When endeavoring to build your Colorado Springs real estate investment business, it is essential to set goals. An overview of goals allows your investment team to simultaneously reach the same point, from when to purchase through exiting a property. Plans serve a dual purpose. They also help to influence each individual’s mindset and contribution to the project.
Consequently, when a company is planning a multi-property investment strategy, it is essential to develop specific objectives. These define how you are going to add value and meet the challenges you encounter along with additional opportunities that may present themselves. Such objectives help in creating a roadmap for your business plan while keeping everyone on track.
Short-term investments for real estate investors are oftentimes overlooked by new and seasoned investors alike. These short-term investments don’t require a lot of time commitments or ongoing supervision, but they still offer a solid return on investment. Short-term real estate investing in the Colorado Springs market can be broken down into three segments; sub-leasing, vacation rentals, and listing opportunities in distressed property. Those are not the only options available to generate cash flow from your properties though, just some of the most popular and convenient ones.
The decision to take advantage of any opportunity will depend on whether you intend on being a hands-off investor who wants to collect rental income while someone else handles maintenance issues or if you plan to manage the property yourself.
Buying properties to flip will help you to create multiple income streams with Colorado Springs real estate.
When you are flipping a house, there is nothing more important than selecting the right team. Finding reliable professionals that have experience in your specific market and will fit into your budget will make all the difference in getting to profitability quickly.
Before you start your search for professionals, however, learn what qualities you should look for in each of them to ensure success. You’ll want home builders who know how to get the most out of every square foot; they may even be able to help you improve on design ideas or make adjustments to save money while adding value at the same time. You’ll also need contractors with quality craftsmanship skills as well as insight into local regulations; working with these pros will reduce your expected costs.
Let’s take a look at an example. Let’s say you’re in the 25% tax bracket, and your annual passive income is $300,000. Your gross rental income would be: 300K (annual) – 75K (taxable income) = 225K x 1.25 = 290K After all the expenses are paid each month including 12% management fees, mortgage and other operating costs such as; power, taxes and insurance: 270 K X 0.12 = 33k (expenses). We’ll leave the rest of our expenses out for simplicity’s sake here, but let’s just say there was another 33k for utilities and maintenance on top of this number that left you with 227 K / year in cash flow from rents.
So, how do you get to this point? How do you find the people who are willing to pay more and still qualify for a mortgage on a home that is in less than perfect condition? The answer lies in the housing market that was discussed above. With all of the homes being sold each month, there would be at least 10% and as much as 20% of them with major defects or deferred maintenance. This is where your buyer will come from…they may be motivated by the price differential between what they saw for sale on the MLS versus what it will cost them plus buy at auction. They often want to make substantial repairs to take advantage of their new purchase. It might seem like an extreme solution but it can reduce both time and money spent on the property.
Great real estate investments are often found in unexpected places. Who would have thought that some of the most successful property investments were made on account of natural disasters? Property owners who were affected by fires, floods, and other calamities found that the insurance money they received after these events was more than enough to help them invest in a new home or upgrade their existing one. Given that Colorado Springs is relatively free from natural disasters like hurricanes, blizzards, etc., you may not think such an opportunity exists here unless you know about flood insurance. You can get a flood insurance policy for your investment property in a matter of days–and it’s pretty cheap! Don’t take chances without it: do all your homework before you make any final choices. Send us a message or call HBR Colorado at (719) 286-0053 to learn more about what we can do for you!