Definitely Dave's Real Estate Blog

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June 6, 2017

Adding Real Estate to Your Investment Portfolio

Should you invest in real estate? Actually, real estate investments can be a great addition to your retirement portfolio for a few reasons.

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Should real estate be a part of your investment portfolio?
 
There are a couple of reasons why having real estate as part of your retirement portfolio is a good idea:
 
1. Diversification. When you are investing for something so far in the future, you’ll want a variety of items in your portfolio, including stock, bonds, and real estate.
2. Return on investment. When you calculate that you’re paying down the mortgage every month, appreciating rents, and tax breaks, your return could be well over 10%. Plus, once the house is paid off, you have a pure cash flow.
 

  


Investing in real estate is a big commitment.


 


Of course, there are also a few reasons why it may not be a good idea for you to add real estate to your investment property. For one, real estate always comes with surprises. You never know when the air conditioner will go out or the roof will leak.
 
Plus, when you invest in real estate, you are working with people. If someone is down on their luck, your emotions may cloud your decision on whether or not to evict someone or rent to them.
 
Investing in real estate is a big commitment. If you get laid off from your job, you don’t have to put money into your 401(k). If you get laid off and your rental property is vacant, then you are in a bit of a crunch because you are still responsible for paying that mortgage.
 
If you do decide to invest in real estate, here are a few recommendations:
 
1. Start with an easy property. I will set you up with a property to make the whole process fun and enjoyable. Soon, you’ll want to buy more real estate!
2. Do your research. Make sure that you follow all of the rental licensing laws.
3. Be prepared to put 20% to 25% down. On a $300,000 house, that means you would need $60,000 to $80,000.
 
Ultimately, real estate can be a very rewarding investment. If you are interested in getting started with real estate investments, give us a call or send us an email. We would be happy to help you!

Posted in Buying
May 12, 2017

When Is the Right Time to Update Your House?

The right time to update your house is right after you buy it. That way, you can actually enjoy the updates and still get top dollar when the time comes to sell the house.

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I work with many people who are getting ready to put their home on the market, and before they do, they always want to know what updates they should make to it.

They usually opt for updating the kitchen, the backyard, or the master bathroom, but I have a secret about home updates I learned from my mother-in-law that I want to share with you.
 

  


Update your house as soon as you buy it.


 

 She told us, “When you buy a house, update it.”

In other words, update your house as soon as you buy it so you can enjoy the updates while you’re living there. You’ll get the same benefits of those updates when it comes time to sell the home as well. If you want to enjoy your life, do the updates now and get top dollar at the sale.

If you have any questions or are looking to buy or sell a house in northern Colorado, don’t hesitate to give me a call. I’d be happy to help.

Posted in Buying
May 1, 2017

Why Is the Cap Rate so Important to Real Estate Investors?

I work with a lot of real estate investors. Each one is different, but they all recognize the importance of the cap rate.

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I work with a lot of real estate investors. Although they each are looking for different features in investment properties, they all have one common thread. They all use the cap rate to determine if a property is a good buy or not. 

What is a cap rate? It’s short for capitalization rate, and it’s essentially a measure of your expected return on your money in the short term. For example, let’s say you bought a property for $500,000 with a 7% cap rate. That means you would get 7%, or $35,000 back after expenses each year. 

Even if you have to get a mortgage for the property at 4%, you will still earn the difference between the mortgage and the cap rate (3%) in cash. That’s still $15,000 in cash flow on a $500,000 home, plus an additional 7% on your down payment.

 

  


Most investors use the cap rate as an important metric.


 

 

With interest rates so low, now is a great time to buy an investment property and realize that great cash flow. In Boulder, cap rates are around 4% or 5%. In Denver, they are around 6%. In Longmont, cap rates are at 7%. 

As far as selling goes, low cap rates equal higher sale prices. Cap rates are relatively low right now, so we’re seeing properties sell for sky-high amounts. 

Whether you’re looking to buy or sell, I love working with investors in this market. If you have any questions, don’t hesitate to reach out and give me a call or send me an email. I would love to hear from you.

Posted in Finances
March 28, 2017

What Changes Are Happening in the Market?

How are changes in the market going to affect buyers and sellers in the Denver metro and northern Colorado? I’ll answer that for you today.

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What changes are happening in the market? I’ll go over what you can expect to see. 

There are now two separate Realtor databases, one for the Denver metro area, and one for northern Colorado. What does this mean for you?

As a buyer, you should be able to find some really good deals. Homes that are not listed in both databases won’t get the exposure they need to get multiple offers. If a home is only listed in one database or it’s improperly marketed, you might be able to snag it without competition driving up the price. 

  


Buyers could snag a great home without a lot of competition.


 

As a seller, you need to make sure you list your home with an agent that uses both databases to market homes. The key to getting your home sold in the least amount of time for the most money is exposure.

If you are looking to buy or sell a home, or if you have any other real estate questions, feel free to give me call or send me an email. I look forward to hearing from you! 

Posted in Boulder Market
March 28, 2017

How Much Do New Construction Homes Really Cost?

Buying a new construction home can be tricky. Here’s what you should know beforehand.

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In northern Colorado, you see ads for new home builds all over the place. They might advertise prices like “starting at $400,000” or “starting at $600,000” but how much does it actually cost to buy one of these homes?

With one builder, a $400,000 house may end up costing you $450,000. It may end up costing you $600,000 with another. That’s quite a range and all the more reason to have a top agent working with you. They can help you sort through the fine print and make sure you know exactly what you’re getting into before you pull the trigger on buying.

 

 


A top agent will be able to guide you properly.


 

New construction prices typically don’t cover things like A/C units, refrigerators, washer/dryer, or landscaping. These are all things for you and your agent to consider before deciding to buy a brand new home. No matter the outcome, a top agent will be able to lead you in the right direction in order to accomplish your real estate goals.

If you have any questions for us, don’t hesitate to give us a call or send us an email. We look forward to hearing from you.

 

Posted in Buying
March 14, 2017

First Quarter Boulder Market Update

A lot has been going on in the first quarter here in the Boulder real estate market. I’ve got some key updates for you today.

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What’s been going on in the northern Colorado real estate market so far in the first quarter of 2017?

One thing we’ve noticed a lot of is new construction. This has begun to have the effect of putting a lid on the price of resale homes in the area.

 

For example, you can buy a home in Boulder for around $400,000, which has prevented resale homes from increasing in value. Anything in the $400,000 to $800,000 range has appreciation limited by what these builders are doing. We’re also seeing builders increase their prices by $2,000 or $3,000 every couple months, which is also putting a lid on price appreciation.

 

 


I’ve seen more lots for sale in the last six months than the last 10 years combined.


 

 

We’re also seeing an oversupply of inventory of homes in the $800,000 to $1.4 million price range. If you’re looking to buy a home in that price range, there are some really good values out there. On the other side, if you’re looking to sell your house in this price range, you might have some trouble due to all the homes on the market. However, from $1.4 million to $5 million, we’re still seeing very low inventory and strong demand from a lot of buyers.

One other thing I’m seeing this year that I haven’t seen in the last decade is land selling. I think it’s due to all the extra new construction and the lack of available lots for sale. In fact, I’ve seen more lots for sale in the last six months than the last 10 years combined. That said, land prices are still below what they were at the market peak of 2001 and 2002. If you’re looking to buy land, now is a great time.

If you have any other questions or you’re looking to buy or sell a home in the Boulder area, just give me a call or send me an email. I’d be glad to help.

Posted in Boulder Market
March 7, 2017

Why Is Hiring the “Neighborhood Agent” a Bad Move?

Hiring the “neighborhood agent” to sell your home is a risky move, and here’s why.

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Why should you avoid hiring the “neighborhood agent?”

I’ve been doing this for a long time, and one thing I always notice with these kinds of agents is that their homes are on the market for a long time and selling for less money.

 


Always hire an agent who is honest and trustworthy.


 

 

Why does that happen? It’s simple—their motivation is different than their sellers’ motivations. Whereas most sellers want to sell their homes quickly and for the most money possible, neighborhood agents just want to get those homes listed in a certain neighborhood so they can have a sign out front to act as branding for them to attract other buyers and sellers to their business.

 

If you’re in the hunt for real estate agent, it might not be in your best interest to hire the neighborhood agent. You’re much better off hiring someone who is honest and will sell your home quickly and for top dollar. I am that agent.

Whether you’re buying or selling and you need an agent who knows the market, please don’t hesitate to give me a call. It would be my pleasure to help you achieve your real estate goals.

Posted in Buying, Selling
Feb. 20, 2017

What Kind of Insurance Do You Need as a Homeowner?

Many first-time buyers don’t know the kinds of insurance they should have. We are clearing things up today.

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When you’re getting ready to buy a home, especially if you’re a first-time buyer, you might not know what kind of insurance you’ll need on the home. Here are three types of insurance that most buyers should have:

1. Homeowners insurance. A lot of times, your lender will require you to have this in order for your loan to go through. You can get a policy from a big company like Farmers or State Farm and it will cover your home in case there’s a fire or storm damage.

 


You want an agent who knows things like this.


 

 

2. Umbrella policy. This will protect your home as an asset in the event somebody slips out in front of it or you get in a car accident and someone tries to come after your house.

 

3. Life insurance. This type is really important and often overlooked. If you’re starting a family or you just got married, you want life insurance. If something happens to you, you want to be sure your family is taken care of and they don’t lose the house.

Whether you’re buying or selling, you want an agent that knows the market like myself. If I can help you in any way, give me a call or send me an email. I look forward to hearing from you.

Posted in Buying
Feb. 6, 2017

Why Isn't Your Home Selling?

We see a lot of homes that failed to sell coming off the market this time of year. This usually happens for one of three main reasons that we see over and over again that are easy to avoid.

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This time of the year, we see a lot of homes coming off the market after being listed for up to six months or more without selling.

When a house fails to sell, it usually happens for one of three main reasons:

1. Condition. The house might smell bad, like pets or smoke. Maybe the house is on a busy road or near train tracks. Having something wrong with the home’s condition makes it difficult to sell.


 


When a house fails to sell, it usually happens for one of three main reasons.


 

 

2. Marketing. The pictures of the home might be bad or don't represent the home well. Maybe it's a case where all the agent did was stick a sign in the yard. The home simply wasn't exposed well to the market.

 

3. Price. Our market here in Boulder is very price sensitive. If you price correctly, the home will sell right away. If you overprice the home, even by just a little bit, it could sit on the market for months with no offers whatsoever.

My team and I specialize in selling these kinds of homes. If you have any questions about why homes fail to sell or you're thinking about buying or selling a Boulder home, give us a call or send us an email. We'd love to work with you.

Posted in Selling
Jan. 5, 2017

How Can We Tell if the Market Is Slowing Down?

How can you tell if the market is starting to slow down? Today I'll walk you through the top three signs to look for and how they might affect you.

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Today, I wanted to point out the three signs to look for in a slowing market.

The first is an increase in days on market. Here in northern Colorado, we've been steady at about 10 to 15 days on market for the last several years. I think that once we get up to about 60 to 75 days on market, we'll begin to see the market slowing.

Secondly, we can look to higher listing inventory. Currently (and over the last several years) if you look at the number of homes for sale, we have about 45% under contract. When we get down to about 10% to 15%, it will be another sign of the market starting to slow. We don't see any signs of that right now.


 


There's no sign of buyer optimism falling in our market.


 

 

The third sign of a slowing market we can look to is waning buyer optimism. In other words, are buyers holding off, waiting for prices to drop, or being nervous about putting in an offer? We see absolutely no signs of that, even with an increasing federal funds rate. The economy is so strong that buyers are excited and ready to buy a home.

 

As you can see, we don't really have these indicators in our market. It should continue to stay strong.

If you have any additional questions about the northern Colorado market or you're looking to buy or sell a home, give me a call or send me an email. I'd be happy to help!

Posted in The Market