Denver’s housing market is still very much a seller’s market, making it difficult for buyers to find the house of their dreams since they are selling like hotcakes. Then for others, they are not ready to buy or would like to explore an area before making a commitment to move to the area. These are all ideal situations if you own a Denver residential property or are considering a purchase. If you are looking to invest in a rental, or need some refreshers, use these property management tips.
Clean Up Your Credit
It is important for property owners to improve their credit in order to buy or refinance a rental. Before making any large moves, take care of any problems with your credit and work to get a score that is 740 or higher. After you accomplish these tasks, you will be able to take advantage of a better interest rate. In addition to a great credit score, it is important to have plenty of money in your savings. This will be something your lender will look for and will also protect you in case anything unexpected arises.
Assess Long Term Gains
Before purchasing a rental property, or if you have an existing one, assess the long term gains you will achieve. Know what your goals are with the property in terms of what you would like your return on investment to be. Next, plan for maintenance repairs. On average, you should expect to spend roughly one percent of the property’s value on repairs and fixes each year. If you are interested in a property that you feel may require work, or are dumping cash into something you own, it may not get you to your long-term goals.
Put as Much Towards Your Down Payment as Possible
In addition to having a credit score that is 740 or higher, the more money you can put towards your down payment, the better. Why? There are many additional factors in investment properties that traditional homes do not have. One of the reasons is because in most situations, you will not be able to use mortgage insurance as they are typically not available for rentals. When you work with a lender, they will explain how much you need to have down, which can be anywhere from 20 to 25 percent of the purchase price.
Find a Property with Work You Can Handle
If you have assessed a property that needs work, but fits within your long-term gain budget, make sure you can handle the work. Often times, new property owners get into situations with projects beyond their level expertise. If you are not able to do the work, do not spend too much time or money on the project yourself as often times, it will require an expert to come in. This is a waste of time and money.
As you work towards your goal of a successful rental property, be sure to read more about the 10 tips for buying your first rental property
. Next, be sure you know the five ways Colorado property management will help your investment real estate
with DenCO Property Management and Sales. Our team will help you with maintenance issues, long-term gains, and much more.