Investing in real estate can be a great way to build wealth if you approach it correctly. And if you’re looking to dip your toe into the market, Summit and Eagle counties are excellent places to do so!
According to the Colorado Association of Realtors, the second half of 2020 and 2021 set records for Vail real estate, with historic buyer demand. Even though unit sales in the Vail area declined by 25% in the first quarter of 2022, prices were still strong and are expected to continue to increase overall.
Walletinvestor.com predicts property values in Vail will continue to rise over the next few years. The median home price in September 2022 was $1,095,500 and it is estimated to reach $1,242,927 by 2027 for a five-year investment profit of about 14 percent.
Here are some crucial rules of thumb when it comes to building wealth through real estate in Summit and Eagle counties and beyond!
1. Buy a home and stay in it as long as possible
This is by far the foremost way to build wealth through real estate. According to Federal Reserve data, homeowners’ net worth is about 40 times more than renters. In 2019, homeowners had a median net worth of $255,000 while renters’ was only $6,300. Homeownership acts as a forced savings mechanism. A portion of every housing payment goes toward paying down a home loan balance which increases the equity in a home.
2. Purchase a multi-family home
Purchasing a multi-family home is one of the fastest ways to accumulate wealth through real estate because the rent payments translate to reliable monthly cash flow that can help cover your mortgage. In addition, multi-family rentals are often easier to finance and accrue multiple tax benefits. You can claim a depreciation deduction on your investment, and deduct maintenance and operation costs, property management fees, insurance premiums, and marketing expenses. Lastly, when it comes to multi-family properties, the phrase “location, location, location,” is key. As an investor, you should seek out a high-growth, high-yield area to purchase a multi-family home. Summit and Eagle counties more than check that box!
3. Buy into a real estate investment trust
If you don’t want to commit to the day-to-day responsibilities of being a landlord, buying into a Real Estate Investment Trust (REIT) is a great way to test the real estate investment waters without a huge commitment. An REIT is a company that owns or finances income-producing properties. REITs allow anyone to invest in real estate portfolios the way they would invest in mutual funds or exchange-traded funds. As the value of the property rises, so do the values of your shares, allowing you to increase your net worth.
4. Purchase a fixer-upper
According to Wallet Investor, Summit and Eagle counties are profitable locales for house flipping. If you have a talent for spotting undervalued properties, can see the potential in any house or condo, and have a penchant for design, you might consider purchasing a property to flip. When done correctly, it can be extremely lucrative!
Cedar Home Loans: Helping you build wealth through real estate
At Cedar Home Loans, our extensive local knowledge allows us to provide customized loan services for real estate investors in Summit and Eagle counties and surrounding areas. Our experts can help you select the perfect home loan solution and walk you through the process from start to finish.
Want to learn more? Contact us with any questions and we’ll get back to you shortly!