Everybody Wants to Buy a Rental Property, But Not Manage It
If you’re buying rental property in Denver, keep these four tips in mind
The Denver rental market is not slowing down. The current market conditions in Denver are showing that there is going to be a need for rental properties for a long time. There are currently some great tax benefits both on the federal level and on the state level to renting a property. If you’ve been thinking about investing in a rental property, there has never been a better time. And, if you’re buying rental property in Denver, keep these four tips in mind.
Tip No. 1
Don’t overcomplicate it.
Buying a property to rent does not have to be as complicated as you think. A lot of people get stuck with analysis paralysis and never end up taking the plunge. If you think you don’t have the time and resources to handle a rental property yourself, you can hire a property management company.
Property management companies will typically charge 10% of the rental price to handle everything from the transaction, finding renters and property maintenance. This can be a great option to take the headache away.
Tip No. 2
Have a strategy.
For example, are you looking for immediate cash flow or appreciation over time? Think about your financial needs, such as the immediate benefit of having cash flow. Or do you want a more long-term investment? Being aware of your strategy and goals up front will help you with your search and satisfy your end game.
Choose a realtor that specializes and has experience in buying and selling rental properties.
Not all real estate agents are created equal. Some have more experience in the Denver rental market than others. If your agent has experience finding rental properties in Denver, their advice can be golden. Interview several real estate agents and ask questions. Do they have a track record of buying and selling rental properties in the Denver market? Do they know what to look for and avoid? Your realtor should be able to help guide you on what it means to own a rental property, not just the transaction and finding the property.
Tip No. 4
Buying a rental property, makes you a business owner.
You’ll need to setup a business entity for tax reasons. To help with the on-going management, you can enlist the help of a qualified tax consultant or get familiar with accounting software like QuickBooks. You will be able to write off any repairs on the property including the purchase of appliances. In addition, you can deduct the depreciation expense of the property. There are some tax benefits available for would-be landlords.
Josh Steck is a Denver native, realtor and owner of Steck Real Estate who loves helping people make their real estate goals a reality. He has been specializing in the Denver rental market for more than a decade.