Home Buying in 80922>Question Details

Sue, Both Buyer and Seller in Colorado Springs, CO

Is this an opportune time to purchase a home to be used as rental property?

Asked by Sue, Colorado Springs, CO Sat Mar 19, 2011

Is there a formula on how much to put down on such a purchase? We are considering purchasing a home in the Powers Corridor to rent out, w/ rents having increased in this market. Our thought is to rent it out for the next few years and when the market has recovered somewhat, sell our current home and move into the rental ourselves. We'd enjoy hearing feedback on this idea!

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Answers

6
It really depends on you and your situation and the kind of home you're looking to rent. Alot of factors. Property values are expected to rise still. We're not at the lowest point, like we were a couple years ago, so it's not as good as if you had bought in 2011. However, I'm buying rentals still and I believe it is a great time. Here's my strategy in a nutshell. Buy one that is livable, but not real nice. Rent it for what you can get. You'll be able to purchase it at a good price since it's not totally updated and rent is not significantly lower.. The reason I don't fix up the house or buy a remodeled house to rent is that the amount of extra rent you'd bring in will not make up the difference in value that you'll lose because no matter how good the renter, they NEVER take care of it as good as you would. You'll still have to replace things. So buy something that needs some updating or work. Rent it as is for what you can get. Then when you're ready to move in, do all the fixing up and make it perfect for your taste.
0 votes Thank Flag Link Wed Jan 22, 2014
In my opinion yes ,where are you considering the purchase? Some areas you can still buy low .
Call for a free consultation ,HENA MARTIN BROKER 760-251-2868
0 votes Thank Flag Link Mon Jan 28, 2013
In short the answer is yes.

You have enough useful info. below to work with. I have done this same thing many times personally. So, my advice to you is; to treat it like a Business and make Business discissions regarding your property and its management.

A property management Co. maybe a useful consideration. Personally, we have developed our own philosophies and strategies that we follow. It's Not a perfect science, but it is a Business and it will not tend it's self.

If set up and managed properly, the up side is substantial!

Best of Luck to you!

Read this: http://www.trulia.com/voices/Home_Buying/BIGGEST_Rental_Boom…

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0 votes Thank Flag Link Sun Mar 20, 2011
Sue,
Brian is right, it can make sense in any market if the terms on the specific home are right. Investment property financing has different requirements than primary residence. My first recommendation would be to make certain you have the down payment and qualifications for an investment property mortgage.
Once you have this, you'll know what your minimum initial investment is and approximately what your payments will be. If you can cash flow an investment home in an appreciating market it is easy to justify. If your market is flat or still declining, you need to plan long term and be willing to ride it out.
Being a landlord is a part time job. I ask all my potential investor clients if they are prepared for maintenance calls, prolonged vacancies, handling tenant screening and possible evictions.
You need to become intimately familiar with landlord tenant law to make sure you are aware of your obligations and limitations.
Real Estate investment can be a good option for many people, but do all the necessary education before you get committed and work with an agent who has experience with buying rentals and can document rents in the area. Best of luck.
0 votes Thank Flag Link Sun Mar 20, 2011
If you are stable enough to afford the investment and the down payment, I would certainly recommend buying rental property in ANY market, but especially this one.

Colorado Springs market is much like the Texas market from what I have heard. Prices never really spiked, and they never really crashed so recovery or appreciation will be more modest than in some areas. Of course, no one has a crystal ball and even a Realtor can't predict the future!

If you have never had investment or rental property before, I would make sure that you spoke with someone that did or speak with a certified property manager. There can be a lot of little things that you don't think of when it comes to rentals. Make sure you know what you are getting into before you get into it.

Investment and Rental properties can be very good sources of income, but they are not for everyone.

Best of luck to you,

Because it's more than real estate. It's RAYL-Estate!

Brian Rayl, REALTOR®, e-PRO, SFR
Keller Williams Elite - Park Cities
972-949-4222
Brian@Rayl-Estate.com
http://brianrayl.com
Web Reference: http://brianrayl.com
0 votes Thank Flag Link Sat Mar 19, 2011
Colorado Springs is at the highest it has ever been in terms of rental occupancy. I believe your idea sounds good, as long as you realize that our market here did not take as large of a hit, and prices won't take that much of a bouce back. There is no guarantee as to what the future holds in any market, so make sure you will be able to handle both properties in case it isn't simple to sell the home you are currently living in over the next few years.

Typically I put 20-25% down depending on the lender to avoid PMI, and then like to see at least a 20% return above the mortgage payment. This will ensure 2 extra house payments per year should I choose to use the profit in that manner. The formula depends on your security and what makes you comfortable. Powers is a great area to own a rental, and with all of the troops coming in it should be easy to fill in the coming months.

Please let us know if you need any help. We provide free buyer representation and a 1 year home warranty.

Thank you,
Kevin & Jessica
Higher Living Team
719-799-3686
kevin@liveinsprings.com
Web Reference: http://www.jessicalaude.com
0 votes Thank Flag Link Sat Mar 19, 2011
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