Introductory Investors
Investment Strategies
Making Money in Denver Real Estate
Top Strategies and Tactics of the Denver Real Estate Moguls
There’s a big difference between buying a Denver home to live in, and a home as an investment. When you’re buying your dream Denver house, you may be willing to pay a premium for the neighborhood you want, or for certain features that are desirable. In some regions, you may even feel compelled to make an offer above market value, and that’s okay. But for Denver investment properties, the strategies are a little different. Buying at the most advantageous price is always top priority for an investor.Denver Real Estate Investment Strategies
Your strategy for investment purchases revolves around four considerations:1. your purchase price
2. your cash flow
3. your sell price
4. location
By obtaining the lowest purchase price possible, you maximize the difference between the buy and sell price, delivering more profits. But if you’re planning to buy, hold, and sell, you have to take into account the “hold” period. If the Denver property is sitting empty for a year or two while you wait for the price to appreciate, then you are losing money every month. Even if you are able to eventually sell the Denver house at a profit, you have suffered an “opportunity cost” from having your money not producing anything for a period of time. As such, the potential cash flow of a property is also an important consideration.
It’s not hard to find a desirable Denver location. The city boasts an incredible amount of greenspace and parks, and regardless of neighborhood, you always have a lush and well-maintained park nearby.
Maximize Your Returns – Here’s How!
A good tactic for Denver residential real estate investing is to maximize your returns, even if you are planning to turn a property around for a sale, is to rent the unit in the interim period. Even if you have reason to believe you can make a quick sale, anything can happen. Markets can go soft, deals can go through, and houses can sit on the market for months, or even years in some cases. Denver’s rental market is vibrant and can produce a very good return—and if you arrange your financing right, a positive cash flow.
Use a
APO
(Annual Property Operating Data Sheet) to help figure out your
NOI (net operating Income)
Denver Foreclosure/bank owned and Short Sale Properties Represent Investment Opportunity in Denver!
On the buy side of the equation, there are below-market Denver homes to be had, even in a positive market like Denver. Foreclosures and short sales may require a little more paperwork and planning, but they represent good value and potential. When looking at an investment home, do a little due diligence ahead of time, and determine:• How quickly other homes in the neighborhood are selling, and for how much
• Is there a vibrant rental market in the neighborhood, and what is the average rental price?
• Are there any other vacant homes in the area? How many?
• Is the home in a desirable Denver location? Near shopping, downtown Denver, workplaces, and Denver schools?
For bank-owned properties, banks are often anxious to get a property off their books, and you will typically get a response to your offer within a few days. Short sales, however, require a great deal more patience, since you are asking the lender to take a loss. It may take several months, and there’s no guarantee of success. Twenty percent of short sales never go through because the buyer just doesn’t have the patience to wait, and goes on to something else. And keep in mind that even if your short sale offer is accepted by the seller, you’re still only halfway there. Seller’s acceptance alone doesn’t constitute a legal contract. When it comes to short sales; you also have to get the lender’s acceptance. Even after you come to terms with the seller, the lender can still insist on further negotiations.
Are any two Denver real estate investments ever the same? Let’s review!
Now would be an excellent time to learn about Denver Investment Property Types.