The hardest part of real estate investing is starting. Many people see real estate investors as super wealthy people with piles of cash who flippantly invest in dozens of properties a year. The truth is much less exciting.
Most real estate investors we deal with here in Colorado Springs work hard to get that initial down payment, then they carefully make their first investment purchase with helpful guidance after much consideration. They usually have a professional manage the property for them, then use the cash flow and equity to buy another investment after a year or so.
Caution and consideration are good things when it comes to real estate investing. When someone comes to us saying they saw house flippers on TV, or heard about investing at a free seminar, and they are ready to buy all the no-money down real estate at 30% discounts, we hit the brakes.
That’s not to say those people won’t make good investors – many people start out that way – it’s just to say we want to take the excited reality TV viewers and turn them into careful investors. Those are two very different things.
So, whatever your background, you’ve made the decision to invest in real estate. Great decision! The only problem is you aren’t sure how to get started. You came to the right place.
Can I invest in real estate for zero cash down?
If there is one reason people don’t invest in real estate, this is it. (If there are two, it’s fixing toilets. We’ll discuss that below.)
There are ways to invest in real estate with zero cash down out of your pocket, but we usually don’t recommend it. If you are eager to get started and you don’t have any money down, I would love to speak with you. I don’t want to go over those methods here because they are risky and most people shouldn’t use them.
The problem with getting started buying real estate in Colorado springs with no cash on hand is you have no margin for error. I’ve never purchased a real estate investment where absolutely nothing went wrong. Available cash gives you some margin when repairs need to be made or when the tenant doesn’t pay rent.
When you are starting out, having a few months of cash in the bank makes life easier. Even if you aren’t quite there yet, we are happy to speak with you about getting started in real estate investing.
How much cash down do I need to invest in real estate?
If possible, we highly recommend saving up some cash before you attempt to buy an investment property in Colorado Springs. If you are not going to live in the home, we can get you started investing in real estate for as little as 15% down payment.
One creative strategy many people in Colorado Springs use to get started investing in real estate is living in the investment property. There are some tax advantages of living in the property and the mortgage approval is easier. Some Colorado Springs mortgage programs allow you to get into real estate investment with little or no money down, if you live in the home.
One popular way to get started investing in real estate is called “house hacking.” House hacking is a clever trend in Colorado Springs that involves living in a portion of the real estate investment and renting out another portion either long-term or short-term.
While there are some legal, tax, and zoning elements your Investment Specialist can make you aware of, this is a great way to invest in real estate while also dramatically reducing your living expenses.
Investors purchase a four-plex, rent out three of the units, and live in the fourth. One young couple in central Colorado Springs had a positive cash flow with this type of investment, even after factoring in their personal house payment and utilities.
House hacking can also be done with short-term rentals, accessible basements, or even a spare room. I read about one home-owner with land in eastern Colorado Springs who installed a “tiny home” next to her house and rented it out on Airbnb.
You don’t have to fix toilets
The second most common reason new investors avoid getting started in real estate is they don’t want to deal with home repairs. Ironically, one of the biggest mistakes investors make is over-improving a home and trying to do too much themselves.
We don’t want you to fix toilets either!
We recommend leaving property reconditioning to experts. You don’t have to get your hands dirty, you don’t have to get your contractor’s license and you do not have to fix toilets.
We have a network of some of the best contractors in Colorado Springs, and recommend structuring your investments in such a way that you can have quality work done by licensed contractors.
If you want to do the work yourself, great! You can build some “sweat equity” in your real estate investment. Most people shouldn’t, and those who can have to be cautious, but we can steer you in the right direction.
Leave property management to the professionals
We’ve heard nightmare stories about someone’s brother-in-law renting out a home to deadbeats who partied every night, parked their Trans-am on the front lawn, and never paid rent. You are getting into real estate for the financial independence it provides, not so you can babysit the destitute.
Unfortunately, horror stories like these prevent many people from getting started in real estate investing.
That’s why we recommend that you always use a capable property manager. Here at Circa Real Estate Group, we spend a lot of time networking, searching for the best in the industry. We carefully screen our vendors to ensure we only recommend the very best.
Your Investment Specialist can connect you with property managers who will make sure you don’t get deadbeat tenants in the first place. And if you do, you don’t have to deal with the headache. When something breaks, you don’t get a call at 1am and when your property is empty, they will work tirelessly to make sure it’s rented out again as soon as possible.
The important element is to structure your real estate investing in such a way that you can hire affordable property managers so you can focus on building your real estate investing business, not knocking on doors for rent.
The first step is the most important. We can help you take it.
You can be a real estate investor. You should be a real estate investor.
At this point, the only thing stopping you from starting is fear of taking that first step.
After reading this article, I hope you see that some of the biggest objections to getting started in real estate really aren’t objections at all.
When you are ready, we want to be there to help. Contact us to get started with your Colorado Springs real estate investment strategy.
Circa Group, LLC, dba Circa Real Estate Group, and its representatives do not render legal, tax, or investment recommendations. Persons should consult with their own professional advisors as to risks and legal, tax, and financial implications and consequences in matters concerning investments. All investments, including real estate, are speculative in nature and involve risk of loss. We encourage our investors to invest carefully.
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