What's the best strategy for buying investment properties in Grand Junction?

Grand Junction Real Estate Advice

Dave ‑

I have about 150K that I am wanting to invest in a rental property. I was all set to find my property and my realtor suggested that instead of buying the property with cash, that I use that money to buy several properties which I would have smaller mortgages on. I really don't like the idea of taking on any mortgages but I want to make the most of my money. What is your advice?

Jarred, Grand Junction

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Jarred,

Great question!! I will start by applauding you, looking to purchase investment properties right now to diversify your investment portfolio is a great idea!

To assess which is the best route for you and your family, you must determine what your long term goals are and how much risk you are comfortable with. I do not believe there is a right way and a wrong way to purchase investment properties, just different ways. There are two ways to look at the purchase of your properties and that is either to purchase with cash, which is the route that presents the least amount of risk or purchase with a mortgage which will introduce some limited risk.

To make a cash purchase makes great sense, because it creates an instant income source. If you need to quickly generate income, then a cash purchase is the best way to proceed. When you purchase with cash, and therefore have no mortgage, you also remove the risk of market rent fluctuations, because you can easily “go with the flow” and adjust to any potential rent changes. Also, with no mortgage you should be able to easily weather a month or two without a renter. If your risk tolerance is low or you need to generate month to month income, cash is your way to go.

“On the other hand, if you take your $150,000 and put $75,000 down on two properties then you have doubled the long term investment potential of your $150,000. ”

On the other hand, if you take your $150,000 and put $75,000 down on two properties then you have doubled the long term investment potential of your $150,000. This should still “cash flow” nicely for you and allow you to have room if there are rental market fluctuations. This will allow you to take advantage of the favorable market and also take advantage of low interest rates that remain historically low. You will be somewhat leveraged, but if done correctly and thoughtfully, and as always with the help you’re your accountant, you should be able to create a wonderful long term return with a little, but limited risk. Make sure to plan it out, be deliberate, but be ready to act when the right thing comes up!

The best thing here: you are taking positive steps toward your goals, thinking things through and are willing to look at all the angles to make an informed decision!! Reaching for your goal, is the first step in obtaining it!! Great job. Feel free to call if you need further information.

Dave Kimbrough
The Kimbrough Team

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What’s better—a slab or a crawlspace foundation?

Grand Junction Real Estate Advice

Dave,

What’s better—a slab or a crawlspace foundation? We’re about to start looking for homes and we’re wondering if a certain type of foundation should be on our must have list. If we find a home that we love, but it has a less superior foundation model should we give it up? This might seem like a very specific question, but we want to make sure we’re investing our money in the right home! Thanks for your advice!

Sam and Katie, Grand Junction

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Sam and Katie,

Great to see you are really thinking this one out! The good news is that if your home is on a stem wall (crawlspace) or concrete slab foundation I think you will find that both are quality options. I don’t think that you have to rule one option out and the other one in, they will both serve the purpose of creating a solid foundation for your home. First a monolithic slab is typically 4-6 inches deep and made from concrete poured over compacted soil. It will have a thickened perimeter edge that can handle the weight of the load bearing walls. A stem-wall foundation is constructed with concrete footings and concrete walls that rise above ground level to provide a raised platform for placing the home’s ground floor leaving a void (crawl space) between the ground and the sub-floor of your home. Both of these methods have advantages and disadvantages.

“Both of these methods have advantages and disadvantages.”

Let’s take a closer look at a concrete slab foundation. The advantages are that a concrete slab is generally less expensive and quicker to build. They are also great for preventing pests and rodents from getting under the house. If you have a water leak, concrete will not rot or become compromised like a wood sub floor. A slab foundation will generally help insulate the home a little better and can lead to a decrease in your heating and cooling bills as it rests directly on the ground. And lastly slab foundations are typically closer to the ground and do not require steps at entry or exit doors and this can prove VERY convenient depending on your age. Some of the disadvantages can be that if not poured correctly they can be un-level and uneven in spots. The biggest concern for many home owners is that if you ever need to make any repairs, primarily with plumbing, that goes beneath the house, it can be very difficult and prove expensive to remedy as it will require removal of part of the slab to correct. Typically we see monolithic slab foundations in the Grand Valley where the soils are of good quality or we have a higher water table, as they prove more economical and are structurally very sound. 

Stem wall foundations are the second most common foundation in our area and it too has positives and negatives. The biggest perceived advantage of a stem wall foundation with a crawl space is that if there are any required plumbing repairs (beneath the floor) then they are easily made and are typically not overly expensive because all the plumbing is easily accessible. They are also softer on your joints as your floors are all built over wood, not concrete. They are typically easier to design and build if the lot is un-level as the stem walls can vary in height making it much easier to work on a lot that has variable terrain. The overwhelming disadvantage to a crawl space, in my opinion, is moisture and the need for proper ventilation and monitoring. Moisture and crawlspaces don’t mix and often can lead to mold and mildew. When this happens it typically spells a big money fix. With a crawlspace it is imperative that you divert all moisture away from the house, so it does not penetrate the crawlspace. Even if you have diverted all water away, many times water will enter a crawlspace from your sprinklers or even one of your neighbor’s sprinklers or downspouts. It is very typical to see a stem wall foundation where the soils are bad or the ground is very uneven. 

As you can see, both have positives and negatives and more than anything it just comes down to price point and personal preference, however I will say that over the past 15 years I have seen far more issues related to crawlspaces than I have a slab foundations. If you decide to go with a stem wall foundation, you MUST monitor the crawlspace regularly to ensure there is no moisture present and ventilation is sufficient. Don’t shy away from either foundation, as both are solid and have areas where one is more desirable than the other, but definitely be aware of the pros and cons! I hope this helped a little. 

Dave Kimbrough
The Kimbrough Team

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How has advancing technology changed Grand Junction Real Estate?

Dear Dave,

I recently went through the home selling and buying process and things have definitely improved, thanks to technology!  I appreciated the fact that I could look for houses on-line through searches that my Realtor had set up for me and the house I was selling also had an on-line presence.

I really think technology made a difference in how quickly and efficiently both our transactions happened.  What I was curious about is how has technology changed your business and how do you keep up with it all?

Thank you for your time - look forward to reading!

Dennis and Eileen - Delta, CO

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Dennis and Eilieen,

You experienced, first hand, what technology has done for the real estate business and for the most part it is a good thing. Information dissemination and transaction efficiency are probably the two most significant advances that technology has provided.

In today’s real estate process you have everything available at your fingertips. At The Kimbrough Team we set both buyers and sellers up on searches that help either locate a new home, for buyers, or inform them of every new listing and price reduction of competing homes, sellers. All this information is sent out on a set schedule and allows both buyers and sellers to effortlessly keep up on what is happening in the market and be as educated as they can be during the buying and selling process. During the transaction/contract process, all the paperwork is electronically available and signatures are rarely done in person anymore.

No longer do you need to keep a hard copy of all your paperwork. All our customers paperwork is available via a Dropbox or Google Drive account. Every transaction document is electronically available from your phone, ipad or computer and all you have to do is log-in to gain access.

The most impactful technological advance has been electronic signatures. We now do most all of our signatures electronically. These signatures eliminate the need for printing, faxing, meeting in parking lots and picking up and dropping off copies. When you electronically sign a document, copies are automatically routed to all the involved parties. You can sign from your mobile phone or any electronic device that enables email access. I have signed documents from a beach in Mexico and from my daughters dance recital at CMU! The convenience of all the technological advances certainly allows one to conduct business while on the go like never before.

“The convenience of all the technological advances certainly allows one to conduct business while on the go like never before.”

Being able to conduct business on the go is a blessing and also a curse. It enables me the ability to do business while spending time with my family, but also makes it hard to ever escape the 24/7 nature of my business. I think all our customers appreciate these technological advances, as it has made everything more efficient and far less cumbersome. It has made everything easier, but as life gets more hectic I sometimes wonder if technology is not largely to blame. No doubt technology allows us to be more efficient and also allows us to do more in less time. 

From time to time it can be difficult to juggle all the information dissemination and the transaction intricacies, however having great systems and even greater people make it possible for us to manage, integrate and embrace the ever changing technological advances that will continue to change the real estate landscape. These changes will hopefully continue to make the process more enjoyable and efficient for everyone involved!

Dave Kimbrough
The Kimbrough Team

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Should you sell your home this fall or wait until spring?

Grand Junction Real Estate Advice

Dear Dave,

I am thinking about getting my house on the market but I have a couple of questions for you before I do that. First, if I'm not ready to put it on the market for another 30 days, is that going to be too late in the year? If it were you, would you put your home on this fall or just wait until the selling season in the Spring again?  Secondly, what are the 3 most important things for me to do to get the most money out of it when I do sell?

Mike, Fruita

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Let me start by saying that you should never put your home on the market until you and your home are ready. You need to be ready, emotionally, and your home needs to be in the proper condition for market. If you are not 100% ready and committed to selling then don’t put it up and make a halfhearted effort. That being said, you must also have your home in the best condition it can be in. Top tier condition can make all the difference between selling and not selling. Put in the effort to make is sparkle.

Too late to sell? Traditionally our market stays active into late October and even early November, depending on the weather. If it gets cold early, the market can slow a little earlier. We are coming off a very good summer and I fully expect home sales to remain good through the fall. Once we get to November, things do change, but typically you have far less competition and I often urge my sellers to remain on the market over the winter when many would be sellers are tired and give up for the winter. Homes do sell during the winter, we often have good winters, because we are taking advantage of the lesser inventory and know that when we have less competition our odds of selling go up! : ) Does the market slow down during the winter? Yes, but don’t fall into the “nothing sells during winter” mentality, it just is not true.  

I do not have a crystal ball, but I do not believe that waiting until the spring of next year will cost you money on the sale price and in fact it could make you a little money. I do not anticipate any significant upswings, but I do anticipate good appreciation to continue in the near term. I will add that there are sooo many variables and trying to predict how next spring will perform is a crap shoot, at best. Act on the now and if the time is right for you to sell, give it a go!! Does it matter to you if you sell in November or April? I bet not, so get it on the market.  You do not want to miss the perfect buyer in November, because you waited.               

The 3 most important things you can do to maximize your money?

1. Make sure it is marketed properly, with a clear marketing plan and an accurate pricing strategy.

2. Make sure your home is in tip-top condition (inside and out) and don’t put it on the market until it is ready.

3. Accentuate your properties positive features, appeal to the right buyer!

Try to get your home ready and on the market as soon as you can and take advantage of the early fall market. I bet you can get it sold and be moving on to the next stage of your life! Best of luck with your home sale.

Dave Kimbrough
The Kimbrough Team

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Should we remove old furniture before getting a house on the market?

Dave,

About 2 months ago, my dad passed away and my brother an I are in the process of trying to figure out what to do with the house and all his belongings, as we are finally in the frame of mind to go through everything. We know we are going to sell his house, but the question is, should we leave all his furniture in it or pull everything out? Most of his furniture and decor are old and not in very good condition, as he lived alone and has been using the same furniture for the better part of 25 years. My brother thinks we should leave all the furniture in it, because a couple of his friends told him that it would show better furnished. I want to get rid of everything and show it as a vacant home. Can you provide some clarity on which way we should go? I always enjoy reading your advice.

Sherri, Grand Junction

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Sherri,

Sorry to hear about your loss. I know it is an emotionally draining process to weed through the belongings of a loved one that has been lost. You did not ask, but I think it is perfect that you have waited a few months to get a clear head and hopefully you are emotionally ready to take on the task of going through his belongings, as the emotions can be raw and time can be such a wonderful healer! 

From what you have described in your question, it is hard to provide a totally informed answer, but I will give it a stab. I would first recommend that you discuss your options with your real estate agent, as they should be able to offer some good ideas after seeing his existing decor. Keep in mind an opinion of decor that is not in good condition, can be relative. What I mean is, just because you would not have it in your home or do not appreciate it, does not mean that the average buyer in his home’s price range will see it the same way. Are the furnishings in line with the home’s price range and the buyers expectations in that price range? Also, does the furniture drag down the overall feel and quality of the homes interior?  After you assess these questions, you can start to make your decision. Many times the elderly have stuff everywhere. It is not, necessarily, that they are pack rats, but that it is more difficult to put things away and they have a hard time getting rid of non-essential items, thus things start piling up. I feel very confident that I can recommend a whole home cleaning and de-cluttering session to get things started and then move on to the furniture, because after you de-clutter and clean, things may take on a whole new look and feel.

I completely understand why your brother’s friends say “it will show better with the furniture in it.”  I also watch HGTV and it is rare that you hear a home shows better empty than furnished, but it does happen. I see it with some regularity, some homes would show better without the owner’s furniture than with it. Listen, it is like clothes, sometimes the style just does not work with the person and furnishings can be the same way, they just don’t fit with the house. More often than not, your brother’s friends are right on, homes generally show better with furniture as it allows people to “see” how rooms set up, feel and live. Two other advantages of furniture are, it typically makes a home feel warmer and keep in mind that empty homes may be interpreted by buyers that the seller is “extra” motivated, which may encourage lower offers.

“My suggestion is to get some outside advice from your real estate agent and have an open and honest conversation about your options and which one will help bring the highest value or help it sell quickest, whichever is your main objective.”

My suggestion is to get some outside advice from your real estate agent and have an open and honest conversation about your options and which one will help bring the highest value or help it sell quickest, whichever is your main objective. You can get a professional stager or someone with some home decorating experience to come in and re-arrange the furniture he does have, as I have seen this have a dramatic effect on the overall feel and appearance of a home.  You have many options, but consider all these questions and angles as you make progress and the solution will come clear.  Hope this helps and I bet if you clean, de-clutter and re-arrange it will present in a different and better light.

Dave Kimbrough
The Kimbrough Team

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