It’s the question on everyone’s mind… Is Denver in a real estate bubble, and when will it burst? Vivi Gloriod from Team Vivi Real Estate discusses the factors that contribute to housing decisions, variables that cause values to increase, and what the Denver real estate market looks like going forward.
9. Year
Projected
Interest
Rate
Interest Expense
on $3.2 Trillion
Amount
Increase
From 2012
2018 5 percent $160 million $110.0 million
2023 7 percent $224 million $174.1 million
2028 9 percent $288 million $238.1 million
Budget Pressure: States
10.
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15. 1.1st Quarter of 2018 Decreased
$40.1 billion
2.What does this mean for
America?
TAX REFORM
17. … Is defined as a sustained increase in the
general level of prices for goods and services
and is measured as an annual percentage
change.
3.8%
INFLATION
18. ….. Is the value of the goods and services
produced by the Nation’s economy less the
value of the goods and services used up in
production.
GDP
19. Colorado has experienced a 40%+ appreciation in
home values in the last 4 years. This has created
such an extreme inventory shortage.
How HOT is Denver Real Estate?
• We have 3,360 available homes for sale in the largest (7) counties in
Denver. A balanced market with a 6 month supply of inventory would
require 31,956 active units.
• In the month of March 2018, 60.4% of Detached Single Family Homes and
61.9% of Attached Single Family homes were under contract in 7 days or
less.
• 68.6% of closed homes in March sold for at or over their asking price.
• Just under 40% of transactions were cash transactions in Q1.
20.
21. Denver's relatively central location makes it a natural location as a
distribution hub for the American west, while also supporting a
number of growing industries in technology and
telecommunications. Its location just east of the mineral-rich
Rocky Mountain range encouraged mining and energy companies
to spring up in the area, making the energy industry another staple
of Denver's economy. Colorado's capital is home to many
nationally recognized museums, the second largest performing
arts center in the nation after Lincoln Center in New York City, and
bustling neighborhoods such as LoDo (lower downtown), filled
with art galleries, restaurants, bars and clubs. Denver has gained a
reputation as being a very active, outdoor oriented city because of
its proximity to the mountains and generally sunny weather.
FORBES PROFILE ON DENVER
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54. The 5 in 10
o Purchase a new home as a primary residence every 2
years for a 10-year period.
o Rent the previous residence at or above the current
mortgage, allowing others to build your wealth.
o Advantages:
Monthly income from your investment
Principal reduction increases equity and net worth
Depreciation
Appreciation over time adds to the equity in the
home
55. The 5 in 10
o Purchasing five $300,000 properties over a ten-year
period would create a $1,200,000 (exclusive of primary
home) investment portfolio in addition to your retirement
savings!
Within 40 years, you can have a debt-free portfolio.
Assuming annual appreciation of 2%: The net worth of
the investment portfolio would be $3,499,000.
56. Are you willing to forego the
“American Dream” to live in a
house that you are OK with living in
– not your “forever” home now?
57. Buy as low as comfortably
possible on your first
purchase.
58. You can do this at a range of different price
points. I think you can even do this in
$400,000 homes. I think it does get
unrealistic above $500,000, but you could
probably buy condos downtown in the higher
price points. Homes rent in all different price
points.
59. Don’t buy the “forever” home until
your last purchase. These are lily
pads to the end destination.
60. # 1 Rule: What will the home
rent out for when you leave?
61. Think of real estate like
chess.
You need to be thinking 2 to 3 moves ahead.
62. If you are going to be
aggressive in the plan,
put a low amount down,
so you can keep
purchasing more
properties.
64. Sacrifice to Success
o Would you be willing to spend the
next 10 years doing what others
won’t do, so that you could spend the
rest of your life doing what other
people can’t do?
65. Fix and Hold
Formula:
If you ask a financial planner what is a good
rate of return in the market, what would he
say?
Gross Rents – the mortgage = CASH FLOW
Annual Cash Flow / Cash into transaction
= CASH ON CASH RETURN
66. Motivation
“If you think you can do it, you’re
right. If you don’t think you can,
you’re right.”
Henry Ford
