Increasing home values make buying property a challenge for those with limited savings or income. That's why the U.S. rental market continues to hold steady, and if you're a real estate investor, buying a rental property is a great way to generate solid income. But if you're going to invest in a rental property, it's important to know where to buy, and one state you may want to focus on is Colorado.
Colorado is a good choice for buying a rental because home prices have gotten too high for many locals to afford. Colorado's metro areas also tend to attract younger folks in transition -- those looking to enjoy nightlife combined with outdoor activities and scenery, and who aren't necessarily ready to settle down and plant roots.
Now when you think about Colorado, you might assume that the Denver metro area is the best place to buy. But new research from Millionacres reveals that you may be much better off opting for Colorado Springs or Greeley instead.
Buying an income property in Colorado Springs
The Colorado Springs metro area saw a 1.9% uptick in population between 2017 and 2018. It also saw an impressive 17.3% five-year employment growth.
Meanwhile, the median home price in Colorado Springs is around $260,000 -- roughly half the price of the average home in Denver. That makes the Colorado Springs area an affordable one to buy into.
The average rent in Colorado Springs is $1,012 for a one-bedroom home, or $1,139 for a two-bedroom. By contrast, on a national level, the average rent for a one-bedroom home is $1,586.84, and for a two-bedroom home, $1,808.73. Furthermore, the vacancy rate in Colorado Springs was estimated at 5.6% as of late 2019 -- a drop from 7.4% back in 2017. That's below the national vacancy rate for rentals -- 6.8%.
Buying an income property in Greeley
The Greeley metro area saw a 3% uptick in population from 2017 to 2018 and a five-year employment change of 17.2% that virtually mimics that of Colorado Springs. Rents are fairly cheap in Greeley, making it a solid choice for budget-conscious Colorado residents. The average one-bedroom home goes for $681, while the average two-bedroom commands $992. Meanwhile, the vacancy rate for Greeley is 2.2% -- well below the national average.
Should your next investment property be in Colorado (but not Denver)?
Both Colorado Springs and Greeley have a steadily growing job market and low unemployment. That, plus the numbers above, make a strong case for buying a rental property in one of these metro areas. But you may want to act quickly. As more and more real estate investors get priced out of Denver, they may begin setting their eyes on these and other Colorado alternatives. The sooner you get in, the better a deal on a rental property investment you're likely to snag.