Five Investment Tips to Get you Started
Even if you’re not counting the days until you can send the kids back to school, there’s good reason to appreciate this time of year as a prospective real estate investor in Boulder.
Late summer begets students back to town and rentals fill up fast. Now’s a good time to think about the pros and cons of buying an investment property. Fortunately, it’s not as daunting as a first timer may think.
This area’s extreme housing competitiveness shows high demand in all categories, not just around campus. Builders satisfy a fraction of new home needs and July saw another record-breaking month in sales. Meanwhile, the rental market is ablaze.
Whether you rent to downsizing Baby Boomers or young professionals, investing in a rental property can offer some sweet rewards:
- Capture additional income
- Diversify your investment portfolio
- Asset appreciation
- Tax benefits
Start your query into your next real estate investment with these five tips.
1. Choose a home type.
Multi-family homes such as duplexes can be a great way to start because your tenants will live in the same building, you can buy replacement parts in bulk – and you can even live in one of the units yourself. You can rent to students, year-round renters or post the home online for vacationers (ask an 8030 Broker about specific laws).
2. Choose your location.
Proximity to a university campus is a sure shot for student rentals and Boulder has no shortage of them! Love them or leave them – but there can be great benefits to renting to the studious type. Consider reliable payments – sometimes even paid upfront – and the competitiveness of university districts could also fetch a higher monthly rate. Plus, students usually won’t demand the latest, high-end amenities.
3. New or old?
Boulder is chock full of elegant, classic homes, but some of them may need upgrades and a steady stream of maintenance. How often and how soon are you ready to pour money into your investment? Think about your budget, time and ability to manage these types of demands. A newer home will eventually need repairs and some come with warranties. Contemplate how much time you’ll want to initially spend to keep up this new property.
4. It’s what’s inside that counts.
Envision your ideal renter and start from the inside. Younger customers love technology, so if this is your target audience, make the property appealing to an ever-connected Millennial. On-site laundry facilities are a huge plus and so is easy access to Wi-Fi and cell services. Secured bicycle storage areas are a benefit. A wealthier professional is going to pay attention to details, so lure them with exquisite personality, such as delicate additions of color, a pristine whirlpool tub or calming patio landscaping.
5. Repeat after me, “Low maintenance.”
Energy-saving appliances and low-flow faucets are a great way to reduce energy for you and your tenants. These may not be deal-breakers, but they add a layer of consciousness that savvy tenants flock toward. Look for government efficiency rebates – there’s even a 30 percent IRS credit for solar panels through next year. If you must choose carpet, pick a dark color, or opt for a surface with a longer life, such as vinyl or hardwood.
Final thoughts: Considering renting near campus?
If you’re worried about the risks to renting to students, there are ways to manage or minimize problems. Include their parents on the lease and get co-signers, check to see if they’ve been evicted from a dorm and include a clause that covers damages. Make them pay for utilities. You can even include guidelines for behavior, such as limiting noise, the number of occupants and banning dangerous items like fireworks or weapons.
Once you’ve got an idea about what type of property could jump-start your investment potential, take a look at what your community has to offer. Our 8030 Brokers are well-versed on our market and can point you in the right direction.