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Hello there, welcome back. I hope you are all doing amazing. Today we will be delving into the world of Real Estate Investing. I hope you can use today’s information to boost your financial success. Enjoy!

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Real Estate Investing

Market Snapshot:

Denver, CO

The Denver real estate market continues to show resilience despite higher interest rates, with the median home price at $565,000, up 3.8% year-over-year. The Mile High City is seeing strong demand for single-family homes due to steady population growth and its status as a top destination for young professionals. However, rising mortgage rates have slowed the pace of sales, leading to an increase in active listings, which now sit at 6,500. Investors are finding more opportunities as sellers become more flexible with pricing.

• Median Home Price: $565,000

• YoY Price Growth: 3.8%

• Active Listings: 6,500 (up 8% from last year)

Deal Of The Day:

• Price: $1,700,000

• Units: 4 (4-Bed, 2-Bath each)

• Monthly Rental Income: $14,000

• Cap Rate: 6.8%

This 4-unit multifamily property in a Denver suburb, offers a strong cap rate of 6.8% and a yearly rental income of $168.000. The property is located near West Denver, making it a prime location for rental demand. Each unit rents for approximately $3,400, and the area has seen rent growth of 5% over the last year. This is a great opportunity for cash-flow-focused investors looking for stability in a growing market.

Real Estate Tip:

Investment Strategy:

Today's strategy is the Equity Sharing Agreement. This involves partnering with someone to purchase a property, where one party provides the down payment, and the other qualifies for the mortgage. For example, in Denver's competitive market, a first-time homebuyer might team up with an investor. The investor provides the $113,000 down payment on a $565,000 home, while the buyer manages the property. They share the profits when the home is sold, making it a win-win for both parties.

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Current Interest Rates:

Denver, CO

• 30-year fixed residential mortgage: 7.25%

• 15-year fixed mortgage: 6.5%

• Commercial real estate loans: 8.1%

Interest rates in Denver have risen slightly, impacting affordability, but demand for properties in high-growth neighborhoods remains strong. These higher rates may cool down the pace of appreciation in the short term, creating potential buying opportunities for cash-heavy investors.

Economic Conditions

Denver, CO

Denver is facing a 4.3% inflation rate, with rising costs in both housing and construction materials. The local economy, buoyed by the tech, aerospace, and healthcare industries, continues to grow, but higher building costs—up 7% in 2024—are delaying some new projects. As a result, housing inventory remains tight. For investors, this means fewer development opportunities in the short term, but higher rental demand for existing properties, especially in central Denver neighborhoods like Capitol Hill and Five Points.

The Rising Demand for Multi-Family Investments in Denver

With the surge in Denver’s population growth, driven by its strong tech and healthcare sectors, multi-family properties have become a hot commodity. These properties allow investors to tap into Denver's booming rental market while benefiting from strong appreciation in property values. For example, a typical 4-unit property in the Highlands area, priced at $950,000, can generate nearly $9,000 in monthly rental income. This makes multi-family homes a lucrative investment in a competitive market.

However, navigating Denver’s competitive real estate scene requires a strategy. Given rising property prices and tightening housing supply, many investors are opting for value-add opportunities. This means purchasing older multi-family properties, upgrading them, and then increasing rents to match the higher market demand. These improvements not only increase the property’s value but also boost cash flow, allowing investors to refinance and reinvest into new properties.

For those entering the Denver market, seller-financed deals are an excellent strategy. With interest rates hovering around 7.25% for traditional mortgages, flexible seller terms can offer lower upfront costs. New investors should look for off-market deals and be prepared to act quickly in this fast-paced environment. Whether you’re a seasoned investor or just starting, Denver’s thriving economy and housing demand provide ample opportunities for long-term growth and income.

Key Takeaways:

• Denver Market Update: Median home price $565,000, up 3.8% YoY.

• Deal of the Day: $1.7M multifamily in West Denver, with a cap rate of 6.8%.

• Tip: Understand market cycles to time your investments for better returns.

• Investment Strategy: Use an equity-sharing agreement to reduce your upfront costs.

• Interest Rates: 30-year fixed rates at 7.25%, impacting homebuyer affordability.

• Economic Impact: Inflation at 4.3% and rising construction costs are limiting new supply, but driving rental demand.

Subscriber Q&A

Q: What is house hacking, and how can it be used as an investment strategy? - Subscriber
A: House hacking is when you buy a property (often multi-family) and live in one part of it while renting out the other units to cover your mortgage and expenses. It’s a popular strategy for new investors because it reduces housing costs while generating rental income. Over time, it helps build equity and allows investors to save money for future investments.

Q: How do property taxes affect real estate investment returns? - Subscriber
A: Property taxes are a recurring expense that can significantly impact your investment returns. High property taxes can reduce cash flow from rental income, while low property taxes can enhance profitability. Investors should factor in the local tax rate when calculating expected returns and consider how tax increases might affect future profitability.

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That’s All For Today

I hope you enjoyed today’s issue. If you have any questions regarding today’s issue or future issues feel free to ask. Come back tomorrow for information on how to grow your income and wealth. I hope to see you.

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