Get Started in Denver Real Estate Investing
Real estate investments can be some of the most lucrative and rewarding in return on investment, but they can also be the riskiest investments. With home values rising by nearly 4 percent each year, it’s a good time to start looking at how you can make money by getting involved in Denver real estate investing. There’s no reason that an amateur investor can’t make good money buying small, individual properties. Check out the following decisions you’ll have to make before you decide to invest in a Denver property.
Assess Your Current Financial Situation
Most buyers are familiar with the standard 20 percent down payment when purchasing a home, but when you’re buying a Denver investment property, you may want to rethink this. Buying investment property with only 20 percent down means that you will be juggling two mortgages, so many successful investors wait until they are able to buy the property outright. This does involve saving a substantial amount of money, but you can start your investment empire with small foreclosures.
In the event that you do need to take a mortgage, you may want to consider living in your investment property so that you can take advantage of owner-occupant rates. Typically lenders require you to live in the property for one year to lock in the lower rate for the remainder of the loan.
Figure out the Potential Cash Flow
The abundance of house flipping shows on television make the process seem super easy and lucrative. However, most homeowners don’t profit when they sell a home shortly after closing. Major renovations up your chances of a short-term profit, but these renovations and upgrades are costly. Unless you are able and experienced in large-scale home improvements, do not make the assumption that you can easily flip a home by yourself for major profits.
For more of a long-term profit strategy, you may want to consider renting out your Denver investment property. You have to price accordingly in order to attract the largest number of possible tenants and while still being able to afford mortgage payments and other homeownership costs. Of course your goal will be to profit immediately, but the large cash flow starts coming in after you have paid off the mortgage.
Today’s market is notoriously expensive and competition among lessees is stiff. Even if you don’t plan on being a landlord long-term, renting may be a good way to make money on your investment property until median sales prices in the region peak.
Choose an Investment Type
Most investors assume that the only way to profit from Denver real estate investing is through individual direct ownership, but that isn’t the case. You can still make a profit through partnerships (both close and limited), and this is an especially good option for those who might not have the time or the skills to run an investment property on their own. Partnerships are a great option for individuals who have similar investment interests who aren’t ready to go it alone yet. Real estate investment trusts (REITs) enable investors to fund multiple projects at the same time without having to deal with day-to-day management.
When it comes to Denver real estate investing, your current financial abilities, estimated profit margins and the type of investment you choose are all major factors to your success. One of the most important things you can do as an investor is to stay informed and up-to-date on the real estate market. Whether you have $10,000 or $500,000 to start with, making smart investments and knowing the industry will help you be successful in Denver real estate investing.