Three words: location, location, and location. Those are the three most important factors to look for when investing in real estate. Of course, it helps a great deal when the location of your investment properties happen to be in the same place that recently legalized the recreational use of a substance that millions of people are enthusiastic about. It certainly doesn’t take a millionaire real estate mogul to figure that fact out. For almost three years now, the housing market in Colorado and in Denver especially, has been booming.
“There has been a huge bump in real estate prices due to the legalization of marijuana,” James Paine, managing partner at West Realty Advisors, told CNN Money. “It’s massively pushed up raw land and industry prices.”
In 2014, Colorado legal cannabis sales totaled $700 million. At the end of Q4 2016, the state expects to collect over $100 million in cannabis taxes by 2016.
CNN Money goes on to report that back in March of 2015, Denver saw a 10% increase of housing prices; its second largest ever, trailing only San Francisco for the highest in the nation.
In the initial stages of the state’s’ legalization, the legal cannabis business was a huge boom for Denver real estate and housing prices were relatively affordable. Now, unfortunately, skyrocketing housing prices in Denver, is potentially transforming the city into one that only the uber-wealthy can afford.
The average home price in Denver is up to $350,500, making Denver a truly seller’s market. This is ripe for hedge funds and investors to take advantage of, but everyday citizens looking to move somewhere to have access to medicine for epileptic children, for instance, might be better off moving to a smaller mountain Colorado town or suburb. Despite the potentially harmful news for everyday working folks enthusiastic about legal cannabis — since the rise in housing prices, Denver vacancy rates and unemployment are way down.
Regardless of Colorado state law, we all know that cannabis is still illegal at the federal level. This fact forces some landlords and property managers to keep cannabis use out of their investment properties. Using cannabis in a rental property may result in violations in loan agreements or other problems with insurance carriers. Of course, landlords and property owners have the final say on what goes on inside their property, and some of have decided to ban the use of the plant altogether.
Some savvy entrepreneurs are setting up “Bud and Breakfasts” locations, however, using Airbnb to attract cannabis tourists to stay at their properties. Stay tuned to The Marijuana Times as we explore the interesting sector of the legal cannabis industry that is Bud and Breakfast locations.