Buying an investment property in Colorado can be a very beneficial investment if done correctly.
There are many different strategies for buying investment properties in Colorado and the specific type of strategy depends on your personal financial goals.
Are you looking for immediate cash-flow from your investments or are looking for long term wealth…or both?
Let’s take a look at a couple of generic investment strategies that may be beneficial:
Investment strategy #1:
Assuming you already live in Colorado or would like to move to Colorado, you take out a primary residence home loan and buy a property. This can require between 3-5% down.
You move into the house and pay the mortgage payment for at least one year. After a year, you decide to rent the first house out and buy another property as your new primary residence. You now have two properties, one you live in and the other your rent. Your rental property mortgage payment is being covered by your rental tenant and the principal on the loan is reducing every month.
In theory, you could continue to do this until you have several rental properties. If you can make extra payments on the property with the lowest loan balance, you can eventually pay the loans off and enjoy the cash-flow of the property into the future.
Investment property strategy #2:
This is an idea for people who have access to 25% or more for a down payment to buy and investment property. The idea is to buy roughly a 300k property and put between 60k-150k down on the property. Assuming you have put 150k down and the new loan amount is 150k, you take out a 15 year loan which provides a lower interest rate than a 30 year loan.
Once your tenant is covering the payment on the 150k mortgage, you then add an additional 2-3k per month extra down on top of that payment. This is obviously quite a sacrifice at first but, by doing so, the loan could be paid off approximately just 3 years! The investment property then turns into a cash-flow generator producing usable monthly income. If you are able to pay several properties off in this way, you will end up with several paid off properties and a generous amount of monthly income for years to come. This is obviously easier said than done but with a little good luck and patience, the outcome is well worth the effort.
Here is a website to learn more about property investment strategies. Biggerpockets.com
As mentioned, these are only generic investment ideas. Everyone has their own style. The trick is to tailor your investment property buying strategy to your ideal quality of life and financial reality.