Duane Duggan

Duane Duggan, Realtor and Author RE/MAX of Boulder

Welcome to 2024! As we embrace a fresh start, it’s customary to set New Year’s resolutions. People often aim for weight loss, gym memberships, waking up earlier in the mornings, and more. How about adding a real estate goal or two to your list this year? It might be worth pursuing.

In the realm of real estate, having time on your side is a significant advantage. Good things often unfold when there’s ample time. Yet, our tendency to procrastinate can hinder us from diving into the real estate market. Initiating progress on these resolutions sooner rather than later is key.

Take a moment to jot down your real estate aspirations and craft a plan to reach them. Remember, delaying until 2025 means starting a year later. Irrespective of your age, consider embracing at least one of the following resolutions.

I resolve to save for a down payment on my first home

Saving for a down payment is the biggest hurdle most first-time buyers face. Research low down payment loan programs so you know how much of a down payment you need. Check out any available down payment grants or assistance programs that may be available locally. Figure out what you can cut in daily expenses and put into savings. Skip the daily $5 latte. Check out Colorado’s First-Time Homebuyer Savings Account (FHSA), which can help you save for a down payment: coloradorealtors.com/fhsa/

I resolve to buy my first home

Once you have the down payment ready to go, it’s time to buy your first home. Meet with a local mortgage lender and determine a price range you can afford for a home. If the lender identifies qualifying or credit issues, work on a plan to resolve those. Get pre-approval from the mortgage lender first before meeting with your Realtor® to see what homes are available in your price range. 

The homeownership rate in the U.S. in 2023 was 66%. From this figure, you can see that a large percentage of people never own their own home. Nevertheless, according to a National Association of Realtors® (NAR) study in 2023, the average homeowner wealth was 40 times that of an average renter.

I resolve to move up to my next home

As the old saying goes, “Life Happens,” which means sometimes you need a bigger house or one in a different location. If you’re expecting to search for a new home this year, contact your mortgage lending professional and your Realtor. You can learn how much you can spend on a new home, and whether you or not you will need to sell your old home to buy the next one. If you can keep the old home and rent it out, you have already achieved the resolution below.

I resolve to buy my first rental property

As stated above, the homeownership rate in the U.S. is 66%. This means that substantially fewer people own their own home AND own a rental property. I could not find a statistic showing exactly how many Americans own both a primary residence and a rental at the same time, but I’m confident that it’s a pretty low percentage. However, owning a second property can be a significant source of wealth building. 

If you can keep your old house as described in the last resolution, you’re on your way to fulfilling this resolution. To acquire your first rental property, you might be able to refinance your old home to pull cash out for a down payment on a new residence. Then you can rent the first house and use a low-down-payment, owner-occupied loan to buy the new property.

If this is not possible, check into investment property loans and get pre-approved for a loan to buy a rental property. Check to see how much down payment is required. It’s usually 20%.  

Most people don’t like to own a rental because they don’t want to be a landlord. Research companies that can professionally manage your investment property. This will make you a much happier rental property owner.

I resolve to pay down my mortgage

People have different goals regarding their mortgages. Some homeowners aim to fully own their homes by the time they retire, while others prioritize building equity to secure a larger down payment for their next property. Notably, in the U.S., we stand among the select nations offering 30-year mortgages.

The argument for keeping your mortgage for 30 years is that towards the end of the term, you are paying it off with cheaper, inflated dollars. There is also an argument to keep the balance high for tax deductibility and use the proceeds from a mortgage to invest in other things. For those prioritizing swift mortgage repayment, numerous acceleration techniques exist to expedite the process, and consulting with a financial planner can guide these decisions.

I resolve to build a real estate investment retirement plan 

I once heard a saying that captures a universal truth: “We spend our youth creating wealth, then we spend our wealth creating youth.” Reflecting on it, this statement holds so much validity! Having three family members residing in senior communities here in Boulder, I’m struck by the significant wealth required in the later stages of life to sustain housing and medical needs.

Owning real estate offers a silver lining; property values consistently rise, and rental income continues to grow, providing essential support during retirement years. As mentioned earlier, many Americans don’t possess both a home and a rental property, let alone a diversified real estate portfolio. However, a feasible real estate investment plan need not be extensive to yield benefits. For instance, purchasing a rental property every two years over the next decade can gradually build a substantial foundation.

Imagine having five mortgage-free rental properties by the time you retire – an impressive nest egg that could cater to your needs as you age. This strategy showcases how real estate, even in smaller steps, can effectively work for your financial future.

I resolve to invest in real estate using IRA funds

It’s been possible to invest in real estate using IRA funds since 1978. Most Americans don’t know that, let alone know how to do it. Many CPAs aren’t familiar with the process either. Investing in real estate in your IRA allows you to let real estate values and income grow tax-free, helping grow your retirement account faster.   

I resolve to get my estate plan in order

As I said in the beginning, there is a resolution on this list for everyone regardless of age. If you have created real estate wealth, it is important to figure out what happens when you are gone. Meet with an estate planning attorney and make your wishes known. Even the great musician, Prince, died with a $300 million estate and had no will. A little planning makes it easier for everyone!

Get time on your side

The younger you are when you start acting on any of these resolutions, the better. When I started selling real estate in 1978, Baseline Subdivision houses in Boulder were selling for under $30,000. Today, they start around $750,000. Not exactly a get-rich-quick, fix-and-flip TV story, but an undoubtedly strong investment.

Have conversations with your Realtor, mortgage lending specialist, and financial advisor. Collaborate on a plan and take action right away!

By Duane Duggan. Duane graduated with a business degree and a major in real estate from the University of Colorado in 1978. He has been a Realtor® in Boulder since that time. He joined RE/MAX of Boulder in 1982 and has facilitated over 2,500 transactions over his career. Living the life of a Realtor and being immersed in real estate led to the inception of his book, Realtor for Life. For questions, e-mail [email protected], call 303.441.5611 or visit boulderco.com.