The real estate market in northern Colorado is hot. With continued economic growth and low inventory, the market doesn’t show any signs up slowing down. While interest rates have risen (very) modestly, money is still cheap. If you’ve ever considered investing in real estate, now is a great time to get started. Here is what you need to know to get started:
Real estate investment is part of an overall financial plan. Investing in real estate requires specific tax, spending, budgeting, and people-management advice. Based on your other assets and your overall financial plan, investment property might be a worthy goal, but only if it fits your investment strategy and if you’re willing to put the time and effort into creating a successful business.
Don’t spend until you study. If you don’t have an intimate knowledge of neighborhoods, rental rates, commercial traffic, or any of the dozens of other factors that make real estate investments a particular success in one community and not in others, don’t bother. Make sure you take the time to study a particular market not only for gains in price, but for stability in rent and overall quality of the property and neighborhood you’re examining. You might hear about a downtrodden neighborhood ready to “turn,” but that rotation might take years. Start slow and choose carefully.
Real estate is not an automatic ticket out of financial trouble. Some people have gambled their way out of debt by buying distressed properties and reselling them at a profit. There’s no question that many people make fortunes from taking big risks, but if you’re not in a position to lose money, you shouldn’t be playing in the first place.
Home ownership is not investment. An investment is something you can sell when the moment is right without any hesitation. There are emotional ties as well as physical ties to a home; real estate bought as an investment must be a business. If it doesn’t produce targeted income, it must be sold.
Enter the foreclosure market carefully. Don’t think that foreclosure buying is easy. It takes time to master all the correct avenues in a community toward investing successfully in foreclosed properties, and actual contact with families losing their homes can be wrenching even if you do know what you’re doing. Foreclosure and pre-foreclosure investing is not for the faint of heart.
Cash is king. While many successful real estate investors choreograph borrowing seamlessly into their strategy, it’s better to have cash on hand for a down payment and to cover ongoing expenses when it comes to investment property. Planning cash reserves is essential.
Keep your credit report clean. Only borrowers with the highest credit scores will find the best lending deals if they need to borrow. Make sure your credit report is clean before you enter the market.
Overall, real estate investing in general and foreclosure investing in particular takes the most educated of buyers. While you might have heard of complete beginners making a killing in certain markets, don’t assume you’ll follow in their footsteps. If you are looking to buy a home or other investment property in Northern Colorado, White Sands Property Solutions can guide you through the process.