of their affordability relates to the supply available.

This is good news especially for single-family or first-time home buyers who might not need much space. The houses were simply constructed which means that maintenance usually costs less as well. Additionally, they tend to have slightly bigger plots and thus have more backyard space than newer Denver homes.

Bungalows

From the quaint neighborhoods around Washington Park to up and down Downing street, bungalows are a staple of south-central Denver.

These iconic homes are small and usually single-story, but they feature ornate roofs and Craftsman decoration that more traditional homes lack.

Bungalows are highly coveted in the Denver real estate market, and so they are some of the most expensive Denver homes for sale.

Not only are the bungalows located in extremely popular neighborhoods for young professionals, but they also have larger lots and feature more ornate designs.

If you want to buy a bungalow in Denver, be sure to work with a highly knowledgeable local real estate team.

Tudor Homes

Tudor homes speckle the northeastern quadrant of Denver, located in an area known as the Park Hill neighborhood. These homes also pop up in Washington Park, securing a prime location by one of the city’s most popular recreational areas.

As some of the biggest Denver homes for sale, tudor homes statistically sell much faster and at a much higher price than other homes in the city.

If you want a bigger home for your family or have the finances for a larger real estate investment, hire a local real estate team to ensure you can put a contract on one of these highly popular homes.

Denver Square Homes

As the name suggests, these are boxy homes named after the city. A return to simple craftsmanship as a response to the Victorian influence that swept the city, Denver square homes are usually plain, two stories, and modern.

These homes aren’t as popular as bungalows or tutors, and they actually sell a bit slower than traditional homes.

Victorian Homes

Like bungalows and tudors, Victorian homes are extremely popular in Denver. Many of them are concentrated in the newly revitalized Baker District. For young families who want easy access to the city, but to live on quieter streets, Victorian homes in this area represent an excellent option.

Known for their elegance, color, and style, Victorian homes tend to be popular no matter the city.

What does this mean for Denver real estate deals?

It pays to know the specific types of homes because you can use these facts as leverage.

If you’re a potential home buyer, for instance, you can certainly negotiate when you’re trying to buy a traditional home. These homes are widespread, have been the most affordable home in Denver’s history, and offer “nothing special” compared to the hundreds of other homes on the market.

If you’re selling a bungalow in Denver, on the other hand, you can come armed with information about its Craftsman style, its unique roof features, and its historical connection to the city.

Hiring a Denver Real Estate Team

Understanding and being able to capitalize on these trends takes an experienced real estate team. While having a general sense helps you to be a smarter consumer, local real estate agents live and breathe these trends.

The team at Denver Realty Group has been helping the Denver community buy and sell homes for the last decade. If you want a full-service real estate team that knows Denver, contact us today!

You can also use our online home search feature to refine your home search by property type, location, price, size, and many more criteria. Take advantage of this feature today!

Factors to Consider When Buying a Single-Family Home in Denver

According to a 2014 survey from the National Association of Realtors, 75 percent of new home buyers chose a single-family home rather than a townhouse, condo, apartment, or co-op.

Interestingly, 75 percent of new home buyers also stated that they needed to compromise on the home they purchased, namely regarding size and price.

Denver Homes For Sale

Now, factor in Denver’s lightning-hot, bustling real estate market and you might assume you can only afford a dilapidated shack…by the airport.

While the Denver homes for sale certainly have competitive bidding processes, don’t give up just yet. If you are an intelligent buyer and have a knowledgeable real estate team, you can absolutely find a single-family home in the Mile High city.

The key is to understand the factors you should consider and prioritize as you explore Denver homes for sale.

Denver Realty Group (DRG) was founded in 2008 as a full-service real estate business in Denver. Consider these guidelines below as you form a picture of the house of your (realistic) dreams.

The Five-Year Rule

Think about where you were five years ago. What was different in your life? What was the same? Five years is a surprisingly long time, especially for young professionals who are more transient now than ever. When it comes to purchasing a home, this concept of five years is really important.

You want to be able to live in your first home for at least five years. This is generally how long it takes for a property to become financially soluble after you buy it. Plus, why go through the hassle of a home inspection, closing, and mortgage if you were not planning on staying in the home?

If you think you might move for work or grow tired of your current location before five years, renting might be a better option for you.

Space for Now and Later

One of the reasons buying a single-family home can be challenging involves projecting the future. The space you can live in now might not be big enough later on. Here, it’s important to really think about your lifestyle.

If you are engaged or married and planning on having children, it follows that you should buy a home with a spare bedroom. That part is easy.

But what about your numerous Colorado hobbies? It can be easy to convince yourself that you don’t need the extra space, but think about your skis, your mountain bike, your winter gear, your car…

Would you be okay keeping these in a basement and hauling them up when you need them? Or, might you need a garage for easy-access and storage? There’s no right answer. The important thing is that you consider anything you’ll need to store (including toilet paper, paper towels, diapers, etc.) both now and in the future. Then, be honest with yourself about what you are willing to sacrifice if it means finding a more affordable home.

What can you change easily?

As you browse Denver homes for sale, you should also train yourself to picture the homes as what they can be instead of what they are. Here, though, you want to be reasonable with “easy” fixes versus renovations that might require outside contractors and expensive material.

Because most first-time home buyers do not have experience with home renovation, this can be daunting. Having a real estate agent or home inspector can be incredibly helpful, as they can provide advice.

If you had to guess, what would be more expensive: redoing your kitchen counters or the cabinets?

Replacing kitchen cabinets is actually much more expensive, even though we think of granite countertops as a more luxury remodel.

Unless you have extensive experience as a handyman or home remodeler, it really does help to have a real estate agent who can determine how much work realistically needs to go into a home for sale.

Location

Of course, location has to be a part of the conversation. Neighborhoods form clear distinctions in Denver, so it becomes easy to judge a house’s location based on its neighborhood.

When you think about location, you should also ask yourself these questions:

  • Commuting/Travel
    • Given Denver traffic, how long can you really manage for a commute?
    • Are you planning on changing jobs?
    • Do you have the option of working remotely?
    • Can you bike or walk to work?
    • Do you travel a lot and need to be close to the airport?
    • Do you want to be closer to I-70 for a quicker trip to the ski slopes?
  • School districts
    • Are you planning on having kids within a few years?
    • Have you researched the local school district to see if it offers what you want?
    • How far would the drive be if you placed your child in an out-of-district school?
  • Do you have the necessities close by?
    • How far is the nearest grocery store, gym, pharmacy?
    • Is there a park or open space if you have a dog?

This list is by no means extensive, but it should at least get the mental wheels spinning as you assess the locations of homes for sale in Denver.

HOA and Neighbors

Homeowners Associations (HOA) can be a sneaky reason that young buyers are not happy with their home choice.

While the home could be perfect, the parking rules, noise limitations, outdoor furnishing requirements, grilling restrictions, etc., can be a nuisance.

Assess your own lifestyle and whether you would be comfortable with following the HOA rules in your development.

Denver Realty Group

For a full-service real estate firm in Denver, contact Denver Realty Group today. We specialize in brokering single-family home deals in the Mile High City.

Top Apps for House Hunting in Denver

Whether you are looking to buy a beautiful Victorian in the Baker District or you’re just looking for a place to rent as you settle into Denver, there’s an app for that. If you want to sell your home quickly, there’s also an app for that.

Indeed, mobile apps have taken over the world of Denver real estate in the past five years. While they cannot take the place of a full-service real estate firm, there are some really neat apps that supplement the house hunting and selling process.

Denver Real Estate Apps

As a local real estate agency, we’ve compiled the top apps that we’ve seen benefit those looking to make the house hunting or selling process more enjoyable, efficient, and effective.

roOomy

According to its website, roOomy seeks to give home buyers the ability to “try before you buy.” Traditionally, when you embark on the house hunting process, you go from home to home and have to visualize what it could be. With roOomy, you can actually visualize what your space will be, thanks to its 3D virtual reality technology.

Using the app, you can actually see what designated furniture will look like in the space. You can do this for every room in the house, so you get a real sense of the home.

For the home selling process, roOomy is also incredibly valuable. Instead of having to spend a lot of time and money on a physical staging of your home, you can stage it all virtually. You can include multiple design options tailored toward different prospective home buyers, all while saving money compared to traditional staging costs.

PadMapper

PadMapper is more geared toward those who are looking for homes or rooms to rent. Think Craigslist, but exclusively for rental properties. You can narrow down available options based on price, zip code, number of bathrooms, whether it’s pet friendly, and just about any other search criteria you could want.

Available for free, PadMapper really is a game-changer and can lessen the headache of finding a place to rent in a bustling city.

RentHoop

RentHoop is like a dating app, but it is exclusively designed for roommate matches. Instead of relying on potentially dangerous sites like Craigslist, you can use RentHoop to find roommates based on shared contacts, hobbies, current living situations, icebreakers, or profession.

While there’s never a guaranteed way to know living with someone else will work out, RentHoop at least gives you a layer of defense against bad roommates by relying on shared contacts as a sort of character reference.

HomeSnap Real Estate

HomeSnap Real Estate is a newer app meant for house hunters. This app is essentially a real estate database of homes for sale. You can narrow down the search based on location, price, school district, and other helpful search criteria for navigating Denver real estate.

The app also features detailed information about each listing, including high-resolution photos, property lines, history, and more.

While Homesnap Real Estate can be beneficial to get a lay of the land, the app focuses on the entire country. This means that you can get a sense of homes available, but you lack the local focus on Denver real estate.

For a local alternative, look at our online database of Denver homes for sale.

Xome

If you want to take advantage of home auctions, foreclosures, and otherwise discounted homes, Xome is the app for you.

Xome is especially useful for those looking to invest in real estate, as you have access to short sales, foreclosures, and bank-owned homes before they hit the market.

Denver Realty Group

At Denver Realty Group, we have been helping people navigate the Denver real estate market for the last decade. As a modern, full-service agency, we understand the importance of using technology to expedite and ameliorate the home buying process.

As an independent real estate brokerage, our real estate agents are highly knowledgeable about Denver real estate trends and houses for sale.

Unlike an app, we will work with you in-person to get a sense of what type of home you want to buy, your budget, and which properties we think you’ll love. It’s this customer service that sets our real estate firm apart from any automated app.

If you’re looking for a home in Denver, contact our team at Denver Realty Group today.

When To Rent vs. When to Buy

Whether to rent or buy a home is an age-old discussion in the world of real estate.

Some people would say it’s a no-brainer: if you have the money for a downpayment and mortgage, you should absolutely buy a home. Why would you pay someone else’s mortgage for them when you could be paying your own?

While this is reasonable logic, it’s not always so simple. Depending on your financial and personal situation, sometimes it is more advantageous to rent.

As a full-service real estate company and rental agency, we definitely see both sides of the argument. As such, we compiled this helpful resource to which you can refer as you decide whether renting or buying a home for sale is right for you.

Consider the cost of each

If you want to do a side-by-side price comparison of renting vs. buying, you have to make sure you’re using accurate estimates for each.

Renting — Your rent should be fixed each month, so that’s easy enough to calculate. But what about utilities, gas, electric, cable, internet, and other utilities that you will also be charged? Does the HOA or apartment complex where you’re renting charge user fees, for amenities such as pools and tennis courts? You need to include all of this available information into your rent calculation.

Homeownership — You have your monthly mortgage payment, but you also need to consider your real estate fees, down payment, home inspection costs, and any other upfront payment needed when you buy a home. Additionally, when you own a home, you’re responsible for every maintenance request. You’re the landlord! So, budget in a cushion for unexpected repairs.

If you have the money for a home down payment and mortgage payments, then buying a house is a good option. However, we also want to mention that you should not accept any old home mortgage. If your credit score isn’t excellent, consider renting for a year or so, building better credit, and then qualifying for a much better interest rate later on. The money you save by paying a cheaper mortgage for 20 years will certainly overshadow the year or so you spent on rent.

Think about your availability

Owning a home is sort of like having a child — albeit a child you can paint, rewire, and eventually sell. You want to really make sure you have the time to put into a new home. If you don’t, you need to make sure you have the capital to finance a home that doesn’t need much work.

Given the steadily increasing price of Denver homes for sale, you might be hard-pressed to find a perfect, no-maintenance home within your price range.

Renting — If you work full-time, just moved to an area, and foresee your life getting a whole lot busier, sticking to a rental is a safe bet. There’s no maintenance or upkeep. But, in 20 years, there’s also no fully paid home.

Homeownership — Be prepared for your home to be your part-time job. Don’t worry as much if you don’t have experience with home remodel. In these days of DIY YouTube videos, it is much easier to tackle home improvement projects than it once was. Of course, you’ll still want to be prepared to hire an electrician, plumber, roofer, etc., for those projects that are just over your head.

Ask yourself if you really don’t have the time for a home, or perhaps if the thought of the responsibility seems a bit overwhelming? If it’s the latter, investing in a home for sale is surprisingly fun. For as many headaches as it causes, it also gives you the opportunity to paint your walls whatever color you like, learn a new set of skills, and have a place you can call your own.

Imagine the worst-case scenario

While imagining the worst-case scenario of rental and home ownership isn’t pleasant, it’s a necessary pill to swallow to see what you can handle.

Instead of thinking of the absolute worst-case scenario (because that can be a slippery slope), we’ll focus on common bad situations that arise in renting and homeownership

Renting — The worst-case scenario here is that you’re stuck in an inhabitable situation, your landlord is participating in illicit activities, or your entire rental home is damaged along with your stuff. If you have rental insurance, you should be covered for damage to your personal property. If you can’t live in a place, you typically have to pay a fee to break the lease, but then you’re home-free.

Homeownership — The stakes with home ownership are a lot higher, but, again, so is the reward.  A bad scenario here is that you buy a home and quickly realize everything about it that’s falling apart. You have some leverage here depending on the stipulations in your mortgage and home inspection, but let’s say the fixes are your responsibility. Is your financial situation secure enough to do so? Could you take out a loan if you need? Are you willing to live with other people to help offset the costs?

Luckily, when you have a good local real estate agent, they help you to avoid these “worst-case” scenarios. Experienced real estate agents, in particular, can spot troubled houses practically from the curb, and they can foresee potential difficulties based on the age, neighborhood, and price of the home.

For talented, local real estate agents, call Denver Realty Group today. We not only know Denver homes for sale, but also which ones will be best for you.

Mistakes Millennials Make in the Denver Real Estate Market

According to The Brookings Institution, a nationwide think tank and research group, Denver had a net annual migration gain of 12,682 people ages 25 to 34 between 2009 to 2014. This is the largest population influx for any metropolitan area in the nation, and it signals that many more young people are moving to Denver than leaving.

In With the New

Reported in The New York Times in 2016, a number of factors (including, of course, the legalization of marijuana in 2016) catalyzed this population increase, and young people account for nearly 35 percent of the total population.

We want to highlight these trends because the Denver real estate market has transformed along with this population shift. Now, millennials (people born between 1981-1997) pervade the market and bring a specific set of home buying needs and wants with them.

Mistakes First-Time Home Buyers Make

Most Denver millennials are first-time home buyers, and they therefore make the same mistakes that new home buyers make around the nation. When you factor in the lightening-hot Denver real estate market, millennials are prone to even more mistakes as they buy their homes.

Denver Realty Group was founded in 2008, just about the time this population increase began, so we have observed these Denver real estate trends for the last 10 years. Here are some suggestions we offer so that you can have a smooth real estate brokering process in the Mile-High City.

They Trust the Internet

Misrepresented Home Values

The Internet can be a fantastic starting point for first-time home buyers; after all, you can read helpful resources like this guide and get a feel for the home-buying process. Issues arise, however, when millennials assume that information on online real estate sites, such as Zillow and Trulia, are like the rule of law. While these sites can be helpful, they also tend to give a false picture of home values.

Use the Internet as a launching-off point, but then go and talk to a real estate team that actually knows the Denver Real Estate market. You can also look at online listings from real estate sites, like our For Sale database, to get a more accurate picture of home values.

Unclear Loan Information

In addition to inaccurate home values, the internet also tends to spew over-generalized information about mortgages. Again, getting a general overview of loan information online can be incredibly helpful as you start, but you really want to talk to a financial advisor, real estate agent, or credit counselor to get the best loan for you.

Depending on your credit, income, financial history, and other factors, you can qualify for loans from lending institutions you might have never considered. Do yourself a favor and actually talk to people in person to get appropriate information. If you need a resource to get started, contact Denver Realty Group and we would be happy to connect with you and answer home-buying questions!

They Get Antsy

Buying a home in the Denver real estate market right now probably won’t happen in a day, or maybe even a month. Young home buyers need to expect a competitive market, and they need to bring their A-game to the table in order to be taken seriously by the buyer. This could mean having a pre-approval letter for a loan, so that the seller knows they have the financial means for a home.

Additionally, home inspections can slow down the process and add some red tape. Home buying, usually, isn’t as easy as, “I signed a paper, and I get the keys.” Having realistic expectations before you begin the process tends to make it more pleasant and productive

This is where having a solid real estate team comes into play, as they can make these situations as smooth and timely as possible.

They Do It Alone

This point alludes back to the over-reliance on the internet, but younger generations especially assume they can find and do everything online. Buying Denver real estate for the first time, though, requires an on-the-ground team of people who know the market and process well. This way, you have access to a whole database of house listings and a team that can help you close the deal.

Contact Denver Realty Group today for an experienced, customer-oriented real estate team in Denver.

Loan Options for Home Buyers

When you embark on the process of buying a home for the first time, it can seem like you need to learn an entirely new language. There are so many acronyms — MLS, LTV, OO, O/F, JV, to name just a few. — and real estate concepts to learn. Financing can be especially overwhelming, as it is probably the longest-term financial commitment you’ve ever made.

Denver Realty Group has years of experience helping first-time home buyers in the Denver real estate market. We know the specific challenges and opportunities of home-buying, and we are aware of the questions first-time buyers usually have. As such, we have compiled this resource that walks you through the basics of different loan types.

As you finance your home, consider all of your options. If you have any questions about your home financing options, contact our real estate team today!

Home Financing Options

Unless you happen to have about half-a-million dollars laying around in cash, you will have to take out a loan to finance your house. Not every loan was created equal though, so it pays to know the details of your available financing options.

Conventional Loans

Conventional loans are fixed-rate mortgages, which means you have a fixed interest rate for the entire duration of your loan. These loans are not insured or guaranteed by the federal government, but they are some of the more difficult ones to qualify for given their stringent applicant criteria.

If you have good credit, a decent income, and the ability to make a down payment on a house, a conventional loan might be a good financing option for you.

Federal Housing Administration (FHA) Loans

If you are a first-time home buyer, FHA loans might be your best option. Unlike conventional loans, FHA loans are federally granted under the U.S. Department of Housing and Urban Development.

With an FHA loan, you have the option for a down payment as low as 3.5 percent of the value. Additionally, the qualification criteria are looser which means you are more likely to qualify for this loan than a conventional one.

Veterans Affairs (VA) Loans

VA loans are an especially attractive option for active duty military members and veterans. Through a VA loan, you can usually buy a home without a downpayment and have lower upfront costs. If you aren’t a veteran, you should still browse lender options from other federal agencies. Sometimes teachers in low-income communities, for example, can quality for decent federal loan options if they have worked for at least five years in a Title I school district.

Before You Shop For a Loan…

Before you shop for the right lender for your home financing, you can do a lot to ensure you get a better mortgage rate. Your FICO credit score is one of the most important measures of your financial trustworthiness, so make sure you know that it is good or do your part in raising it before you apply for any home loans.

Additionally, be realistic about your financial situation and what your family can afford to spend upfront on a home. With a good real estate agent, home buying can actually be more fun than stressful — but you should still be prepared to spend money before and after actually buying a home.

Get a Good Real Estate Team

This is just the tip of the iceberg when it comes to home mortgage loans. Aside from financial security and a clean credit history, hiring a real estate team that knows your location really helps. Real estate agents do not just know property listings — they also know the ins and outs of home buying and can help you to make educated home financing decisions.

The Denver real estate market has been hot for the last five years, and many first-time home buyers have their sights set on Colorado. A good financial record can really set you apart from these other buyers, as can having loans from approved lenders.

Denver Realty Group can navigate the Denver real estate market with you, and we are excited to make your home buying process as smooth as possible.

Contact our real estate team in Denver today to set up an appointment!

Buying Older Homes in Denver

Originally settled in 1858 as a mining town, Denver has as much history when it comes to real estate as it does new development. The city has grown exponentially in the last few years, with new subdivisions, neighborhoods, and urban development occurring in every direction. Still, Denver has iconic older houses, often tucked around the city parks such as Cheesman Park and Washington Park. If you are new to the city or are just getting started with Denver real estate, it helps to understand the distinct advantages and disadvantages of buying older homes in the Mile High City. As a top real estate firm in the Denver area, Denver Realty Group has outlined the lessons we have learned about buying older homes in Denver.

Older Houses For Sale in Denver

Older neighborhoods in the Denver real estate market are usually near the city’s notable landmarks, such as the Denver Zoo, Ferril Lake, and the Museum of Nature and Science. Classified as homes built before 1970 or ones that do not use modern construction materials, older homes certainly have personality. Here are the reasons to buy older houses for sale in the Denver real estate market.

Lower prices:

This isn’t necessarily a hard-and-fast rule, as some of the most historic homes have a special status and thus sell for more money, but in general older houses mean more affordable houses. According to expert real estate brokers, the same sized house sells for about 10 to 20 percent lower as an old home rather than a new construction. This means that you are paying less upfront to own your home.

Better locations near city parks:

Older homes in Denver got dibs on the best locations around the city. Whether it means an incredible view of the Rocky Mountains to the West, a short jaunt across the street to one of the city’s most iconic parks, or proximity to the culture and activities of downtown, buying an older house certainly comes with its location perks. The City Park neighborhood, for instance, was designed in 1882 and still features a beautiful, historic fountain from 1908. In the summers, City Park hosts an incredibly popular weekly jazz series — and parking fills up accordingly. If you purchase an older Denver home closer to City Park, though, you can really maximize your leisure activities.

Larger lot sizes:

Older houses in Denver might be smaller on the whole than newer ones to the east of the city, but they have much better lots. If you are a young family considering a single-family home, you should at least consider an older home for their beautiful and expansive yards. Additionally, you tend to have more privacy in older homes, as there is more space between each property. In new developments, you tend to get the cookie-cutter effect, which means homes not only look the same but also exist close together.

Distinct Denver Charm:

Sometimes “a house with character” is a euphemism for a house that is practically falling apart. When it comes to Denver real estate, though, we really mean personality and charm when we say “character.” From crown molding and bay windows to rustic fireplaces and herringbone floors, older Denver homes have a charm that the newer ones struggle to replicate. For neighborhoods in Denver with charming older homes, consider The Highlands. While this neighborhood has also been the epicenter of urban renewal and development, it also features multiple historic neighborhoods dating back to 1858, such as Potter Highlands, Wolff, and Ghost. The Country Club Historic district, a bit west of Cherry Creek, also stands out for its quirky 20th-century revivals.

Better foundations:

Because of updated construction regulations, older houses in Denver often have more solid bones than newer ones. Rather than drywall, the walls are made from stronger materials like plaster. Similarly, the home might have been constructed with sturdy, old-growth trees that are now protected and unusable. An advantage of our high-altitude, dry climate also means that we usually don’t have as many mold or moisture damage issues as other regions. So, older houses can still be as strong as they were decades ago.

Denver Realty Group

Denver Realty Group has been working in the Mile High City for years, and we know what to look for regarding older houses. If you have any questions about the Denver real estate market, contact us today!

Denver Neighborhood Guide

If you are new to the area or just want to get a better sense of Denver homes for sale, it pays to understand the city’s neighborhood layout. While I-25 divides Denver between east and west, the city parks actually serve as the more unofficial neighborhood dividers. At Denver Realty Group, we put together this helpful Denver Neighborhood Guide featuring our favorite areas. Because we know how important location is to sifting through all the Denver homes for sale, this guide can point you in the right direction as you begin your initial housing search. If you have any questions about Denver real estate as you peruse this guide, feel free to contact our real estate office to speak with one of our real estate agents!

Cherry Creek

Cherry Creek is one of the nicest neighborhoods in Denver, especially for its multi-family homes and upscale town homes. Defined by Colorado Boulevard, 6th Avenue, and University, this neighborhood is perfect for any family desiring a top-rated school district, luxury home, and proximity to downtown Denver events. If you live in Cherry Creek, you have unbeatable access to the Children’s Museum of Denver, the Denver Art Museum, The Denver Botanic Gardens, and the Denver Zoo. If you and your family want access to incredible city events with the amenities of suburban living, Cherry Creek is the perfect real estate market for you. Cherry Creek also has incredible pedestrian access, so residents can run, cycle, or stroll long its beautiful creek-side paths. Just a 14-minute drive from the Denver Tech Center and a 10-minute drive from downtown Denver, homes for sale in this area make for a very manageable commute.

Because Cherry Creek is such a highly sought-after neighborhood, having a local real estate team to help you find houses for sale, negotiate prices, and ultimately close on the house of your dreams is invaluable. If Cherry Creek sounds like the right neighborhood for you, call Denver Realty Group to help you buy in this popular area.

RiNo

An abbreviated version of River North, the RiNo area is one of the hottest real estate markets in Denver. If you are looking for an affordable Denver home for sale and don’t mind taking on a few renovation projects, then RiNo is a great area for you to buy a house. Especially for young couples looking for a single family home, anyone who wants to be in a vibrant and artistic neighborhood, or people who want to be a bit closer to the airport, RiNo is a neighborhood to consider. Industrial in feel, RiNo is home to many Denver breweries, trendy coffee shops, and an awesome restaurant-cafe-art venue called The Source.

Because RiNo was the epicenter of Denver’s recent urban renewal project, affordable homes are much scarcer than they were a few years ago. For this reason, it really helps to have a real estate agent who knows the Denver market. Denver Realty Group has seen the evolution of RiNo, and we therefore have many recommendations for the RiNo area. Contact one of our real estate agents today, and work with them to find a home in RiNo.

Stapleton

Located a bit east of Denver proper, though still connected by the Light Rail system, Stapleton is the place to purchase an affordable single-family home in Denver. Stapleton refers to a larger area, but it is divided into 10 distinct neighborhoods, each with newly-built single family homes, town homes, and apartments. With athletic fields, open spaces, and its own schools, Stapleton really was made for young families in Denver who want to raise children in a safe and community-oriented environment.

Additionally, Stapleton features income-stable developments which speaks to the commitment Stapleton has to affordable housing for all of its residents. Already blossoming into a diverse and active community, consider Stapleton as an option in your Denver housing search.

Our expert team of real estate agents at Denver Realty Group will assist you through every step of the home buying process, from scoping out real estate properties to closing on your home. We have been serving the Denver community for years with our variety of real estate services, and we are excited to support you as you move into the neighborhood!

How to Value a Rental Property

Denver

A well-known and well-followed path to wealth is one involving the ownership of rental property. Ever since personal property rights became widespread, ownership of rental income-generating real estate has been a reliable method to increase wealth over time. This strategy of buying rental properties has proven successful for many people, and has several hundred years of demonstrated effectiveness. With this understanding, how does one begin to think about valuing rental property?

Steps for Valuing a Rental Property

To understand what a property is intrinsically worth, we must first understand the implied return from owning it. Current asset values, or relevant ‘transaction comps,’ are highly correlated to the market’s perception of future returns, although the relationship fluctuates through the market cycles. To understand value, one must answer the most fundamental question: what is the return to you as a property owner?

There are three return components:

  1. Cash flow income
  2. Debt principle amortization
  3. Property value capital appreciation

Cash Flow Income

Cash flow income itself is the net of two components – revenue and expenses. The revenue side is straightforward in that it is typically contractually-based lease income with some element of predictability. Market default rates, tenant turnover times, average market vacancy, and expected losses on non-collectible receivables always need to be layered into any conservative forecast of rental income before buying rental properties. However, in general, expectations of status-quo, current-market rental income can be reasonably understood.

Debt Principal Amortization

The expense side of the equation is a bit more volatile. Some expenses are large and infrequent, such as hail damage, roof replacement, boiler failure, flood or fire, and all are almost inevitable over the long term. One way these can be accounted for is through adequate insurance or a repair and maintenance reserve, which is used to smooth out the unexpected bad luck. However, unusual and irregular capital expenses, premature aging of building equipment, and other maintenance requirements are always going to occur. Be sure that the calculation of expenses always includes some portion of the expenses that can potentially happen in any given year, and do not be lulled into complacency by thinking a few recent low-expense years are necessarily representative of the long-term average. Property taxes and total debt service expenses are two non-operating costs that also need to be subtracted from revenues to come to a true net cash flow number as you think through buying rental properties.

Once there is a solid understanding of the cash flows of the property, one must then get a sense of the capital structure. Either for a new acquisition or a currently owned property, the cash flow, debt paydown, and capital appreciation are applied to the equity value in the property to calculate the investment return. The equity value can be calculated as the market value of the property, less any transaction fees to monetize the property (for properties currently owned), less any taxes payable on gains (for properties currently owned), less any current or prospective outstanding debt – the net result is how much the investor could be investing in another opportunity given their current circumstances. Once a determination of equity value is made, the real estate investor can divide the sum of the cash flow income and debt principle amortization by the equity value to determine the current annual percentage return on the investment property.

Observations About Investing In Rental Properties

Cheap Leverage Yields Returns

One key observation from this analysis is that cheap leverage benefits returns. Net cash flows, relative to equity, will be enhanced with more low-priced debt. While increased leverage is accretive when times are good, it can also amplify losses when cash flows or property values are decreasing. Leverage is simply a magnifier of outcome, and when used successfully can increase returns. The opposite. of course, also holds true, as the imprudent use of leverage is one of the very few ways to lose your entire investment when purchasing real estate.

Sensitivity to Interest Rates

A second key observation as it relates to leverage is real estate’s sensitivity to interest rates. Assuming a fixed amount of debt on a property, the net cash flows are greater on a property with a lower interest rate, and vice versa. Using this logic, it is clear why, on average, fluctuations in real estate values have a high correlation to changes in interest rates. This must be considered when planning future exit opportunities – is the prospective buyer likely to have access to financing that enables adequate cash flow returns to justify required sale prices? The future is difficult to predict, so the less dependent an investment is on the exit, the more likely it is to have a positive outcome for the investor.

Stable Cash Flow Means Returns Go Down

Another key observation is that over time, if cash flow remains relatively stable, returns will go down as debt is amortized and market values go up. If rental rates, and therefore expected cash flows, change at a rate that is lower than the growth in equity value through debt paydown and market value appreciation, simple math will show a decreasing rate of return. This implies returns need to be regularly evaluated to determine if they meet investor thresholds, and to see how they stack up relative to other opportunities in the marketplace. Increasing equity values relative to cash flows over time provides the investor with an opportunity to recapitalize, or sell the assets at a premium to what their underlying fundamentals may imply.

Property Value Capital Appreciation

Valuing and investing in rental properties gets much more complicated when considering the third component of returns – property value capital appreciation. Theoretically, any increase in market values should be justified by increases in potential cash flows, but of course this isn’t always the case. In hot markets, it is the allure of capital appreciation that tends to move the market, but investors (as opposed to speculators) will always rely on adequate cash flow income and debt principle amortization as the true indicators of expected return. Any capital appreciation on an exit is just icing on the cake. Because increases in property values flow directly to leveraged equity, speculation is widespread in pursuit of these easy gains. Those investors that are most successful over a career will tend to enter into situations where they are exposed to the optionality of capital appreciation benefits (either through favorable developments in market sentiment or through justifiable cash flow increases), but they always rely on fundamental cash flows of an investment as the basis for justifying investments.

Market Cycles and Focusing on Price

As you can see, investing in real estate is all a bit circular: the market value will determine the amount of debt that can be placed on the property, which will determine the aggregate interest expense, which will determine the cash flow which will determine the market value… When doing fundamental investment analysis, it is important for the prospective investor to fix one of the variable assumptions from which to do the evaluation. The easy anchor for the investor to put a flag in the ground is on price. At a fixed price, does the specified asset have the characteristics to meet buy or sell requirements? Fixating on this anchor can have its drawbacks, however, as assumption criteria can shift in order to accommodate certain deals. This is most easily seen in how investors look at market comps: if everyone else is justifying the prices paid, does that mean I should too? Are my assumptions too conservative if other people are buying there? You get the picture, as this is how market cycles are created.

Look at Personal Required Returns

A better metric to fix is for investors to predetermine their own personal required returns, and ruthlessly determine if those thresholds are likely to be met in any given real estate investment opportunity. A focus on the cash flows of the property, rather than the market values, is the most reliable indicator of investment success. If the investor first determines their own return hurdle, a little math will quickly tell them the price they are willing to pay for an asset (or a price at which they would sell), with minimal exposure to many psychological pitfalls that can corrupt otherwise good analysis. This may mean passing on more deals, but the idea is to select the right ones with the highest probability of successful outcomes over time.

Questions To Ask When Valuing a Rental Property

Investing in real estate is a well-known strategy to generate income and grow wealth. The key questions to ask when valuing real estate are:

  • What is the actual tangible return on current equity value through cash generation and debt paydown?
  • What is my opportunity cost of that equity capital, and am I maximizing it in this investment?
  • Is the investment positioned to potentially get lucky with capital appreciation without relying on it for adequate returns?

If an investor can confidently calculate and evaluate the answers to these questions, and then optimize for them, they will be well on their way to increasing wealth over the course of a real estate investing career.

For more information on how to value a property and investing in rental properties, contact Denver Realty Group today.