You’re thinking of buying an investment property in one of the highest-rated cities in the United States. That’s great, but do you have what it takes?
There are several options out there when it comes to buying an investment property. Real estate investments Denver can help you sort out what is best for you and your situation. Do you want to buy a new property or a fixer-upper? Are you planning on living in it or renting it out? If you’re renting or leasing the property out, is this going to be your sole income or supplement what you already have? These questions, and more, will help you make an informed decision when it comes to buying an investment property.
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Here are a few things to think about:
1. Down Payment
When buying an investment property, there’s no mortgage insurance, so you’ll be required to put down a minimum of 20% for normal financing. Remember, loan interest rates are higher for investment properties by as much as 0.75% in Denver for example, so the more you put down, the better rates you’ll get.
2. The Landlord Route
Keep in mind that with becoming a landlord, also comes the responsibilities of upkeep and maintenance on the investment property. Some states require rental checks, so it’s important that you know the laws in the state where your property is located.
3. Property Tax
When you purchase a rental property, there may be a noticeable increase in property tax. There may have been a homestead exemption in place for the previous owner that you might not qualify for.
4. Fixer-Uppers
Fixer uppers in Denver can be a good investment for the price. Generally speaking, fixer upper investment properties are 10-20% lower than the market value.
But, if you choose to invest in a fixer-upper, be aware of the projects needed to make the property livable. If you can’t do the work yourself, make sure to do your homework to find the right contractor for your needs.
5. Start Small
Try starting off investing in a small home. Once you’ve successfully made money with one house, invest in another. Work your way into larger homes, duplexes, or small apartment complexes.
6. Invest in What You Know
Much like our last point, invest in what you know and are comfortable with. Most first-time investors aren’t going to know how to run a full apartment complex. Nor have the resources to do so. When you start off by investing in a small fixer-up home, you have the ability to figure out what works for you to make your property profitable.
7. Take Your Time
There are a lot of real estate options available. Take your time and find what that perfect investment property you’re looking for. Plan your budget for the down payment, property tax and any repairs needed, as well as upkeep while you don’t have any tenants.
Conclusion
Let’s go over our tips for you to think about before investing in property in a high-rated United States city. Remember that you’ll need to put at least 20% down and that you may have a higher-than-usual property tax. You’ll be responsible for the upkeep and maintenance of your investment property. Start off with a small fixer-upper before moving on to duplexes or an apartment complex. This will give you a chance to learn the ins and outs of being a landlord and figuring out what works best for you and your tenants.