Is Colorado Land a Good Investment?

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Is Colorado Land a Good Investment?

Bart Waldon

With the USDA reporting over 31,000 individually held Colorado farm proprietors managing 14.5 million acres of agricultural real estate as of 2023 paired with consistent annual net income averaging $150-$200 million statewide driven by livestock and field crop cultivation, both operating ventures and undeveloped land in the state demonstrate intriguing investment upside. Though nearly 60% of farms currently operate at ownership losses with staying power stemming from off-farm income streams, the remaining portions throw off surpluses alongside overall property appreciation averaging nationwide farmland leaps of over 7% annually over the past decade. 

For investor groups or direct landholding startups either bringing operations expertise or outsourcing to local management companies to overcome profitability challenges, Colorado presents a promising arena leveraging scale. Individual plot owners can also pursue leasing, materials harvesting or recreational usage models generating proceeds from the land itself while benefiting from accumulating valuation gains over longer-term holds.

Background on the Robust Colorado Land Market

Over 300 days of annual sunshine and ready access to winter and summer activities has supported Colorado’s appeal for decades as an outdoorsman’s paradise. The state’s population expanded by 14.8% from 2010 to 2020, nearly double the broader US growth rate. Denver, Boulder, Fort Collins and Colorado Springs rank among the fastest growing metros in America thanks to the influx. Tourism fuels the economy as well with over 115 million visitors spending nearly $22 billion in 2021.

This wave of new residents and guests has greatly impacted Colorado’s land market. Median sales prices for vacant recreational plots rose from around $30,000 in 2012 to $60,000 in 2022. Strong demand lifted the median per acre price of ranch land to $3,100 in 2020, a record high. Values for undeveloped space near expanding municipalities saw even more dramatic appreciation in some cases, with rises of 40-50% near Denver over a 5 year stretch.

Development Drivers Vary Region to Region

With such a red-hot market already, where might there still be room for additional price growth? Translating Colorado's broadly rising land prices into future profits requires research into nuances by submarket.

One key driver to understand is infrastructure development. Regions set to gain new highways, power generation, airports or dams often experience a ripple effect boosting nearby undeveloped land. Areas with enhanced access to water rights also often see property valuations inflate.

While rural mountain retreats embody Colorado’s image, over 80% of residents actually settle along the Front Range corridor from Fort Collins down to Colorado Springs. Analyzing the density and growth plans for cities in this beltway can reveal especially promising zones for both residential and commercial projects. Recreation areas outside population hubs still command investor attention as well however, with tourists seeking their own slice of paradise in the form of ski-in cabins, dude ranches and other properties supporting their passions.

Market Segments to Target

Infrastructure improvements on the drawing board for locations like Aspen, Vail, and Steamboat Springs catering to the luxury second home crowd represent one angle. Investors may also find upside scouring permitting databases for indications a swath of farmland or ranch might give way to freshly zoned housing or mixed-use developments as municipalities stretch their boundaries.

State economic development agencies track the trajectory of key industries as well. Growing tech and renewable energy hubs across Colorado will require real estate for additional office parks and manufacturing plants in the years ahead. Positioning holdings to meet these niche needs could pay off for enterprising buyers.

Factors Influencing Risks and Returns

Beyond development, assessing the upside of a prospective Colorado land purchase requires weighing additional opportunities and challenges that could influence actual realized returns:

Upside Factors

  • Tourist appeal bringing outside dollars into local economies through booming tourism
  • Ongoing population growth not projected to slow dramatically for major metros
  • Access to key infrastructure like water, power and road frontage
  • Favorable zoning allowing higher density housing or mixed residential/commercial
  • Developable land limited by geography and conservation areas

Risk Factors

  • Potential localized bubbles in prices from excessive demand without income growth to support valuations long-term
  • Strict county and state level land use regulations that limit development
  • Seasonal restrictions and natural disasters from fires to floods temporarily limiting site access
  • Year-round access challenges in more remote areas

Regulations on allowable density prove critical as even large acreage holdings may only allow single residence without extensive planning approval efforts. Assessments should weigh total build-out potential down the road. Moreover not all growing regions follow state-wide demand trends equally, with nuances from Telluride to Sterling.

Navigating a Competitive Land Investment Market

The complexities of the Colorado land market argue for partnering with specialized brokers and companies to identify and capitalize on promising opportunities. While the average land parcel may take 1-2 years to sell according to industry estimates, even at full market value, long holding periods pose their own challenges for investors. Upfront purchases without sunk capital reserved for development can require outside financing that cuts into returns. This market reality gives rise to land companies like Land Boss focused on buying and holding land for profit across the state.

Professional Assistance

Over 100 transactions have provided Land Boss key insight into markets across Colorado. Their experience aids clients in assessing purchase decisions holistically given variables like:

  • Sales of comparable nearby plots over 1-3 years
  • Probability of re-zoning approvals to support increased density
  • Typical marketing timelines for specific areas and property types
  • Optimal pricing thresholds to secure deals with discounted risk buffers

For those interested in purchasing and flipping land, such expertise assists with setting realistic sale targets. Land Boss's capacity to purchase properties for cash also provides an alternative exit for motivated owners not positioned to wait out multi-year listing periods.

Requesting Site Evaluations

Investors intrigued by the potential of Colorado land can request complimentary consultations and market analyses from Land Boss online to determine viability of available holdings before making any purchase commitments. Reports outline:

  • Estimate maximum property value based on comparable sales
  • Likelihood of securing zoning changes to increase value
  • Projected marketing timeframe if choosing to sell
  • Cash purchase offer price if looking to liquidate quickly

Should I Invest in Colorado Land in 2023?

With Colorado's scenery, urban growth, and allure for tourists, questions abound on whether its land market will maintain momentum. Real estate values exploded recently with median recreational land prices doubling over the past decade. Risks still remain however when assessing investment potential in 2023. Taking a targeted look by region and land type provides the best gauge.

Tailwinds Supporting Continued Demand

Several positive signals point to another active year in Colorado's land market. Many key metro areas rank among the fastest growing cities in America. This net migration not only fuels housing development but also lifts demand for mixed-use parcels. Major infrastructure projects like transportation improvements, new solar plants, and utility upgrades prime adjoining undeveloped sites for fresh interest as well.

Resort communities expect heavy 2023 tourism activity too after lodging metrics and occupancy both rebounded sharply post-pandemic. Investors may find buyers hungry for vacant plots adjacent to resort towns looking to build second homes and tap into the short-term rental boom.

Exercise Caution With Broad Plays

Despite the positives, simply buying random Colorado land without research as a speculative play looks dicey. Even with state-wide appreciation, overpaying for a poorly located or constrained site significantly dampens return potential. Moreover localized price corrections in areas that saw values detached from fundaments could transpire.

Getting suitable zoning, density approvals, access easements and utility service reserved ahead of development promises importance too before land will realize maximum value.

The better 2023 Colorado land investment strategy requires targeting very specific submarkets enjoying visible demand tailwinds. This disciplined approach allows securing discounted positions with future catalysts that upgrades potential. Whether hunting for promising Front Range development sites, resort/recreation holdings or rural spreads, professional guidance pays dividends.

Final Thoughts

While tight supply and accelerating growth indicates Colorado land should continue appreciating over the long-term, exercising caution is still advised even amidst the optimism. Careful planning and risk-mitigating moves like securing water rights and baseline density approvals differentiates an investor gambling on the general market's rise rather than making an informed bet. Pinpointing metro and resort area submarkets enjoying tailwinds from positive net migration and infrastructure expansion proves paramount. Patience and tapping knowledgeable professionals may be required to navigate deals at attractive margins too. But given proper due diligence, the Centennial State offers one of the country’s more compelling regions to stake out early positions.

Frequently Asked Questions (FAQs)

What regions of Colorado offer the best land investment opportunity today? 

Some of the best regions to target include Denver metro suburbs seeing strong population growth, resort areas with increasing tourism like Aspen and Vail, as well as Front Range cities with infrastructure expansion plans.

What types of land tend to see the highest returns on investment? 

Land poised for residential development or commercial use often delivers higher ROIs than recreational/agricultural raw land based on potential value appreciation from increased density. Plots with utility, roadway and zoning advantages in growth corridors offer prime potential.

What risks should I be aware of when buying Colorado land as an investment? 

Risks to monitor include overpaying above actual development potential value, tight county development regulations limiting buildout, seasonality and natural disasters impacting access, as well as localized land market bubbles if demand drivers shift.

How long does it usually take to sell Colorado land? 

Industry estimates suggest the average timeframe to sell a vacant Colorado land parcel ranges from 1-2 years even at full list prices. Factors like location, acreage and preparedness for shovel-ready building can influence marketing duration.

Should I consider the services of a specialized land company? 

Partnering with specialized land buying companies like Land Boss can provide market expertise, facilitate discounted purchases and potentially buy investment properties directly for those wishing to exit ahead of long sales cycles. Their guidance can prove invaluable for optimizing ROI.

About The Author

Bart Waldon

Bart, co-founder of Land Boss with wife Dallas Waldon, boasts over half a decade in real estate. With 100+ successful land transactions nationwide, his expertise and hands-on approach solidify Land Boss as a leading player in land investment.


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