REAL ESTATE INVESTMENT GUIDE

Posted by DB Wilson on Tuesday, September 6th, 2011 at 11:59am.

Right now is a great time to buy property for profit. Whether you plan on moving, reselling or renting, making a real estate investment can be a smart move. Here are a few general guidelines critical to making an intelligent real estate investment.

Financial Security
While it may seem like a great idea to make a real estate investment during a buyer’s market, you need to make sure you are financially secure before diving in. Make sure you have enough cash for the down payment—usually between 10 and 20 percent, and be sure you have enough money for upkeep and maintenance as well.  If this is going to be an investment property and not your year-round home, make sure you can afford to keep it in good shape while renting or leaving it vacant.  And don’t count on flipping a property right now, unless you are in a position to hang on to the home for five to 10 years before selling.

Essential Ingredients
Make sure the property you’re looking at has a few essential amenities that will make reselling smoother, or the possibility for adding them. These include central air, ranked highly as a must-have feature by a poll done by the National Association of Realtors; ample storage space; a good location and a few modern updates like energy efficient features and appliances.

Strong Market
While most markets are suffering right now, there are a few pockets around the country that are not only remaining stable but appreciating. These are great places for a real estate investment that offer a real possibility of reselling in the near future. Make sure you are extremely familiar with the market you are purchasing in before making any investment decisions.

Tax Time
Investment properties are taxed differently and the longer you hold on to your property, the better you will make out with the IRS.  Any profit you make from an investment is considered capital gains, and so it will be taxed based on your income and the amount of time you've owned the property.  It’s smartest to hold on to your property for more than a year so you will be charged a long-term capital gain, instead of an income tax rate. The difference here can be up to 20 percent more. However, if you make your investment property your primary home, then you can avoid a capital gains tax altogether. To meet this requirement, you must have spent a minimum of two of the last five years residing in the property. The two years don’t even have to be sequential. Other factors, like being married and filing joint taxes, can allow you to make even more on the investment without being taxed.

If you are a frequent investor and are buying several properties in a year, be prepared for the IRS to land you with business taxes as well.


For more information on investment real estate, please contact RE/MAX of Boulder, Inc. at 303-449-7000, 1-800-825-7000 or RE/MAX of Boulder, Inc.

RE/MAX of Boulder, Inc. located on the corner of Canyon and Folsom, is nationally and locally recognized as one of the most successful real estate offices in the industry. Nationally, they are one of the "Top 500 Power Brokers in the United States" as listed in National Real Estate & Relocation magazine. Real Trends ranked them #1 in the Nation for Closed Sales Volume for 2010. Regionally, for the 4th year in a row, the company has been named the #1 RE/MAX office in America for Single Office Closed Volume. They can be reached at 303.449.7000 or visit http://www.BoulderCO.com. Connect with them on Facebook and Twitter, search remaxofboulder. Subscribe to their YouTube channel and see videos of all their homes for sale at http://youtube.com/remaxofboulder

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