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For almost a year, the Get Home Denver Team has been advising our investor clients to get into the game.  While the rest of the country has been experiencing the massive devaluation of real estate, the Denver Market has (In my opinion) neared bottom, and has stabalized substantially over the past 12 months.

In fact, pockets of the Denver area are no longer dropping in value, but actually holding value, or even seeing slight appreciation.

For the past year, our favorite investment play has been the Fitzsimons Redevelopment area. The redevelopment is a 578 acre project that creates a common workplace for both Private Bioscience companies and the clinical endeavors of the University of Colorado Health Sciences Center, and the Denver Children’s Hospital.  Once complete the area will be home to:

• University of Colorado Denver, Anschutz Medical Campus
• University of Colorado Hospital
• The Children’s Hospital
• Colorado Science and Technology Park at Fitzsimons
• US Veterans Health Administration Hospital
• Colorado State Veterans Nursing Home
• Commercial trade and services establishments, along with some limited scale multi-family residential development.

The on-site employment currently is approximately 16,000 and is projected to be over 43,000 by the time the development is complete.

In 10 years it is anticipated the economic contribution of the project will be

• $3.3 billion in annual operating expenditures
• More than 3,200 undergraduate and graduate students at the UC Denver facility, not including medical residents and fellows. (Hint: These folks will all need somewhere to live!)
• 23,100 jobs based on-site, supporting another 28,100 elsewhere in the Denver Metro Area.
• Nearly $2.1 billion in employee income annually!

I could go on, but you can see this is a big deal!

View Larger Map

Now, why we think this area is ripe for real estate investment.

1.  Location, Location, Location. The location is not only walking distance from the Fitzsimons project, it is also adjacent to the hugely successful Stapleton Airport Redevelopment area.  Stapleton has been one of the largest and most successful infill development projects in the country.  This strength rubs off on the surrounding area, and makes people want to be a part of this community.  If they can’t afford the Stapleton community they look to the surrounding area, which this is a part of.

Here are some fact about the Stapleton area.  The fact that Stapleton held ground, while the Denver Market in general dropped over 15% during the same time period, speaks to it’s strength.

• In 2006, 215 Properties were sold
  • Average Sales Price = $430,000
  • Avg. Price per Sq. Ft. = $214/ft
• In 2008, 285 Properties were sold
  • Average Sales Price = $432,000
  • Avg. Price per Sq. Ft. = $211/ft

2.  Price Point. The price point of these homes is less than $100,000!  In combination with the rental rates, there is huge cash flow potential!  These are post WWII homes that are a perfect match for the entry level homebuyer, (always a strong exit strategy,) as well as, those looking to rent a home.

3.  Rental Desireability. Homes in this area rent for between $700-$1100 per month.  Rental Rate is influenced by number of bedrooms and baths, as well as, basements, garages and conditions.

It is my opinion the already brisk rental market, will only get hotter as the demand for housing is pushed by more Med Students, Hospital Workers, and those with a desire to be near the amenities at Stapleton.

4. Appreciation Potential. The appreciation play here is phenomenal!  The price of these homes has been hammered over the past 2-3 years as a large number of foreclosures have effected this entry level neighborhood.  Homes that sold for $130k-$175k a couple of years ago, are being sold for $50k-$80 today.  We sold a number of places early in 2008 for $50k, and today, it takes closer to $65k-$70 for the same property!  This area has shown appreciation in 2008, and we think will continue to do so.  Here is a look at some of the numbers.

• In 2006, 517 homes were sold
  • Average Sales Price = $119,000
  • Average Price per Sq. Ft. = $117/ft
• In 2008, 743 homes were sold
  • Average Sales Price = $81,000
  • Average Price per Sq. Ft. = $79/ft

Conclusion

My team and I believe the Fitzsimons area to be the #1 investment play for residential real estate in the Denver Area.  Our opinion is that this is NOT a Fix n Flip investment, but rather a buy and hold, income producing play.

Please feel free to contact us for more information, access to our Hot Investment Home database, or if you would like to access any of our other Real Estate Investor tools.

The number of unsold homes in the Denver area continues to decline. In October there were 23,120 homes on the market, a 20.1% drop from 2007!  Inventory hasn’t been this low since January 2005, when there was slightly less than 21,000 homes available.

One of the primary reasons for the lessening inventory is the fact that would be home sellers, are not putting their homes on the market given the current conditions.  Many sellers we work with are choosing to be landlords, or just sit tight until the competition from bank owned properties subsides.  Unfortunately, they may have to wait a while.  I predict the REO properties will continue to dominate our landscape for the next 6-9 months.

Another reason for the smaller inventory numbers is that we’ve seen investor money start to pour in.  There has been 3 occassions in the past month where Get Home Denver Team clients, have lost buying opportunities due to bids on properties we identified.  These multiple offer scenarios are a good sign that this market is on the rebound!

There are some really good deals out there, and investors are starting to gobble them up!  We scour the market on a daily basis, and present these deals to our clients.  If you would like to be included on these deals, simply contact us and I’ll make sure you are receiving this info!

Image by pbo31 via Flickr

HomeVestors of America Inc. ranked Denver No. 6 on its list of top 10 markets for residential real estate investing in the third quarter…

Based on HomeVestors data, the best U.S. markets for home sales, in order, are:

(1.) Dallas
(2.) Houston, Texas
(3.) Fort Worth, Texas
(4.) Atlanta, Georgia
(5.) San Antonio, Texas
(6.) Denver, Colorado
(7.) St. Louis, Missouri
(8.) Philadelphia, Pennsylvania
(9.) Milwaukee, Wisconsin
(10.) Richmond, Va.

Based in Dallas, HomeVestors was started in 1996 and now has more than 230 franchisees in 35 states. The company’s slogan is “We Buy Ugly Houses.”  Franchise Brands LLC of Connecticut became majority owner of HomeVestors in June 2008, acquiring 62 percent of it.

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The subprime mortgage mess, and questionable lending practices may have started this debacle, but the Wall Street brain trust are to blame for the full blown financial meltdown.

Greed and suspect ethics are the reason the financial infrastructure of this country is in a state of chaos. But instead of letting these companies be cannabalized by others in a true free market system, our elected leaders have chosen to open the treasury to these crooks. Maybe they should have opened up a few jail cells instead!

Check out this video from 60 Minutes, it breaks down the Wall Street mistakes.

Invest in Denver Area Real Estate?

Since the beginning of the year we’ve been telling our clients that now is the time to start investing in Denver area real estate.  Here are some of the past articles.

• The Rich Get Richer
• Investment Trends

Some things to consider

• Prices are 10%-25% lower currently than they were last year.  This equates to the market, in general, being “On Sale”
• The Denver market has appreciated every month since March this year.  This tells me that the “Sale” is over, or will be very soon!

We have been advising clients based on our 18 years of experience in the market.  There have been numerous people take advantage of the bargain pricing, but I fear many of our clients will be left telling themselves, “I wish I would have bought properties during the housing crisis of 2007-2008!”

So in an attempt to move the weary off the fence a bit, I wanted to share with you some thoughts from the pre-eminent investor in US history, Warren Buffett.  Mr. Buffett, through his investment company Berkshire Hathaway, own real estate companies and continue to acquire more real estate assets based on the current “opportunities” in the real estate markets.

Quotes From Warren Buffett

I will tell you how to become rich. Close the doors. Be fearful when others are greedy and greedy when others are fearful.
Lecturing to a group of students at Columbia U. He was 21 years old.

The most common cause of low prices is pessimism - some times pervasive, some times specific to a company or industry. We want to do business in such an environment, not because we like pessimism but because we like the prices it produces. It’s optimism that is the enemy of the rational buyer.
1990 Chairman’s Letter to Shareholders

We will reject interesting opportunities rather than over-leverage our balance sheet.
Berkshire Hathaway Owners Manual

Managers thinking about accounting issues should never forget one of Abraham Lincoln’s favorite riddles: `How many legs does a dog have if you call his tail a leg?’ The answer: `Four, because calling a tail a leg does not make it a leg’.

Tell us what you think.  Do you believe that this is a good time to be a buyer in the real estate market, and if not, why?

photo credit: trackrecord

Fannie Mae has announced that they are lowering the maximum loan-to-value (LTV) ratios for a number of loan types. The three changes that will have the most impact follow:

Principal residence, cash-out refinance: Current max is 90%, new max is 85%. This means that if you refinance your primary residence, you can’t get more than 85% of the value if it’s a cash-out transaction.

Investment property purchase: Current LTV max is 90%, new max is 85%. This means purchasers of investment properties will need 15% down.

Investment property refinances (all types): Current max LTV is 90% for rate and term refinances and 85% for cash-out refi’s, new max is 75% for both. This means the most you can get with an investment property refi is 75% of the value.

The changes are not in effect yet for loans that are run through Fannie Mae’s automated underwriting system, and Fannie Mae has not announced when they will upgrade their underwriting software. They usually make upgrades relatively soon after making announcements.

With the bailout of Fannie Mae and Freddie Mac, there are sure to be some changes in a variety of areas.

Stay tuned. We will have follow up information when available.

I saw this video, laughed out loud, and immediately though that this is what I feel like dealing with the incompetence among the countries big lenders.

Stonewalled and ran around, day after day, their actions and attitudes communicate an overwhelming aire of indifference! [Read examples from previous posts here and here ]

If you are considering the purchase of a foreclosure or short sale, please bring your patience. It will be needed, I promise!

If you are an exec at one of these mortgage companines, Please get your act together and try and make the process easier for everyone (it will become more profitable for you!)  Plus, my head hurts!

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If you are a regular subscriber to BlogHomeDenver than this is old news to you; for everyone else, The Denver Post recently published an article touching on some of the incredible deals for investment buyers in the current real estate market.  The current credit crisis and difficulties in the national real estate market are providing opportunities for investors to take advantage of the banking industries misfortunes and missteps.

The newspaper article highlights an active investor who is jumping on this market.  The take-home message for Denver investors is the spike in properties for sale under $100,000.  There are currently over 2000 properties priced under $100,000.  The majority of these are single family residences that make ideal rentals with easy cash flow in the extremely tight rental market (under 3% vacancy).  Denver investors can pick up a detached residence at the same price as a condo and rent it without the HOA fees.  The condo and townhome values have been hit the last few years.  Buyers can avoid the uncertainty of Home Owner Associations (HOA) fees rising due to depleted reserves, or delayed maintenance, or unpaid monthly fees due to foreclosed units.  The HOA is the weak link in condominium investing because it directly cuts into profits by taking a portion of the tenant paid monthly rent.

As an example, one of our investors purchased a rental this year for $65,000.  Compare this to the previous sale price of $147,000 and that is a 66% sale on income property.  It gets even better.  Let’s assume it’s a 25%, or $16,250.00, down payment since it’s an investor loan.  Let’s add on $10,000 for closing costs and immediate repairs or updating for a $26,000 total investment on an asset that is worth almost 3 times that value, at a minimum.  If we look at the previous sale price compared to the initial investment (only 17%), the asset value is over 5 times the investment cost!

This Leverage (not to mention the Tax Advantages) is the TRUE STRENGTH of Real Estate Investment!

So you have to ask yourself if you want to begin to diversify your investments with real estate now, or wait for the market to recover and the prices to begin to climb.  If you don’t want to step up all by yourself, look to form a small group of willing investors to take a first step towards building your own real estate empire.  Now is the time, Denver is the place.

photo credit: hackshaven

Excessive loans against your credit card might result in loss of your car insurance as well as putting up your homes for sale.

A good value has become a Great Value!

Check out 6180 E. Yale Ave.  This great townhome is priced to move at $284,000!  Originally priced at $324,900 this is a $41,000 savings.

The only other home on the market in the sub-division is priced at $345,000!

Click HERE to view property details and on-line presentation!

I just received a great comment on my last article outlining the 2008 Housing and Economic Recovery Act.

There is one big change that effects Seller’s and the amount of capital Gains Tax they may have to pay. Buried deep on page 690 of the 694 page law is an important change to the Capital Gains Exclusion rule.  This rule is modified from allowing Seller’s to exclude capital gains on their home sale of up to $250k, or $500k for those filing jointly, to a formula that reduces this exclusion.  This is Bad, Very, Very BAD!

As this new law is further digested, I wonder what other “Little Surprises” we will find?

Thanks Brad Nix, for the info!  To check out the formula, and other details check out this article.

http://maxsell.net/housing-and-economic-recovery-act-of-2008/