Investment Properties, Interest Rates, And Cash Flow

I hope you are all having a great start to your February! Real estate is still selling very quickly in Fort Collins, and myself, buyers, and sellers are all keeping up with the speed of the market by being proactive. On the buying side that means me looking for properties that may not have hit the market yet, and sending mailings to neighborhoods to see who would have a property that would fit my buyers’ criteria. On the selling side that means having all the marketing in place before putting it on the market, because most likely we will be bombarded with showings. That also means preparing sellers for the potential for multiple offers, and the different ways we can deal with those situations.

Let’s talk about investment properties now though. Many investors have been sitting on the sidelines for 2013 because of the lack of inventory. As we progress into the spring of this year though, I’m hopeful that we will see more properties coming on the market. Meaning investors will at least have homes to look at, a big change from last year! It is important to understand what types of cash flow targets us investors will be seeing as the interest rates increase. While we were spoiled with investor rates at 4 and 4.5% last year, that gave us great cash flow because monthly payments were less. A single family home (3 bed 2 bath around campus) we were seeing $300-400 per month after all costs (assuming 25% down). As we see the rates increase, we just have to understand those cash flows will be down a little bit (probably closer to the $200-250 mark). The benefits to purchasing investment properties will still exist though, including writing off the interest, depreciating the home on your taxes, and best of all building equity over time as a retirement plan.

If you have any questions about purchasing investment properties here in Fort Collins and what I can do for you, please call me at 970-673-7285. Thanks!