All About Buying Investment Properties in Western Colorado

By in Real Estate Finances

Owning investment properties is a great way to generate income. You can fix and flip a house, buy land and wait for it to appreciate, or rent residential and commercial properties.

Despite common belief, these concepts aren’t reserved for seasoned real estate investors and don’t require hundreds of thousands of dollars to start. With enough money for a down payment and proof of concept, you can find several fantastic investment properties in desirable areas like Western Colorado.

Things To Consider When Buying an Investment Property

Location is the cornerstone of the best real estate investments. You need to find an area where the real estate market is appreciating and has a high population of buyers – if you intend to sell down the road – renters – if you want to rent it – or businesses – if you’re buying a commercial property.

Riding on the successes of the greater Colorado real estate market, Western Colorado is an opportune place for buying an investment property. Not only are there many different property types, but they are more affordable than on the Front Range and are speculated to continue appreciating.

The Best Real Estate Investments Work For You

Western Colorado has a thriving agricultural economy, tons of recreation, and a growing population, making it an ideal location for various investment properties. Here are a few ideas:

  • Western Colorado has plenty of land for sale, and prices are increasing. You could purchase land and sell it later, rent it to farmers and ranchers, rent it for recreational use, or even develop it.
  • Colorado vacation homes make incredible investment properties, especially when you position them as getaways for seasonal recreational activities.
  • Cabins in Western Colorado range from one-bedroom hunting cabins on hundreds of acres to luxurious mountain homes in bustling cabin communities.

What Do You Want To Do With It?

Another consideration for buying an investment property is what you want to do with it, which correlates to your level of involvement and how much money you want to make. For example, you may want to manage a short-term rental cabin on the Grand Mesa – a big commitment that equals a high return. Or, you may want to buy land for sale and wait for the right developer to make an offer – a small commitment that equals an uncertain return.

How To Buy An Investment Property

When buying an investment property outside of your primary residence, the process may look different than the one you underwent to buy your first home. 

A home equity loan is one of the most popular methods to obtain investment properties. A home equity loan allows you to cash out the equity you’ve built in your current home, pay that money back to your lender over time, and use it to purchase your new investment property. To qualify for a home equity loan, most lenders need to see the investment property’s internal rate of return – or how much money it will generate. 

Down payment requirements and interest rates are higher for investment properties than primary residences. Most real estate investors put 20-25% down (although some loan programs allow you to go as low as 15%).

Tax Benefits of Buying an Investment Property

In addition to generating income, buying an investment property can help reduce your tax burden. First, you can deduct from your revenue owner and operating expenses. Second, you can leverage a 1031 Exchange, which allows you to defer capital gains tax by exchanging one like-kind investment property for another.

Explore Western Colorado For Yourself

Whether you’re looking at an in-town home, commercial property, recreational land, Colorado farms for sale, or any other investment properties, Western Land & Lifestyle Properties can help. We have dozens of properties for sale in Colorado, and many would make fantastic investments.

Contact me, Robert Gash, at 970-986-2955 to schedule a showing of any properties on our website.

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