You want to start investing in Colorado real estate. What’s holding you back?
If you have limited investment experience or you’re unfamiliar with Colorado laws and taxes, investing here may seem risky. What happens if you make a bad investment? Could you lose your entire principal? How much will you have to pay in taxes?
If these questions are on your mind, you’ll be relieved to know that real estate is one of the safest long-term investments.
As demand for local housing has increased in recent years, opportunities have emerged that allow investors to capitalize on local markets. Read on to learn how you can recognize and jump on these opportunities!
Benefit #1: Low Property Taxes
Investors from states with high property taxes may be hesitant to invest in Colorado real estate. They pay high property taxes at home, so they assume that rates will be similar in Colorado. But in reality, Colorado has some of the best property tax rates in the nation.
With an average property tax rate of 0.49%, Colorado has the third most affordable rate for property taxes in the United States. Here, rates are more than 50% lower than the national average of 1.11%!
Investing in a state with low property taxes is a great way to achieve greater returns on your investment year-over-year. If you want to purchase a home as a rental property, a real estate investment in Colorado or another state with low property taxes will put more money back into your pocket at the end of the year.
Benefit #2: High Average Rent Prices
Those worried that their real estate investment in Colorado won’t provide a consistent income stream should consider recent trends in rent prices.
As the state’s population grows, greater demand for quality housing causes rental prices to increase steadily. For investors, this presents the opportunity to increase returns by raising rent prices between leases.
Owning property in an area with high demand is a great way to generate consistent income immediately. Buying a property to hold and sell for profit can take years, but renting it to tenants helps homeowners generate additional earnings.
Benefit #3: Tourism Means Greater Rental Opportunities
Owning a rental property that provides return through rent payments is great, but owning one in a high-tourism area is even better.
Homeowners in less touristic areas may struggle to attract new renters after a lease ends. Plus, a lack of tourists limits how much you can charge for the use of the property.
By contrast, owning property in touristic locations allows homeowners to charge higher nightly rates during the most popular times of the year.
Higher rates paired with greater seasonal demand can make renting a property as a vacation home more profitable than a standard 12-month lease.
Benefit #4: High Demand Means Great Flipping Opportunities
Concerned about the long-term costs of buying and maintaining an investment property? Taxes, repair and maintenance costs, HOA fees, and more can make buying a rental home sound cumbersome and unappealing. Luckily, Colorado’s high demand for housing provides a great opportunity to flip homes for profit.
During periods of high demand, homes often receive multiple purchase offers and sell above the owner’s original asking price. If you’re an investor, that means you can buy a house and potentially flip it for profit by simply holding the property.
Consider locking in additional returns by making renovations before listing a home for sale. In hot markets, the extra curb appeal could allow an owner to sell their home faster and for a better price.
Flipping property is a savvy way to make a quick profit in a seller’s market. As long as Colorado sees elevated housing demand, investors who purchase homes intending to use this strategy are at an advantage.
Benefit #5: Homeowners Can Use Leverage To Grow Investments
Purchasing multiple properties requires a lot of upfront capital. If a homeowner has all their money tied up in one property, it can be challenging to afford a second home. But those already invested in real estate receive a benefit that makes buying a second or third property much more manageable: the ability to use leverage.
When an individual owns a property, its value can be used as leverage to secure a mortgage on another home, often with little to no down payment. This way, a current homeowner can invest in a second property without the need for additional capital.
Leveraging a property can create excellent investment returns in strong economies, but it’s important to understand that it could lead to losses if home values decline. Protect yourself from potential risks by accounting for market factors and personal circumstances, like debt to income ratios, interest rates, and local housing demand.
If you’re serious about real estate investment in Colorado, leverage provides a clever way for smaller players to gain a competitive edge against investors with more extensive access to financing.
Benefit From Real Estate Investment In Colorado Today
Real estate investment in Colorado is a great way to take advantage of low property taxes, high tourism rates, and increasing housing demand. Those beginning to invest in real estate have a unique opportunity to capitalize on market conditions.
Have you decided that investing in Colorado real estate is right for you? The team at Vantegic is prepared to help you secure the home of your dreams.