If you are looking for a comprehensive guide to start flipping houses in the state of Colorado, you’ve come to the right place.
Flipping houses is one of the best ways to get started investing in real estate. It might be a lucrative business venture. However, since it is a high-risk investment, you must take into account a number of factors.
But don’t worry, I’m here to help you with your research and decisions. This detailed guide breaks down market research, assessment, and techniques for flipping houses in Colorado.
Flipping Houses in Colorado
Colorado has one of the hottest housing markets in the country. For house flippers, it’s a once-in-a-lifetime opportunity to make money. Despite the expensive housing market valuation, investors who choose the appropriate properties and flip houses in Colorado win handsomely.
Houses in Colorado are no exception to the rule that every investment, including real estate, is very niche and local area dependent. Paying attention to current market events and learning how to react swiftly can help you figure out whether you made a profit or a loss. To grasp the trends in these local markets and locate investment opportunities, you should always deal with a local specialized real estate agent. Their in-depth knowledge of the ins and outs of these specific housing markets may help you at every stage.
Analyzing the Colorado Housing Market in 2022
Colorado is the 4th most expensive housing market in the US. Colorado’s average house value is $589,634 as of April 2022, which is significantly more expensive than the national average home value of $344,000. Furthermore, house values in Colorado climbed by a little more than 8.75 percent in 2021, and are expected to rise by a stunning 23.2% in 2022. These prices, on the other hand, vary even within the state, indicating how regional and localized housing markets are.
Colorado’s housing market trend has attracted real estate investors from all across the country. Residences in Colorado are in more demand than they are available. In Colorado’s housing market, this has resulted in a strong seller’s market. It’s easy to see why investors are flocking to the real estate market in Colorado. The rising population and improved employment and education sectors are two of the most important drivers of progress. Colorado has a 92% high school graduation rate and a $73,000 median household income.
Colorado is expected to have another successful fiscal year. Employers and job seekers alike face possibilities and difficulties in Colorado’s competitive labor market. Colorado’s unemployment rate fell to 3.7 percent in March 2022. The Colorado Department of Labor and Employment (CDLE) stated earlier this year that the state’s job recovery was exceeding the national rebound. Through 2030, the CDLE predicts that more than 300,000 jobs will be added in the Denver metro region alone.
Furthermore, Colorado’s super expensive housing costs make houses less accessible to first-time homebuyers or investors. You’ll need more money to get started, which means there will be fewer novice investors and, as a result, less competition in this business.
How to know if the house in Colorado is a good investment?
After studying Colorado’s housing market and economy in general, you’ll most likely want to look into a more specific area and neighborhood to find possible homes. Keep in mind that not every local real estate market has the same kind of investment opportunities.
In general, a variety of factors go into assessing whether or not a property is a good investment. When you’re just getting started, avoid local marketplaces with a lot of inventory and postings that have been active for a long time. Houses in Colorado Springs, Colorado, sell after an average of 35 days on the market. This means that if the house in the zone is still actively listed after 35-50 days, it is a no-go.
If the price of a house in Colorado is less than the local market average, it is another sign that it is a good investment. Looking for houses that are significantly less costly than past sales in the region is one of the simplest ways to detect potential value. Remember that the less expensive homes will require significantly more changes than the more expensive ones.
How much should I pay for a house in Colorado?
It’s usually a good idea to stick to the 70% rule when deciding how much to spend on a home in Colorado. According to this rule, you should never spend more than 70% of the house’s after-repair value, less repair and renovation expenses. Let’s say you buy a house in Colorado and want to spend $50,000 on repairs and remodeling. Keep in mind that upgrades raise the property’s market value. Let’s say your house is worth $700,000 after repairs.
According to the 70 percent rule, you shouldn’t have spent more than 70% of the after-repair value minus repair expenditures on this property. When you add up the numbers, it only amounts to $440,000.
It’s critical to keep in mind that the 70% rule is discretionary. It’s only an estimate of the house’s genuine worth. This rule aims to create a profit margin that is substantial enough to pay all other costs while flipping houses in Colorado while still leaving you with a good profit margin.
Do you need a real estate license to flip houses in Colorado?
In Colorado, you don’t need a real estate license to flip houses. Getting both a realtor and a contractor’s license is typically a smart idea if you want to start flipping houses in Colorado full-time.
It’s OK if you don’t want to cope with the difficulties of obtaining a real estate or contractor’s license in Colorado. In this case, I strongly suggest you deal with a seasoned realtor and contractor with whom you can build a good working relationship.
Finally, locating a reliable contractor or repairman might be difficult if you are new to Colorado. In addition, zoning regulations and requirements differ by city, and market trends change often. Working with a reputable agent or contractor might help you anticipate issues.
How to start flipping houses in Colorado and make a profit?
Once you’ve done extensive research on the Colorado housing market and are certain that the house is a sound investment, you’re ready to start your home flipping journey in Colorado. To start flipping houses in Colorado and profit handsomely from this sort of real estate investing, follow these six steps.
1. Create a Budget and Secure Financing
The first thing to consider when flipping houses in Colorado is your financial situation. It’s typically a good idea to perform the math before looking at potential qualities.
If you have cash on hand, you should already know how much money you have. By paying cash for your Colorado house flips, you may avoid financing charges, mortgage payments, and any other closing expenses or fees. As a result, if you’re flipping houses in Colorado and have cash on hand, you should always use it.
Taking out a loan or other forms of financing to buy and remodel a house might significantly affect your earnings. You’ll keep paying mortgage payments until the home is sold. Even if you took out a $600,000 loan to buy a house in Colorado, a 10% down payment on a home might cost upwards of $60,000, to begin with. You’ll need to spend an extra $10,000 on top of the $30,000 for repairs and improvements.
Unfortunately, repairs and improvements take time. As a result, you may end up paying your mortgage for a longer length of time, perhaps resulting in a significant profit margin loss. Furthermore, you may not be able to earn any money after accounting for property taxes, building permits, utilities, marketing costs, closing fees, home insurance, broker commissions, and other expenditures associated with flipping houses in Colorado.
As a consequence, having cash may help you save money on all of these things while also allowing you to keep as much of your earnings as possible.
But don’t worry if you don’t have any cash on hand. There are still a few more options for sustaining your house-flipping business on a tight budget.
2. Research the Cities and Neighborhoods
You may analyze the neighborhood’s desirability once you’ve located the properties that are listed below market value and taken into account other indicators such as active days on the market. When it comes to house flipping in Colorado, the neighborhood’s quality is critical. In addition to the listing and sale price, other quantitative elements such as the quality of education, entertainment, parks and leisure, and the shopping experience in the area should be considered.
Existing housing stock in historic towns in Colorado, as well as a quickly rising urban zone, may benefit from rehabilitation and repair. You may earn a good living flipping houses in Colorado. However, you must learn to recognize suitable choices.
Here is a list of the 4 best cities to flip houses in Colorado for 2022.
Flipping Houses in Colorado Springs, CO
Colorado Springs is one of the biggest cities in the state of Colorado. This city is composed of 69 neighborhoods and offers multiple affordable duplexes, townhouses, and affordable multi-family homes. As of April 2022, the median listing price for houses in Colorado Springs was just $450,000, trending up 14.3% year-over-year. The median listing price per square foot was $213. The median sold price for a house was $535,000. Furthermore, on average, houses in Colorado Springs sell after 35 days on the market.
The sale-to-list ratio of houses in Colorado Springs, CO is 100.01%, which confirms the strong seller’s market.
The city offers 175 public schools rated good or higher by GreatSchools and 26 private and charter schools. Colorado Springs also offers hundreds of grocery stores, restaurants, and cafes. There is also a plethora of beautiful parks and gyms for a healthier lifestyle.
Out of the 69 neighborhoods in Colorado Springs, Broadmoor is the most expensive one, with a median home price of $875,000. On the other hand, Park Hill is the most affordable neighborhood, with a median listing home price of just around $339,000. There are also some other great neighborhoods, like Village Seven, Stetson Hills, and Wolf Ranch.
Flipping Houses in Denver, CO
Denver is the capital city of Colorado. It is composed of 78 neighborhoods and offers multiple affordable duplexes, townhouses, and multi-family homes. As of April 2022, the median listing price for houses in Denver was $575,000, trending up 15% year-over-year. The median listing price per square foot was $370. The median sold price for a house was $567,500. Furthermore, on average, houses in Denver sell after 33 days on the market.
The city offers 248 public schools rated good or higher by GreatSchools and 70 private and charter schools. Denver also offers hundreds of grocery stores, restaurants, and cafes. There is also a plethora of beautiful parks and gyms for a healthier lifestyle.
Out of the 78 neighborhoods in Denver, Cherry Creek is the most expensive one, with a median home price of $1,200,000. Conversely, Windsor is the most affordable neighborhood, with a median listing home price of just around $270,000. There are also some other great neighborhoods, like Downtown Denver, Green Valley Ranch, and Hampden.
Flipping Houses in Aurora, CO
Aurora is a city in Colorado that consists of 64 neighborhoods and offers multiple affordable duplexes, triplexes, and multi-family homes. As of April 2022, the median listing price for houses in Aurora was $475,000, trending up 18.8% year-over-year. The median listing price per square foot is $238. The median sold price for a house was $523,500. Furthermore, on average, houses in Aurora sell after 33 days on the market.
The sale-to-list ratio of houses in Aurora, CO is 106.33%, which confirms the strong seller’s market.
The city offers 128 public schools rated good or higher by GreatSchools and 16 private and charter schools. Aurora also offers hundreds of grocery stores, restaurants, and cafes. There is also a plethora of beautiful parks and gyms for a healthier lifestyle.
Of the 64 neighborhoods in Aurora, Southshore is the most expensive, with a median home price of $838,400. On the other hand, Tollgate Overlook is the most affordable neighborhood, with a median listing home price of just around $275,000. There are also some other great neighborhoods, like Meadow Hills, Heather Gardens, and Summer Valley.
Flipping Houses in Fort Collins, CO
Fort Collins is a city in Colorado and is composed of 113 neighborhoods. It offers multiple affordable duplexes, townhouses, and multi-family homes. As of April 2022, the median listing price for houses in Fort Collins was $550,000, trending up 15.3% year-over-year. The median listing price per square foot is $256. The median sold price for a house was $560,000. Furthermore, on average, houses in Fort Collins sell after 34 days on the market.
The sale-to-list ratio of houses in Fort Collins, CO is 105.29%, which confirms a strong seller’s market.
The city offers 65 public schools rated good or higher by GreatSchools and 10 private and charter schools. Fort Collins also offers hundreds of grocery stores, restaurants, and cafes. There is also a plethora of beautiful parks and gyms for a healthier lifestyle.
Of the 113 neighborhoods in Fort Collins, Fossil Lake is the most expensive one, with a median home price of $885,000. On the other hand, Prospect-Shields is the most affordable neighborhood, with a median listing home price of just around $375,000. There are also some other great neighborhoods, like Rogers Park, Troutman Park, and Side Hill.
3. Assemble your team
Whether you’re flipping houses full-time or part-time in Colorado, you’ll need a crew to make each flip a success. There will very probably be a need for a real estate lawyer, a lender, a real estate agent, a general contractor, a few laborers, and an accountant.
If you want to make house flipping a regular part of your investment strategy, working with a trusted team rather than a new specialist for each job is also a good idea.
4. Select and Purchase your Colorado House
After you’ve sorted out your finances and assessed whether or not it’s a good investment, it’s finally time to buy your Colorado home. Another thing to keep in mind when purchasing a home is that homes that require more upkeep and maintenance are typically less expensive to purchase. As a result, reselling them will be more time-consuming.
Houses in good condition that do not require extensive repairs and modifications, on the other hand, are substantially more costly. If you invest more money upfront, you will save a lot of money in the long term and will not have to worry about home upgrades.
As a result, while shopping for a home in Colorado, aim to strike a balance between these concerns. Choose a house that fits your needs, price, and timeline.
5. Repair and Renovate the House
Consider the cost of repairs and improvements, as well as the time it will take to complete them. Determine which improvements will add the greatest value and if they will appeal to prospective purchasers. For homeowners who wish to escape the hot and humid Colorado summers and severe Colorado winters, adding air conditioning and energy-efficient upgrades to a property may quickly boost its value.
Furthermore, power washing the exterior of the house, painting the inside, repairing a leaking faucet, reglazing and caulking bathtubs, and cleaning the floors are all minor but necessary tasks that will help your home sell faster.
6. Resell the Renovated Colorado House for a Profit
After you’ve completed mending and restoring the house, it’s time to re-list it. In Colorado, you have two alternatives for reselling your house. Selling as a for-sale-by-owner (FSBO) is the first option while selling through a real estate agent is the second.
One of the many advantages of selling your house without the assistance of a real estate agent is the cost savings on commissions. Even if you sell your Colorado home on your own, you must pay a fee to the buyer’s agent (3 percent ). If you want to sell your home quickly, you’ll need to be prepared to haggle like a pro and fill out all of the paperwork appropriately.
You may always employ a professional real estate agent if you don’t want to deal with the inconvenience of selling your house yourself. The process of creating, debating, signing, and closing contracts will all be streamlined. You will, however, be compelled to pay them a charge of 3% for their services.
How much money do house flippers make in Colorado?
The average revenue per flip in the United States is $60,000, whereas it’s only around $75,000 in Colorado. As a result, the average revenue per flip in Colorado is just $15,000 higher than the national average. To put it another way, it makes sense. Affordable housing and a rising standard of living in this state attract a large number of real estate investors, resulting in increased resale value per flip.
It’s also important to remember that revenue per flip isn’t the same as net profit. You’ll also want funds for repairs and restorations. A wide range of repairs may be necessary depending on the current state of the house. But if you invest $30,000 in repairs, you’ll have a net profit of $25,000 to $30,000 to deal with after subtracting all additional fees and levies.
As a result, it’s normal to expect to make at least $25,000 from flipping a single house in Colorado. Furthermore, the typical real estate investor flips four houses each year in Colorado. That means you can expect to make around $100,000 per year if you flip houses full-time in Colorado.
Overall, flipping houses in Colorado is a great way to get started in real estate investment. Colorado is one of the most profitable states for flipping houses. It is rapidly developing and has a lot to offer for both long-term and short-term real estate investors. Furthermore, finding profitable flips in the Centennial State requires a combination of your talents, competence, and luck. If you find a great deal on a house in Colorado, make sure you follow a well-thought-out strategy, remodel the house if necessary, and sell it to a high-end buyer.