Top 5 Improvements To Make To Your Colorado Investment Property

You just bought an Colorado investment property and are wondering about making improvements to it. So what improvements should you make to your property in order for it to be worth more to you now in rent and later in value?

Let’s start with the really important things – systems:

Top 5 Improvements To Make To Your Colorado Investment PropertyIf your property needs updates done to HVAC, electrical, plumbing, well/septic or sewer in order to bring them up to code, you have no choice, you must do them. The more important thought is that if they are replaced they will be more energy efficient and cost you less money in the long run. Plus their improvement will be a huge selling point later.

Siding, doors, windows:

Outside is another place to look. Changing siding, doors and windows will give you a huge return on investment, make the property more energy efficient, safer and keep future tenants happy. They aren’t always expensive fixes, but they are worth every penny.

Finish unfinished areas for more living space:

Attic spaces, basements, or other rooms that could be used as bedrooms, offices or bonus rooms. They mean more money in rent and more money because of the living space additions. Baths are another huge addition that add value even just new counter tops, Adding even a half bath adds about 10.5% to the value of your home, full baths twice that. If you have the space to add one, do it.

Update your kitchen:

Just doing simple updates like painting, refacing or painting cabinets, replacing flooring or changing counter tops will add a lot of value. People look for updates in kitchens, so do what you can there even just updating the counter tops. If you have a bigger budget, gut and replace. Don’t forget to update appliances too. Old ones are a problem and new ones energy efficient.

Add storage:

Any additional storage that you can provide or build into your property will add value. Closets, built in cabinetry or shelving, storage areas. It all adds up.

Updating an investment property is a good idea, one you should not ignore! If you need more personalized suggestions for upgrades to your Colorado Investment Property give Tena D. a call today! 303-452-5853

How to Use a 1031 Exchange to Buy an Investment Property

You may have heard of someone who used a 1031 Exchange to purchase a property. They are used for investment properties and it will help you avoid having to pay immediate capital gains taxes on the sale of an investment property. So how does it work and could it work for you?

What is a 1031 Tax-Deferred Exchange?

How to Use a 1031 Exchange to Buy an Investment PropertyInternal Revenue Code, Title 26, Section 1031 says: “No gain or loss shall be recognized on the exchange of property held for productive use in a trade or business or for investment if such property is exchanged solely for property of like kind which is to be held either for productive use in a trade or business or for investment.”

That means it allows a tax deferred exchange of like-kind properties along with cash, liabilities and property. All kinds of entities can take advantage of it, individuals, C corporations, S Corporations, partnerships (general or limited) limited liability companies, trusts and any other taxpaying entities.

Like-kind relates to use:

Like-kind relates to the use of properties, and that means that the old and new properties must be held as an investment or used in a business. Vacant land is always considered as qualifying for 1031, but “flip” properties and primary residences don’t qualify. While investments are eventually going to be sold, a 1031 requires a two year holding period.

No extensions allowed:

The new property must be identified within 45 days of the closing of the sale of the old property and there are no extensions. The 200% rule requires that the total value of all of the properties that you are identifying to be less than double the value of the property that you sold. The closing on the new property must take place within 180 days of the closing on the old property. Again, there are no extensions for any reason. The money from the sale of the old property can’t be touched by the seller either. A Qualified Intermediary is required to hold it for the seller until closing on the new property. Also everyone listed on the title to the old property has to be listed on the new one as well and the new property has to be the same price as or a higher price than the old one.