Buying Rental Properties

In Today’s Real Estate Market, opportunities abound. One of the primary opportunities my Clients are asking about is purchasing a rental property.

All over town there are great Real Estate buys, perfect for holding for a few years and selling. The decrease in lending programs for those with poor credit has closed the door of home ownership for lots of people who would like to be in a home.

Buying a rental property allows my Clients the chance to take full advantage of both of these situations.

So should a Buyer put a lot of money down on his Mortgage Loan?

The only advantage of this would be if the Buyer had a significant amount of money to put down. In that case, a tax-deferred 1031 exchange would be ideal. A 1031 Exchange protects those funds from taxation owing to a reinvestment incentive. Please let me know if this may be of interest to you.

Outside of this instance, there is usually not a compelling reason to put a lot of money down on a mortgage loan.

It is essentially correct that a larger down payment means lower interest rates and monthly payments. However, it is sometimes better to take the money, if you have it, and invest it elsewhere.

Here’s why: one will usually do better paying an extra few dollars on the monthly mortgage payment and having the capital on hand.

Should an emergency arise, one does not need to take a home equity loan to use one’s own money. Oftentimes using another investment vehicle to hold the capital that would have gone down on the loan can produce regular and profitable results that can be enjoyed before the sale of the house.

Many in our area are taking advantage and spending as little case as possible to get in on a hot rental market in Denver. It’s a great way for you to take advantage of what’s going on in Real Estate and bring more security to your future. For more information, I can be reached at (720) 275-3926.