Smart Tips to Investing in Denver Real Estate
Denver real estate investments can be incredibly lucrative in terms of the return on investment that you will see, sometimes upwards of 20 percent. To make beneficial investments, it’s important to invest wisely and to plan for the unforeseen. When it comes to making smart Denver real estate investments, be sure to consider the following guidelines.
Compare Property Values and Rents
The best measure of a property’s value is often the sale price of nearby properties, and the same holds true for rent. A low price can justify a reasonable rent, and renters that can afford high rent can afford to buy instead, so you need to price reasonably. Check the papers to see who is advertising and what they are offering. If the Denver market is flooded with properties for rent, it might be a good idea to hold off a bit and wait until demand rises again.
Know That Tax Laws Can Change
A common mistake investors make is to base their tax investment on the current tax laws. The tax code is constantly changing, and it’s important to remember that a good investment is a good investment regardless of the tax code.
Specialize in Something You are Familiar With
One of the best pieces of advice is to start in a Denver market segment that you are familiar with. Whether your expertise is in fixer-uppers, condos, apartments or starter homes, you will benefit greatly by starting with something that you know.
Know What the Costs Are
Before you make a solid investment, you need to know all of the financial statements. Know what your operating expenses, loan payments, vacancy costs, taxes and the cash flow statement look like before you make your Denver real estate investment.
Know Where Your Tenants are Coming From
Your tenants may be considering a move if the last rent increase was recent, or they may be living there with a short-term lease to attract unsuspecting buyers. It’s also important that you collect your tenant’s security deposit at closing.
Assess the Tax Situation and Use Your Accountant
It might be a good idea to consult with a tax advisor in order to make the best investment. Taxes are a crucial part of successful Denver real estate investments and they often make the difference between a positive cash flow and a negative one. Understand your tax situation and see how you can manipulate to work to your advantage.
Find an accountant who is well-versed in tax code because taxation really is a key element in successful investing.
Check Out Insurance Coverage
If the seller’s insurance coverage is based on lower-than-current replacement value, you might be looking at a higher insurance cost when you pay a higher price.
Inspect
You should never buy a property without performing an inspection first. Do a thorough walk-through of the property and carefully examine the site. It might be a good idea to hire professional inspectors to examine the structural mechanical system.
Denver real estate can be one of the most rewarding investments, but it is also one of the riskiest. Before you jump into any investment properties, it’s important that you understand what you are getting yourself into. Start small and with markets you know before branching out and making investments in other markets for the best success.