Real Estate Investing

Your Castle Real Estate is the preeminent investor-focused real estate brokerage in the Denver area. I have the most in-depth real estate trends data and tools available which means I can help my clients find the best deals available.

I have experience with foreclosures, the foreclosure auctions, short sales, fix and flips and rentals. Call me today and I can help you with your next investment property.

When thinking about real estate as an investment, whether it's your principal residence or a rental, most people look at the entire purchase price to determine their return on investment. This is a mistake. You should be looking at the cash you've actually invested. Here's a simplified example...

Initial Value: $100,000
Amount Invested: $5,000
Mortgage Amount: $95,000
Mortgage Interest: 6%
Projected Annual Growth: 5%
Projected Value in 10 years: $155,000
Projected Profit: $55,000
Projected Return on Invested Capital: 1,100%

Of course, this is a simplified example. There are additional expenses that you will have, many of which are offset by tax deductions, depreciation and/or rental income. But the point is that real estate, over the long term, can be an EXCELLENT investment. When compared to renting for the long term, renting doesn't even start to come close to making sense compared to the returns you could get from buying.

You will typically "make your money" when you buy a property. In other words, the better deal you can get, the better built-in return you will have. Any home could make a could investment, but many people focus on foreclosures and short sales (see definitions below). Regardless of what the situation is with a particular property, you still must do your research, with the help of your experienced Realtor, of course. Just because a property is a foreclosure, doesn't necessary mean it's a good deal.

If you're thinking about investing in real estate, contact me today!

1031 Exchanges

(source: IPX 1031)

If you're thinking about selling an investment property but want to defer capital gains taxes, a 1031 exchange may be the right option for you. Take a look...

When Do I Need to Set Up a 1031 Exchange?

The simple answer is before the relinquished property (“old investment property”) is transferred. This seems very basic; however, it is misunderstood by many investors. Many people think a 1031 exchange is just a special account that can be set up after they have transferred their old investment property. However, to be entitled to defer capital gains under section 1031 of the Internal Revenue Code an “exchange” must be established.

To create an exchange using a Qualified Intermediary (“QI”), the taxpayer must enter into an Exchange Agreement with a QI and that QI must be assigned into the contract for sale of the old investment property before it is transferred. Through the Exchange Agreement, the QI agrees to acquire the old investment property from the taxpayer and it transfers the property to the buyer through the contract of sale it has been assigned into. Similarly, the Exchange Agreement also provides that the QI will acquire the replacement property (“new investment property”) for the taxpayer. The taxpayer assigns the QI into the taxpayer’s contract to purchase the property. The QI thus becomes a party to that contract and has the seller transfer the new investment property to the taxpayer by means of a direct deed from that seller to the taxpayer. It is through the assignments of the contracts from the taxpayer to the QI that an “exchange” is created. The taxpayer is deemed to have transferred the old investment property to the QI and the QI is deemed to have transferred the new investment property back to the taxpayer, even though the deeds transfer title directly between the respective sellers and purchasers. Without the assignments there is no exchange, just a taxable sale followed by a purchase.

To avoid problems, follow these simple steps. Enter into an agreement to sell the old investment property and put that contract into escrow. Then contactIPX1031® to set up an exchange. Sound too easy? It doesn’t need to be complicated. However people make it more difficult by not planning and/or waiting until the last minute. By planning ahead you can reduce your stress and make the transactions smoother.