Homes for Sale in Colorado Springs

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Tips for Finding Investment Homes for Sale in Colorado Springs

 

tree-lined-neighborhood-colorado

We often have the opportunity to speak with new investors as they begin their journey into the world of real estate investing. Many of those conversations end with them asking for our best advice on real estate investing. And we most always share with them this one important idea – manage expectations. 

 

This is so key for the new investor. We know this because we’ve been there, but also because another common conversation we have with investors goes something like this:

 

New Investor: “Hi, I’m looking for homes for sale in Colorado Springs under 150. What do you have for me?!”

Me: “Great! I know of a cozy 1 bedroom condo that would be perfect for you.”

New Investor: “No, no…I need a 3 bed 2 bath home with a big yard, attached 2-car garage, in a nice neighborhood and good school district, with only minor cosmetic repairs needed…for under 150.”

Me (laughing): “Don’t we all.”

 

In reality, if you approach your investing strategy looking for homes for sale in Colorado Springs for under 150 and you have criteria that matches the above description, chances are you need to change your expectations. 

 

As you’ll quickly learn, managing your expectations can be one of the most valuable tools for your investing journey. Most would-be investors give up before they ever actually do a deal. Or they do one deal, fail and return to their day job with quiet resignation. This is primarily due to the fact that they simply don’t know the reality of what to expect.

 

We want to help you avoid that. Understanding the challenges you’re facing and how to manage those challenges will arm you with what you need to push through when circumstances become difficult. 

 

Managing Expectations with Colorado Springs Homes for Sale

 

Here are some tools we’ve learned that may help you when searching for homes for sale in Colorado Springs.

 

  1. Understand the Colorado Springs real estate market.
    In the past 4-5 years, Colorado Springs has garnered much attention from savvy investors as well as national “best-of-living” lists creating the perfect storm for real estate. Plenty of people moving into town plus an influx of investor interest has driven supply down and demand up, taking prices with it. While this doesn’t mean you can’t find a deal, it’s important to remember that what you could have found for $150,000 five years ago, simply isn’t the case anymore. 

    What to Remember: Colorado Springs real estate prices have risen considerably in the past five years. While prices may have been closer to many opportunity-rich Midwest cities in the past, this is no longer true. You probably won’t find your typical fix-n-flip deal that most investors suggest. Understand that either your price will need to be increased or your criteria lessened.

  2. There’s no quick path to riches. 

Exciting TV shows and unlikely success stories would lead one to believe that a profit of $75,000 per flip is the norm. This just isn’t the case. Real estate is an excellent way (in our opinion, one of the best ways) to build wealth; however, it’s not a get-rich-quick route. It takes time to build the equity and capital to get to deals that are providing the amount of profit mentioned above. Some rehabs can end up lasting 9-12 months and only profit you $15,000. Run the numbers on that…we’re pretty sure your day job pays considerably more than that in 9 months.

What to Remember: Don’t look for a deal that will profit you a year’s worth of wages in 3 months. You’ll be sorely disappointed. And if you do find something that promises that, chances are you need to run your numbers again. Certainly look for a deal that has plenty of safety margin, but don’t expect an excessive amount of profit per deal. It’s just not realistic. 

 

  1. Don’t be afraid to partner.

We speak to many would-be investors looking for homes for sale in Colorado Springs that seem to think they have to do this thing all on their own. Whether it’s their unwillingness to share any profit or their misplaced confidence that they already know exactly what to do, new investors are often more opposed to partnering than experienced ones. And maybe that should tell you something.

What to Remember: It’s okay to need someone else. In fact, it’s good. You’ll learn much quicker and avoid many mistakes by partnering with an experienced investor. Besides a little money is better than no money…or even worse, losing money. Most experienced investors we know have numerous partners, depending on the type and scale of the deal they are doing.   

 

  1.   Enthusiasm shouldn’t be your only currency.

This may seem like a no-brainer to some, but you’d be surprised how many hopefuls come at the game with little more than excitement about the podcast they listen to every day. Excitement is good, and enthusiasm may initially get you noticed. But eventually, you will find you need more than just enthusiasm in order to actually get buy-in from partners, investors or lenders. Figure out what else you can bring to the table.

What to Remember: Start with what you know. Is there something about what you currently do that can support another investor? Perhaps you’re good with numbers, maybe you have solid contractor connections – whatever the case, start there. Then make sure you have at least one of these other contributing factors: knowledge, experience, money, time, or technical skills. Don’t expect to get into the game if you have nothing more than optimism. 

Making Smart Investing Decisions.

When you manage your expectations, you manage your emotions. And when your emotions are in check you’re much more likely to make solid decisions and stick with it when things get tough. 

If you’re interested in finding out more about how we help new and experienced investors navigate the Colorado Springs real estate market, give us a call at 719.257.3236.

 

Value-Add Real Estate

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picture of old apartment building with value added opportunity

MOST BUYERS DON’T REALLY WANT VALUE-ADD REAL ESTATE

 

When investing in property, commercial real estate investors tell us they want to look for a “value-add” investment. A value-add real estate investment is when the property is under-performing in some way and the investor can improve the property in order to improve the value.


In reality though, many newer investors don’t truly understand what a value-add real estate investment actually means, or they simply don’t recognize one when they see it.


If a commercial property is under-performing, in need of repairs, showing negative cashflow, or has poor bookkeeping records, most self-proclaimed value-add investors will immediately walk away with nothing more than a glance.

Value-Add Real Estate or Turnkey?

 

While the truly experienced value-add investors don’t operate under these faulty ideals, we’ve seen a trend among newer investors saying they want value-add but actually expecting turnkey.


The whole point of value-add investments, however, is that the property has obstacles. Without any negative circumstances, the property is not value-add real estate.

 


A true value-add investor doesn’t evaluate a commercial real estate investment on where it is but where it could be.


Negative cashflow, for example, is likely the result of some other underlying issues. Perhaps the owner-occupant is undercharging rents to themselves and other tenants. Perhaps the property is in bad condition and can’t bring in market rents. But simply glancing at the rent rolls, determining that the cashflow is poor and walking away will bring you no closer to a value-add investment property. Why? Because it is within these difficulties that value-add investments are found.


An experienced value-add commercial real estate investor sees opportunity where others only see headaches. An experienced investor will dig into the numbers with a treasure-hunter mentality, rather than expecting treasure to be lying around on the beach.


Buying a property that needs little to no repairs, has positive cashflow, organized books, and an excellent marketing presentation is not a value-add investment, it’s a turnkey investment.


There is nothing wrong with turnkey investing. It’s an equally valuable investment strategy. But you can save yourself and your broker a lot of frustration by realizing that you expect turnkey bookkeeping, condition, location, and cashflow rather than a value-add situation.


To be clear, simply being a value-add property doesn’t make it a good investment. Negative cashflow, poor condition, etc, is certainly a problem that needs to be investigated. Sometimes the investigation is worthwhile, sometimes not. You may see how terrible the situation is and decide it’s not worth digging.

What to Do with Value-Add Investments

 

But if you really want a value-add investment and the property meets at least some of your initial criteria, determining that a property has problems is not the time to walk away. It’s the time for true value-add investors to dig in and see if there is opportunity others may have missed.


While striking gold when you dig is uncommon, we are certain you won’t strike gold if you never dig below the surface.


Interested in learning more about value-add real estate for your own investment portfolio? Call us today to see how we can help.

 

719-257-3236

Wholesaling Real Estate in Colorado Springs

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Warning for Homeowners of Real Estate in Colorado Springs

 

Elderly lady eating at her table

 

Long-time Homeowners May be a Target

The term “assigning transactions” may not currently carry much weight within your need-to-know vocabulary. But it has carried the weight of much frustration and financial loss to recent victims of what is quickly becoming an unscrupulous real estate practice in Colorado Springs and across the country.

 

As this issue is closely tied to the services offered through Colorado Springs Property Investors, we feel a duty to arm you with this knowledge in order to help protect your real estate interests.

Beware of This Real Estate Practice in Colorado Springs

Perhaps you’ve more often heard it called “wholesaling.”

 

The investors and real estate professionals that force deals through wholesaling think of little else but finding the largest profit margin possible through whatever means necessary.

 

While there are certainly some who practice the wholesaling method in trustworthy, honest fashion, we have seen far too many that choose to capitalize on a homeowner’s innocence and/or ignorance concerning real estate in Colorado Springs.

 

So what, exactly, are we talking about?

 

Wholesaling/Assigning Transactions

The concept of wholesaling, at its core, is innocent. It’s been practiced across almost every culture and  industry for hundreds of years.

 

In essence, a wholesaler is a middleman. Many of your online purchases are from a middleman. The tomatoes you buy at the grocery store sit there due in large part to a middleman – a tomato broker (we know…weird). Perhaps you even financed your current home in Colorado Springs due to the work of a mortgage broker – again, a middleman.

 

So we’re not knocking the concept of wholesaling, even in real estate. But we are warning you that not all wholesalers are created equal.

 

Whom do they target?

Those that would take advantage often target elderly individuals, long-time homeowners or distressed homeowners.

 

Long-time homeowners have minimal housing debt (if any) and may unknowingly sit atop a good bit of equity. Their home’s value when they purchased 20+ years ago has surely risen to significantly more than the original purchase price – likely more than they would ever suspect.

 

How do they do it?

Wholesalers will approach an individual such as this (often unsolicited) with an offer that appears enticing, especially when the price is double the original purchase amount. But the unsuspecting homeowner does not realize that the actual value may be 3 or 4 times greater than the original price.

 

Generally, the wholesaler has “data” to back up their offer price. This may come in the form of other property comps, an exaggerated list of needed repairs, and market condition scares. Unfortunately, these can all be manipulated to serve a purpose.

 

Once the wholesaler has signed a contract with the homeowner for the agreed upon price, they turn around and sell, or assign, the property again for considerable profit without ever having given any actual money or sweat equity. This is most often accomplished through “assigning”  the contract.

 

Here again…is wholesaling all bad? Definitely not. A lot of work can go into the hunt for a good wholesale property in Colorado Springs. Many wholesalers work hard for the money they earn, and most do not take advantage of homeowners in such extravagance. However some do. And they do so by manipulating numbers, data and the homeowners emotions, often forcing an unsolicited sale.

 

What can you do to guard against this?

 

  • Get help – Seek the advice and involvement of a family member, friend, neighbor or even a third party real estate agent. It needs not be much. Simply ask them to look over the information provided from the wholesaler and give a second opinion.
  • Make decisions with others – If possible, determine to make a decision to sign only when you have the involvement of your supporters.
  • Obtain copies of documents – Ask for a copy of the property comparisons the wholesaler provides and then take them to another source for review. Remember, these can be manipulated to support the wholesaler’s claim, masking the real value of your property.
  • Consider a professional appraisal – Spending $300-400 on an appraisal may end up saving you thousands of dollars in the end. It’s certainly worth considering.
  • Look at the contract – Review the contract to see if it is “assignable”. If so, ask why, to whom it is assigned and what the assignment fee will be (how much will the wholesaler profit?).
  • Call a contractor – Call a reputable contractor in the area and explain the situation. Ask for a quick price range on the proposed work to gauge whether the property repair pricing is actually within reason.  Note: Out of respect for the contractor’s time, obtain a price quote over the phone instead of requesting an on-site proposal if you do not intend to do the work.
  • Seek legal advice – If you’re still concerned, consider hiring a lawyer experienced in real estate transactions.

 

Is all wholesaling bad?

Despite the unethical methods, wholesaling does still happen. Thankfully, most of the time it happens with solid practices and no manipulation.

 

It’s important to remember that it’s completely acceptable for wholesalers to make some amount of profit from the deal. Most of these wholesalers are hard workers, just trying to make a living with opportunities they unearth. Most don’t pocket large hoards of money by swindling the unsuspecting widow down the street.

 

And while you must scrutinize all considerations closely, it’s also important that you keep an open mind. If their offer accurately represents the value of real estate in Colorado Springs, provides a solution for a tight spot you’re in and takes the stress off your mind, you may find yourself working with a wholesaler!

 

Ultimately, it’s up to you as the homeowner to do your homework. Talk to as many professionals within the real estate industry as you can, and trust your research, not your emotions.

 

For more information concerning the dangers of this practice, read the CODORA Consumer Advisory on the issue.

 

If you’re interested in talking to us about this practice or other real estate related issues, please call us at 719.323.3029.