When we talk about real estate investing, Southwest isn’t the first thing that comes to mind. However, there’s an emerging city in Colorado that might be able to change your mind about that. We’re not talking about Denver, no – we’re talking about Colorado Springs. Now, just because someone says Colorado Springs is a good place for a real estate investment does not mean it actually is. Therefore, we’ve decided to take a look at some crucial factors and determine, once and for all, if Colorado Springs is a good place to invest in real estate. Well, let’s find out!
The Population
You can’t talk about a city being a great real estate investment opportunity without talking about its population. As you might know, Colorado Springs isn’t one of the big-name cities of the US. It’s the second-largest city in the state of Colorado, just behind Denver and that places it in the top 40 most populated cities in the US.
However, the sheer number of residents doesn’t mean that much. What does, however, is the fact that the population of this city has been steadily growing for quite some time now. According to UN data, the growing trend isn’t stopping any time soon, as they predict a steady population growth for the next 15 to 20 years. As you know, more people means better opportunity, so as far as the population goes, Colorado Springs seems to be a good investment opportunity.
Renters Vs Homeowners
As we’ve said, the sheer number of people isn’t the only factor when deciding whether something’s a good investment opportunity or not. For that matter, we have to look at another important factor and that is the renter population. The good news is, according to some reports, almost half of Colorado Springs’ is renting out their homes and apartments. Even though there’s a large number of homeowners, in a city where we have a constant influx of new residents, it’s only a matter of time before we see a shift in power balance, where renters become a larger portion of the overall population. As a real estate investor, you’re counting on renters and as far as Colorado Springs is concerned the things are looking good.
Price-to-Rent Ratio
Another thing that investors have to keep in mind is the price-to-rent ratio of a city. This metric is rather simple and it shows whether it’s more affordable to rent or buy the place you plan on living in. If the price-to-rent ratio is low, people will mostly opt-out to buy, instead of rent, since it’s more affordable, and that doesn’t really translate well into an investment opportunity. However, if you’re a beginner investor, don’t rely on this metric too much. Although it can be very helpful, this is mostly tailored to homebuyers, not investors. On the other hand, it can point you in the right direction as it will show you whether you should invest in a rental property or not.
To calculate the price-to-rent ratio, you’d just divide the average property price by the years’ worth of rent and in the case of Colorado Springs that number ends up at around 24. According to Venterra Real Estate, any place with a price-to-rent ratio over 21 is a good investment opportunity if you’re looking to invest in rental properties.
The Economy
Naturally, when you talk about investing, you have to mention the city’s economy. In the state of the world we live in, answering questions about the economy is quite difficult, but luckily, we can talk about life prior to worldwide lockdown and maybe pick up on some trends.
Pre-C19, Colorado Springs’ economy has been enjoying steady growth. The job opportunities were present and the people have managed to keep their jobs for years. This was one of the main contributing factors to the “boom” of the housing market in the city. Naturally, a lot of businesses had to shut down because of the virus, so the city’s economy took a solid punch to the gut, but we have no doubts that it will manage to bounce back, given the strong foundation that it has built-in the years prior.
Property Prices
The first thing you’ll notice if you start pondering the idea of investing in Colorado Springs real estate is that the property prices are higher than the nation’s average. This is to expected if you consider the rise in popularity of the market. The national average is just above $340,000 and the average price of a property in Colorado Springs sits well above $450,000. However, you can expect to find properties well below the median property price, for as low as $70,000.
Now, what may be even more important to investors is whether the property will appreciate in value or not. While no one can predict that, we can take a look at some previous data that shows steady growth in the last 20 years with an annual average rate of over 3%. However, we hardly doubt we’re going to see an increase in value that significant over the next few years given the current state, but if we’re talking further down the road, we’re almost certain you can expect another stretch of steady growth.
Is It A Good Place To Live?
If you plan on investing in real estate, you need to know whether people will want to live there. As far as Colorado Springs is concerned, people love living there. It’s a relatively small city in the Southwest, with a nice, healthy climate and pleasant people. The rent is affordable for most, there are three major colleges in the city, there are job opportunities present at all times and if you love nature, you can be in the mountains in no time. All in all, we’d say Colorado Springs is a good place to live in.
Conclusion
If we factor in all of the things we’ve talked about, it’s hard not to look at Colorado Springs as a good place to invest in real estate. It checks all the necessary boxes, so if you’re in the market for something of sorts, you should probably explore your options in the city.
