Six Reasons to Consider Rental Homes

Always a good investment, Denver’s rental market has paid for many a child’s college education. When buying a Denver area rental for the child early in their life the equity position by their 18th birthday can be substantial, allowing Mom or Dad to utilize that or the monthly income to subsidize the tuition payments. But here are some other reasons to consider buying a rental property in Denver…

Single-family homes offer an investor the ability to borrow large loan-to-value amounts at fixed interest rates for long terms on appreciating assets, tax advantages and reasonable control. Some of these characteristics are not available through other investments.Denver

75-80% loan-to-value mortgages are available on most residential properties up to four units. Comparatively, the stock market allows you to borrow up to 50% on a stock but if the price goes down, they will require additional cash to keep the ratio at or below 50%. If it isn’t available, your stock can be sold to satisfy the loan.

Real estate investors call getting a long-term mortgage putting an investment to bed. The fixed-rate and the 20-30 year terms are exceptions to loans for most other investments, if they’re available at all.

Real estate tends to go up in value over time. There can be a lot of variables that affect the price like supply and demand, condition and available mortgage money, in addition to the general economy.

Rental real estate has several different tax advantages. The profits are taxed at lower, long-term capital gains rates for investors who have owned the property for more than 12 months. While the property is being rented, investors are given a non-cash deduction based on cost recovery of the improvements. Tax deferred exchanges can also be available if specific conditions are met which allow an investor to postpone paying the tax on the gain.

It isn’t necessary to have a partner with mostly rental homes if the investor can qualify for the mortgage. This allows investor control to make all the decisions that an owner is entitled such as setting the rent, making improvements and determining when to sell.***

Rental real estate can earn a much higher rate of return than other available investments while providing income during the holding period. It certainly is worth investigating the possibility with a real estate professional who understands and works with rental properties.

***Often an IRA can be set up to buy real estate and a number of “Uncle IRAs” can join together, create a partnership or other agreement and buy much larger properties. You need the advice of 2 people here: a good Realtor and a good Accredited IRA custodian. I know both here in the Denver area.Call me.

Posted in Denver, Denver Real Estate, Highlands Ranch, www.DenverRelocation.com | Tagged , , , , | Comments Off on Six Reasons to Consider Rental Homes

OK Denver…What Would You Give?

It was not in Denver, but I got to watch Yogi Berra, Mickey Mantle and Roger Marris play in Yankee Stadium in the 1960’s with my dad. He let me eat everything I wanted and when Marris hit his 60th that day, I think I was in the toilet hurling, but will never give up that memory! And that is why folks buy homes in Denver…to build memories with their family. So, as you consider that move to, or around Denver, what would you give up? I think I agree with…

Yogi Berra who said he’d give his right arm to be ambidextrous. While most first-time home buyers are not going to that extreme, it is interesting to see what sacrifices are being made according to the National Association of REALTORS® 2016 Profile of Home Buyers and Sellers.Denver Home Buyer

  • 43% – cut spending on luxury or non-essential items
  • 34% – cut spending on entertainment
  • 27% – cut spending on clothes
  • 14% – canceled vacation plans
    9% – earned extra income through a second job
  • 7% – sold or decided not to purchase a vehicle
  • 44% – did not need to make any sacrifices

Forty-percent of first-time buyers experienced some difficulty during the mortgage application and approval process. Single, male buyers expressed a higher incidence of difficulty than single females and married or unmarried couples.

Pre-approval from a qualified mortgage lender before the home search process begins is still considered the best advice for all buyers who will purchase with a mortgage. Your real estate professional can make recommendations for a loan officer that could help you avoid unnecessary aggravations.

An experienced DENVER loan officer can save you so much in the process, just by helping you increase your credit score 20 points it could shave a 1/4 percent off your note rate when buying that Denver Home. They can also help you see where the down payment might come from. Make sure you get “pre-approved! Call one of these Denver lenders before you start to search for a home. http://www.denverrelocation.com/lenders.shtml. In addition to the right real estate Broker, the right lender are the keys to a good Denver Home buying experience.

Posted in Denver Real Estate, Highlands Ranch, Littleton, www.DenverRelocation.com | Tagged , , , | Comments Off on OK Denver…What Would You Give?

Denver Loans from Relatives for real estate

I do quite a bit of estate work here in Denver, and because of my title experience as a landman I often find the loans, deeds and other documents are un-intentionally fowled up by well meaning relatives. Also, we can often pass interests at the wrong time to our loved ones creating further taxable issues See my previous post about the basis of the “Inherited Real Estate“. But more often we find mom & dad “loaning” the kids some money to buy the house, collecting interest, and the kids NOT being able to deduct that interest. Read on…

Occasionally, when dealing with close relatives who might also become heirs, signing a note and handling the paperwork properly may seem like a needless effort but it could mean the difference in being able to take a legitimate interest deduction.Denver Real estate

Home mortgage interest is deductible only if the loan is a secured debt which involves the buyer signing an instrument like a mortgage or deed of trust that makes the ownership of the home security for the debt. That instrument must then be recorded or otherwise perfected according to state or local law and the home, in case of default, must be able to satisfy the debt.

In a family situation, a parent, grandparent or other relative may decide to loan a buyer the money to purchase a home because they have it available and it isn’t earning much in certificates of deposit. They offer to loan it for a rate equal to what a conventional lender is charging but without the fees.

While it may appear to be a win-win situation, there could be problems if things are not done correctly. Even if the borrower makes the payments, they are not entitled to an interest deduction unless three criteria are met: 1) sign a debt instrument specifying the terms 2) securing and record the debt properly and 3) the home is sufficient collateral for the loan.

It would be prudent to consult with an attorney before you sign the final settlement papers to be comfortable that both buyer and the lender-relative are complying with IRS regulations. For more information, see IRS Publication 936 – Home Mortgage Interest.

There are all kinds of attorneys with all kinds of specialties. If you need one that is 100% focused on real estate here in Denver to help you preparing loan documents or even mineral severance deeds, let me know so I can introduce you.

Posted in Denver, Denver Real Estate, Highlands Ranch, www.DenverRelocation.com | Tagged , , , | Comments Off on Denver Loans from Relatives for real estate

Proof of Purchase – Your Highlands Ranch Home Burns

Back in the day when I was the Highlands Ranch area coordinator for neighborhood watch with Douglas County Sheriff (I think I stopped when Highlands Ranch got to 10,000 homes), this was one of the biggest issues for people recovering their goods after a loss in Denver. You know the land won’t be lost, and maybe the foundation will be useable, but in Denver, like Colorado Springs, the personal property, the art work, the silver from Granny, the trains in the basement or even the guns in the safe can all go up in smoke. You need to be ready and it is pretty simple, but read this first:

People who experience a personal property loss are usually asked by their insurance company for proof of purchase which can come in the form of a receipt or current inventory of their personal belongings.Highlands Ranch

Even the most organized people might find it challenging to find receipts for all the valuables in their home. If the inventory isn’t up-to-date, a homeowner might forget to add some items to the claim and may not recognize the omission for long after the claim is settled.

The inventory can serve as a guide to make sure a homeowner gets compensated for all the loss.

Photographs and videos can be adequate proof that the items belonged to the insured. A series of pictures of the different rooms, closets, cabinets and drawers are helpful. When video is used, consider commenting as it is shot and be sure to go slow enough and close enough to things becoming recorded.

For your convenience, download a Home Inventory, complete it, and save a copy off premise. Good places for your inventory could be a safety deposit box or digitally, in the cloud if you have server-based storage available like Dropbox.

Take out your camera phone and walk the house and note the special things on the video.Then save it to a safe place, and delete it from the phone…don’t give the bad guys a shopping list! If you want a printed blank inventory, just reach out to pete@DenverRelocation.com and I will get one to you. If you want to be part of Neighborhood Watch or want to start one, call your local law enforcement agency and ask for the community relations officer.

Posted in Denver, Denver Real Estate, Highlands Ranch, www.DenverRelocation.com | Tagged , , | Comments Off on Proof of Purchase – Your Highlands Ranch Home Burns

Denver Boomers Are Staying In-Place

Thirty one, almost 32 years being a residential real estate broker in south Denver allows me to look back and note interesting trends. And this is one that is fairly consistent. What is different is the number of silver haired residents we now have in Denver…it seemed to be different in the 1980’s. The common complaint we hear today is there isn’t anything I can buy to replace my home. When we built our home we actually planned for an elevator, eventually. So my counsel to folks is often, “re-model if you love your home”.

There is one new trend I am seeing and that is folks chasing the grandchildren. What I mean is grand parents want to be near the children and so they move to where they live. And then the kids move again, so they do too. It is a curious trend that has developed because of our mobile society. We hope our children will come “home” after their adventure. And while multiple moves are good for me (I can refer you to Realtors across the country) I pray the families are re-inforced for the effort it takes to leave Denver.

There seems to have been an accepted progression for homeowners going from starter home, to gradually moving into one’s dream home, then, downsizing after becoming an empty nester and finally, into a retirement home. However, Marianne Cusato’s 2016 Aging-in-Place Report indicates that many older Americans don’t plan on following that pattern.Denver - Pete Doty

61% of homeowners above the age of 55 intend on staying in their homes indefinitely. 2/3 of them believe that the home’s layout will serve their needs without having to make aging-related improvements.

Some of the reasons being cited for staying in place are:

  • 66% say their home is conveniently located
  • 38% say they live close to their family
  • 68% say they feel independent in their home
  • 54% say they are familiar with their neighborhood
  • 66% say the feel safe in their home

Typical renovations that might be considered for their current home are things like grab bars in the tub or shower, shower seats, taller toilets, handheld showerheads and additional handrails on stairways.

It seems that the report’s conclusion is that regardless of a homeowner’s age, they want to thrive in their home. The same emotional reasons that causes a person to want to buy a home are the things that cause them to hold onto them if is practical.

One of the services I offer is a list of contractors who can help you get your home up to speed for your life style or ready for sale. If you are considering a move, we should talk.

Posted in Denver Real Estate, Highlands Ranch, Littleton, www.DenverRelocation.com | Tagged , , , | Comments Off on Denver Boomers Are Staying In-Place

Attracting Buyers to a Denver Home

It seems that in Denver Home sales incentives, including those with builders, have shrunk to almost none. However, over 16% of the listings in the MLS have expired and could take advantage of this. Yet experience tells me that even offering a carpet allowance will cost the Seller 3 times the actual costs because of the buyer’s inate ability to “HORIBLIZE” any repair situation. So having a property properly priced and in great condition will not only expedite the sale but also maximize your investment.

There is a common body of knowledge among real estate professionals that indicates that the longer a home is on the market, the lower the price will be. Many sellers discount this belief in the beginning because they feel confident their home will sell quickly.Denver home incentives - article.png

Lowering the price is the most obvious thing that can be done to encourage buyers but it might be good to look at what builders do. Builders offer a variety of incentives such as upgrades, seller-paid closing costs, interest rate buy downs, washers, dryers, refrigerators or big screen TVs.

Interestingly, much of the resale market doesn’t employ these techniques. According to the latest NAR Home Buyers and Sellers Profile, 64% of sellers did not offer any incentives at all.

21% of sellers offer a home warranty. 16% of sellers offered assistance with closing costs and 6% offered credit toward remodeling or repairs.

The attached chart indicates that while 80% of sellers were not willing to offer incentives in the beginning of their marketing period, as weeks passes and their home hasn’t sold, closer to half did add incentives.

The ideal outcome is to maximize proceeds in the shortest time possible with the fewest unexpected issues. This involves having a firm understanding of current, local market conditions and crafting a marketing plan that will insure results.

There is so much at stake, the value of a trusted real estate professional is essential.

As a potential seller of a Denver Home, take a look at http://www.denverrelocation.com/selling.shtml for tips and some videos.

Posted in Denver, Denver Real Estate, Highlands Ranch, www.DenverRelocation.com | Tagged , , | Comments Off on Attracting Buyers to a Denver Home

Denver real estate a HOT market?

From the first publication: In the last 7 days about 1350 homes have come on the market.
1560 have gone under contract. Yes property sales in Denver are going to be crazy again this year.

Updated 1/12/2017: In the last 7 days about 819 homes have come on the market.
1083 have gone under contract. Yes property sales in Denver are going to be crazy again this year.

And what about those folks who say it is too late? The trends say: More houses are selling, days on the market are the same, Fewer new listings, and median prices are up 10% over last year throughout Denver. The three that are most important to me are the Year To Date SOLD, Denver Real Estatethe Active Listing count, and the days on the market. They all would combine to push prices higher in Denver.

The question always seems to be “How Much Longer will this last for Denver?” To me with my limited scope it appears that another 2 years is likely. That would be a 20% increase in the value of a home you bought today if the above trends hold true. We simply need to see more houses on the market and fewer buyers…which brings us to the why?

Colorado is a net 75,000 people growth per year state (about 15% for mj). Denver and the front range get most of them. That requires about 20,000 living units and that is the simplest explanation I know. When the market tanked the builders quit building, but we did not stop having babies. And those kids are now buying houses too. Why so many people moving here? Unemployment is low so it is easier to find good work. And how about those mountains west of Denver? You know why you live here.

 

 

Posted in Denver Real Estate, Denver Realtor, General Real Estate, Highlands Ranch, Littleton | Tagged , , | Leave a comment

Rent or Buy – You Pay for the Denver House You Occupy

So often I find folks throughout Denver who are simply afraid of a long term commitment like buying a home. They feel they cannot afford it, that their credit is bad, or that homes are too expensive. At least in Denver, if you can afford the rent you can afford to buy a house. Feel free to reach out, in confidence: pete@DenverRelocation.com. 

The ironic thing about people who think they can’t afford to buy a home for themselves, end up buying the home for their landlord. There are several facts that support this notion.Denver Home is Leveraged Investment

Mortgages, whether held by an owner-occupant or an investor, are usually amortized so that each payment reduces the principal amount owed so that the loan will be repaid totally over the term. A tenant is inadvertently retiring the landlord’s mortgage with his monthly rent.

In most cases, the mortgage payment including taxes and insurance will be lower than the rent tenants are paying. Some experts are saying that we may never again experience the incredibly low mortgage interest rates currently available.

Renting precludes a person from enjoying the advantage a home has as a leveraged investment. When the borrowed funds cost less than the investment is returning, the rate of return on the down payment grows much faster. As you can see from the chart, a 2% appreciation on a home could result in big returns on the down payment. In most cases, there are very few or no alternative investments that offer homeowners similar returns.

Even if a buyer agrees with all of these things but doesn’t have the down payment or cannot qualify for a loan, they still need to investigate further. To find out exactly what types of loans are available and the specific down payment required which can be a whole lot less than 20%, they need to consult with an experienced, trusted loan professional (an Internet lender or a “BIG” bank may not be the best choice.) Call for a recommendation. 303-880-5585.

Posted in Denver, Denver Real Estate, Highlands Ranch, www.DenverRelocation.com | Tagged , , , | Comments Off on Rent or Buy – You Pay for the Denver House You Occupy

Facts or Myths – Denver Home Buyers

I cannot express how often I hear this from prospective Denver Home Buyers! Banks and mortgage companies here are very receptive to providing financing for qualified individuals who can verify employment, assets and have good credit. Some even offer FREE credit repair services so you can lower your interest rate. So what are the facts & myths? Read on…

  • “It’s impossible to get low down payment loans.” – FACT! FHA down payments are 3.5% and VA is 0%. In some areas, there may be some 0% down payment USDA loans available. FNMA and Freddie Mac have 3% down payment programs.Denver Home Buyer
  • “It takes perfect credit to get a loan.” – FACT! There is a relationship of better rates to better credit but many issues on a credit report can be explained or corrected. The way to know for sure is to speak to a reliable lender.
  • “If I’ve had a bankruptcy or foreclosure, I can’t qualify.” – FACT! Credit history following a bankruptcy or foreclosure is very important and there can be extenuating circumstances. It only takes a few moments with a reliable lending professional to find out if your individual situation will allow you to qualify for a new mortgage.
  • “Getting pre-approved is expensive.” – FACT! Usually, the only expense to getting pre-approved is the cost of the credit report which could be around $35. The advantage is that you will know that you qualify for a particular mortgage amount.
  • “I should wait to qualify until I find a home.” – FACT! It can take weeks to qualify for a mortgage especially if there are issues that need to be corrected. The best interest rates are only available for the highest credit scores. It is to your advantage to start the qualifying process early in your home search.
  • “All lenders are the same.” – FACT! Reliable lending professionals will explain the entire process before collecting fees, quote fees up-front, have competitive products, do what is necessary to get the loan approved and close at the locked rate and terms. Ask for recommendations from recent borrowers.
  • “Adjustable Rate Mortgages are more expensive than fixed rate mortgages.” – FACT! Adjustable Rate Mortgages can be less expensive than fixed rate mortgages if the buyer’s circumstances warrant it. If a buyer is only going to be in a home for a few years before selling, it can be determined if an ARM loan will result in the lowest way to finance the property. There are many variables and you need to be aware of them before deciding which type of loan to finance your home purchase.

Buyers and Sellers need solid information to make good decisions. Call us with your questions or to get a recommendation of a reliable lender who can give you the real facts.

Posted in Denver, Denver Real Estate, Highlands Ranch, www.DenverRelocation.com | Tagged , , , | Comments Off on Facts or Myths – Denver Home Buyers

“This is going to be the year”

Denver is a net 75,000 plus in population for the last few years. That requires a net 20,000 NEW living spaces. Re-sales of homes have only increased by 1000 over last year. Maybe that partially explains our real estate market. Add to it one of the lowest un-employment rates in the country and one of the most desirable environments to live in and we see what we have.

Every year, it seems like the same things are on the list but this could be the year you really do invest in a Denver rental home.Denver real estate resolution

Rents are climbing, values are solid and mortgage rates are still low for non-owner occupied properties. A $150,000 home (if you can find it in Denver) with 20% down payments can easily have a $300 to $500 monthly cash flow after paying all of the expenses.

There are lots of strategies that can be successful but a tried and true formula is to invest in below average price range homes in predominantly owner-occupied neighborhoods. These properties will appeal to the broadest range of tenants and buyers when you’re ready to sell.

Single family homes offer an opportunity to borrow high loan-to-value mortgages at fixed rates for long terms on appreciating assets with tax advantages and reasonable control.

This can be the year to make some real progress on your resolutions. The first step may be to invest some time learning about rental properties by attending a FREE webinar on January 4th at 7:00 PM Central time zone by national real estate speaker Pat Zaby. Click here to register. If you can’t attend live, by registering and you’ll be sent the link to watch at your convenience.

If you want to see the homes on the market go to www.DenverRelocation.com.

Posted in Denver Real Estate, Highlands Ranch, Littleton, www.DenverRelocation.com | Tagged , , , | Comments Off on “This is going to be the year”