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Residential Investment Real Estate typically falls into one of four major categories:

1. Purchase and occupy (for two+ years to avoid capital gains tax)

2. Purchase and hold (as a rental)

3. Fix and hold (as a rental)

4. Fix and flip

According to the National Association of REALTORS, the family home accounts for more than 70 percent of a family's investment growth and life-long net assets.  Therefore, all residential real estate transactions should be looked at as investments; including your personal residence.

For investment purposes, two important goals are to "buy low" and "sell high".  While it is not always possible to accomplish both goals, during certain economic cycles purchasing residential real estate makes especially good investment sense, as when home prices are especially low (buy low) or when sales prices are especially high (sell high).

Experienced investors are aware of the a third goal and set of variables; keeping holding costs to a minimum.  Let's therefore look at a couple of examples.  We'll keep the numbers simple for illustration purposes.

Example 1.  The family home ~  

If you purchase a $200,000 home and you put down five percent, that would be a $10,000 down payment.  If your home appreciates at five percent annually, which is about average for many metro-Denver areas, the $200,000 home would be worth $210,000 after the first year.  So, you invested $10,000 and your had a return of $10,000 in one year.  That would be a 100 percent return on your money.  Not bad and pretty much impossible in the stock market or with other investments.

You could also look at this example another way, as in receiving approximately $833 a month extra income.  Even though the money would not be readily available, you are still earning this return on your personal home investment.  Obviously, a $300,00 or $400,000 home with five percent appreciation, would return even more.

Example 2 - Purchase and Hold (as a rental) ~  

If you purchase an investment property you'll have several categories of costs to monitor and control. There are the A) acquisition costs B) Fix-up/make ready costs C) Holding Costs, D) Sale, or liquidation costs, and E) Capital Gains Taxes to pay, or preferably to roll-over to a new property via an IRS 1031 exchange.

We have experience with all the major investment scenarios listed above.  For beginning investors we have prepared Excel spreadsheet templates to help in quantifying and managing costs in the areas mentioned above.

Current Market Conditions

With adversity comes opportunities. There are almost always a considerable number of foreclosure, fix-up and short-sale opportunities.  However, in today's current market there are literally thousands of properties and investment opportunities available. The timing has almost never been better for serious investors to make very large sums of money. 

If you have $50,000 or more of cash assets, and are interested in learning more about how to get started investing in residential real estate, we encourage you to contact us immediately.  Home prices are down (buy low), interest rates are down (for greater cash flow), the number of available properties and opportunities is up.  For those interested, it's time to take action.  Please give us a call at 303-770-0007 and we'll schedule a convenient time to discuss the possibilities.

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