Investing in Luxury Condos in City vs. House outside of City? Denver, CO

[Dalton Skach]

I am interested in investing in a luxury condo in Denver, CO and I am wondering what kind of property will be more in demand and what things I should be careful about when investing in a condo?  I know that every market is different and I would like some advice from Real Estate investors/agents in the area that are familiar with this niche?  I am also curious as to whether there is a spending limit as to how many condos you can buy in a particular complex.  Please feel free to share your thoughts or ask me any questions and I will respond ASAP.  Thank you.

[Scott Trench]

Dalton - Currently there is a real shortage of condos in Denver.  I think that you may find that the price to rent ratios on luxury condos will leave you with a low rental cash return and that you risk competing heavily with higher quality condos in the near future.  This situation is largely due to a set of laws that I heavily criticize regarding builder defect laws.  Check out this link:

http://www.westword.com/news/has-condo-development...

Basically, it is super easy for the builders of condos in the Denver area (and all of Colorado for that matter) to get sued on a large scale for relatively minor problems in the construction of these structures.  This results in the situation we have today in Denver  - a situation where a very tiny fraction of available housing is in the form of condos - a small percentage compared to other similar markets.  Instead, apartment buildings are constructed with apartments that are often hard to distinguish from condos but are currently rented by apartment style tenants. 

It is my view that investors should be wary when purchasing condos in the Denver area, because I tend to believe that the mounting pressure to protect builders and incentivize them to bring condos to the region will drive down the price of existing condos over time.  Further, there is already quite a bit of inventory in place ready to be converted to condos when/if the legal status of these current apartments ripens them for sale as condominiums.

My two cents!