This garage conversion added 400+ squarefeet of living space for about $6,000.

The kitchen received a complete facelift, though most cabinets remained. They don’t make’em like these anymore!

2026 is a tough year for real estate… But maybe not in the way you would expect.

High prices, high rates, high cost of renovation and construction… We’re all asking the same questions: how to make today’s numbers work?! Is there still value to be found in the valley, after the amazing run of the last few years?! What to look for, and what are the main pitfalls?

The truth is despite all the headwinds, prices are not going down. With sellers comfortably sitting on a lot of equity, low rates, and low leverage, prices are still maintaining or going up. Almost nobody is forced to lower their price to sell quicker.

In this environment, you have to believe the data, and be confident in the fact that prices have stabilized at an”unaffordable” level… I know, it’s a conundrum, but that’s where things have found their balance at this point. The low motivation of sellers have counterbalanced the low level of demand. Despite the fact that most buyers are disqualified in today’s market, there is so little for sale that prices remain stable, and anchored and a high level. This has to be factored in your calculation for the final value of the project you decide to take on. The market has now proved itself very resilient, and able to sustain high prices despite a rate hike cycle, a war etc…

So yes, 2026 is a tough year for real estate, but not because values are crashing. It’s a tough year for real estate because very few are allowed to play and transact, and most of us are pushed to the sidelines. This market transacts on the margins, and after years of doing so, it’s time to make peace with the fact that this low volume market is here to stay, and we will be operating under those assumption for the time being.

The stalled market (read more) is just our reality. Taking on a renovation is daunting, with discouraging labor and material prices. But values are stable at a high level and that’s what you need to aim for when you take on a project.

Since action talk better than words, here is the last purchase I did, and how it went.

In a nutshell:

Type of home: single family home in Glenwood Springs.
Purchase price: $702,000 - $125,000 downpayment
Renovation budget: $50,000 (including financing) and a lot of elbow grease
Furniture: $10,000
Timeframe: Purchased in 10/15/2025, rented on 02/13/2026 - 4 months
Equity created: $185,000, about a 100% return on the initial investment (downpayment + renovation and furnishing costs).
Cashflow: TBD - anticipated to be around an 8% cash on cash return ($20k/year)

Before and after pictures:

What created opportunity

You have to be able to read between the lines of the listing, and be confident in your vision so you can actually unveil value-add items that others didn’t see.

Bedroom count: The home was listed as a 2 bedroom home, but when I went on the assessor’s website, I saw that it was reported as having 3 bedrooms. When on site, I realized that the owners had taken down a wall and a door, to open access to the backyard, and basically turned one of the bedrooms into a large hallway to the backyard. I could easily rebuild the wall and put a barn door to recreate the bedroom without completely preventing the passage to get to the backyard. It was like buying a 3 bedroom house for the price of a 2 bedroom!

Short Term allowed: This location is in the county, tough it has all the advantages of being in the city (sewer, water etc…) and none of the regulations. Therefore it is possible to operate it as a short term rental. Renting short term is a good solution to help cover the high cost of financing that we’re having to deal with today. Though by my experience, it only really make sense if you are able to manage it yourself. And let’s be honest here, it won’t be passive income! If you go that route, you’ll also have to furnish it and decorate it, which honestly adds up ($10,000 and a lot of trips to Habitat and Arc thrift store)!

Here is the link to the short term rental: https://www.airbnb.com/rooms/1608062621377847771?guests=1&adults=1&s=67&unique_share_id=d7f05d29-4415-4f65-af4d-e25858ec7a64

Perks of the location: West Glenwood is also somewhat looked down on by locals because they see what at the bottom of Mel Rey road (fairly unattractive commercial buildings) and they never go up those streets if they don’t live in the neighborhood. Which allows for a lower purchase price. Meanwhile guests on short term rental platform will not see the bottom of the street as a deciding factor when they book. They will drive right past it to get to the home and never think about it again. Taxes are also less since you are not within city limits. That opens a window for better cashflow. I also think that appreciation prospects are better in West Glenwood than downtown. West Glenwood benefits from lower prices, and larger lots, better sun exposure than downtown (that’s a low bar :)) as well as no through traffic and great mountain views. I believe that as homes get renovated in West Glenwood, and maybe one day the commercial properties at the bottom of Mel Rey get a face lift as well, we will see homes prices appreciate faster than other areas of Glenwood.

Adding square footage to a small home: What was limiting the value of that property was the size of the home (1,450 sqft). But with converting the garage into living space (that includes pulling a permit, insulating, putting the electrical to code, and refinishing the space), I could bring it up close to 1,950 sqft. 2,000 sqft of home on one level is pretty ideal. The garage conversion is a great way to add value. I converted this one for about $6,000, which is about 13$ for foot. The market value of a square foot in Glenwood is close to $500…

The home benefits from great mountain views, and the landscaping was already done and very attractive. That should be great selling points for the listing on short term rental sites.

What to look for?

Find updates that don’t require a permit. Permitting, inspections, code requirements are expensive. In our case only the garage conversion required one, so we put in the application while doing the rest of the work, and then we were ready to tackle the garage as soon as the permit was issued.

Find updates that can be done with a single subcontractor only. It can either be done by finding a subcontractor that can do several things with the same crew, or by choosing updates that stay within the same skill. You lose a lot of time by finishing up with one sub and waiting to get on the schedule of the next one.

Sorry to go there but… Location location location. Buy something that is at a good spot, and under the average price for the neighborhood. If you can then make it become better than the average home in that neighborhood, you will force some appreciation.

Find unique qualities in that area that create scarcity for this type of home (for us it was a large flat lot with mountain views, and proximity to the hot springs, and a single level home) and consider the marketability of those qualities. This will insure that the resale goes smoothly, and that you can justify the higher level of upgrades that you put into the home.

Main pitfalls:

Make sure to factor in the cost of financing. In my case, it was about 25% of the total cost of the renovation. Interest rates are high and a house sitting empty will cost you a pretty penny to carry while you are doing the cost. And go fast so the home doesn’t sit empty too long!
Be careful with large homes that need cosmetic renovation throughout: If every surface and fixture needs changed, tiny but mighty is the way to go! Gone are the days when “throwing new carpet” and “just painting” was cheap.
Don’t go for the cheapest home on the block! They usually have obvious issues that will hinder the value and potential for resale (noisy road next to it, functional obsolescence etc…). In the expensive markets we are experiencing, it’s tempting to reduce you r exposure and go for the cheapest purchase possible. But the most value is usually to be found while picking a property up that’s in the middle of the pack and to make it a front runner for the area.
Avoid serious bathroom renovation. I can’t exactly explain why, but they areaway last long and are costly, no matter how prepared you think you are! Re-tiling, changing light and plumbing fixtures is as far as I’m willing to go.

In conclusion

I’ve been on the lookout for a project for over a year before I found something that was motivating enough. So far every milestone was met, regarding cost of renovation or cashflow. So I’ll consider this a successful venture. That being said, the same execution 3 or 4 years ago would have yielded so much more. In today’s market, the bar is high and you need to adjust your expectations. In the current environment…. Only go for home runs and keep margin for error!