Investment Property Advantages

Dated: January 7 2022

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If you are looking for an investment property in Grand County, CO, I suggest you do your homework before you commit to a property.  I am a firm believer in investment properties and my goal is to own enough units to be a 100%'er.  That means that 100% of my net rental income covers all of my living expenses.

So, for example, if I spend $6,000 per month on my living expenses, then I would need $6,000 per month in net rental income to cover those expenses.  So, if I net $250/month per unit, then $250 x 24 = $6,000.

Sounds easy, right?  It is IF you do your homework and can easily evaluate potential rental properties to help you make decisions easily.

There are 4 advantages to owning real estate investment properties:

1) Cash Flow - that is the monthly net income.  This is the BIG ONE to pay attention to when evaluating properties.  Don't buy a property unless it has cash flow.  Be sure to consider all expenses and potential expenses (like if you are eventually going to hire a management company - that's usually 10% of the rent):  these include but are not limited to: mortgage, taxes, insurance, HOA fees, water & sewer, trash, cable, internet, vacancy, improvements, management, advertising, snow removal, lawn maintenance, gas, electric, etc.  (Email me if you would like the Cash Flow and Year One analysis spreadsheet - julie@rewinterpark.com).

2) Tax Benefits - Real estate investors can take advantage of numerous tax breaks and deductions that can save money at tax time. In general, you can deduct the reasonable costs of owning, operating, and managing a property.  You need to consult your accountant and/or financial advisor about these details as I am neither of these.

3) Appreciation - Real estate values tend to increase over time, and with a good investment, you can turn a profit when it's time to sell. Rents also tend to rise over time, which can lead to higher cash flow.  The saying goes - "Don't wait to buy, buy and wait."

4) Equity - As your renters pay down your property mortgage, you build equity—an asset that's part of your net worth. And as you build equity, you have the leverage to buy more properties and increase cash flow and wealth even more.

So, where am I at right now?  I own one condo and we have another 4 plex under contact that is new construction.  That 4 plex should be done sometime late this year.  And we are adding an apartment on to our primary home so that will become a rental in about 18 months.  That should be 6 total units in about 18 months - that will net approximately $1,500/month.   If I can buy an average of 3 units/year after that, I will have my 24 units in about 8 years.  And if I can sell a few in the future that have gained significant appreciation to pay off others to have a higher net income I will definitely do that.  If I don't have a mortgage anymore, that will increase the net income significantly.... for example: if I own 6 properties outright and they each net $1,000, then I have a total monthly net of $6,000.  

***I am not an accountant or financial advisor, you should consult your accountant and/or financial advisor BEFORE you go under contract on an investment property.

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Julie White

My goal is to help people with real estate. I am invested in helping people achieve their real estate goals - I work with vacation/second homeowners, locals, investors & developers. I specialize in pr....

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