Rental Property Walkthrough | Investment & Deal Analysis (Denver, CO)
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Rental Property Walkthrough | Investment & Deal Analysis (Denver, CO)


Hey, Everyone I’m Dave Meyer with Bigger Pockets and join me as we check out this 4 bed, 2 bath, 1/2 duplex in the Park Hill neighborhood of Denver to see if it can generate some cash flow. Hey, you must be Bill. I am. Nice to meet you, I’m Andrew. This is my client, Dave. Good to meet you Bill, with Madison & Co. alright well thanks for taking the time to show us around tell us what you got. Sure, so what I have here is a four-bed two-bath one half duplex South Park Hill neighborhood listed at 299 thousand we have 860 square feet above 860 square feet below the entire basement has been refinished we took out all the old piping so no galvanized metal pipe down there we got rid of the old rusty pipes as well by the the laundry so we have new pex piping, brand new granite countertops a big open-concept and flow perfect for a rental for students or otherwise That’s what I like to hear. so can you tell people who might not know anything about Denver or Park Hill a little bit about this neighborhood Sure Busy man I am busy man, lots of calls this neighborhood is great it’s a transitional neighborhood that we’re seeing right now is located just a few blocks over to the west from Lowry and the stapleton complex which is fantastic lot of new commercial developments have gone in there a lot of opportunity for students were also just a block north of Johnson & Wales so it’s pretty easy for the college students if they’re looking for a place to rent or some roommates to share the rent costs with 4 bedrooms and 2 baths is an excellent way to cut down those costs and give them more money for books. Absolutely, I’m sure that we’re spending absolutely a lot of knowledge is power. So, for people who are just thinking about getting into real estate investing this is a really prime opportunity you have downtown Denver which obviously is super-high rants and we have the Stapleton area which also has high rents in a really high-end neighborhood we’re right in the middle right here there’s obviously nice housing stock in this area so what I’m thinking immediately is that this is a neighborhood that is eventually going to start to fill in and prices for both the house and the rental are going to go up over time And Bill I also understand that it’s already been divided so they’re separate tax ID numbers for both units There are, we have separate tax ID’s. Both units are actually for sale we only have the one listed currently but the seller ideally wants to give it off to an investor to buy the entire building and then you move it from there Perfect. I love hearing that. I mean it’s impossible to find duplexes in Denver right now so it seems like a great opportunity Yeah. Let’s do it Alright guys so let’s recap. Today we’re looking at a 4 bed, 2 bath, 1/2 duplex that is selling for $300,000. Its price at about a $174 per sqft which is great for Denver this area South Park Hill is a growing neighborhood that is between two very high rent markets of downtown Denver and Stapleton. It’s been completely renovated and is within walking distance of a college so we know this will make for great student rentals. Lastly, both sides of this duplex are being so there’s an opportunity to grab both. Something we’ll keep in mind when making our decision. Inside the unit you walk into a bright and open living space with hardwood floors, lots of light, and an open-concept feel. the first two bedrooms have great space light and hardwood carried throughout it’s definitely a lot nicer than what I had in college. I think we can get about $400 to 500 dollars and rent for each of these bedrooms. The kitchen is well done with new countertops and clean appliances, since this will be a student rental the kitchen fits right in it’s not too nice, but it’s certainly good enough for college students probably not doing too much of their own cooking anyway. Downstairs is what really makes this rental great. You have this massive living space that is just as bright as the top floor which just doesn’t happen in duplexes of this nature. The bedrooms in the basement are spacious and clean and the ceiling height is unheard of for a basement. To top off the living space downstairs there’s a very nicely done jack-and-jill bathroom connecting the two rooms. Overall, I think we can get about $400 to $500 per bedroom down here just like the bedrooms upstairs. Overall, this unit is very impressive and designed perfectly for its market I would say we can get between $1,900 and $2,100 altogether for the four bedrooms. But we want true numbers to see if this deals gonna work, so let’s see what we got. The purchase price of this property is about $300,000 we’re going to put 20% down and that will leave us with the loan amount of about $240,000 amortized over 30 years. Interest rates are rising slightly so we’ll say we can get a 4% fixed rate. This will leave us with a monthly mortgage payment of $1,145 dollars the great news is that shortly after our walk through the current owner leased the unit for $2,200/mo. That’s 10% more than we actually thought when we were walking through the place and that means a tenant would already be there if we bought it which is a huge bonus. The expenses are pretty clear. The tenants will pay for their own electricity, water and internet. As the owner, we will cover the garbage, sewer, taxes, and insurance for a total of about a $175 per month. We also need to set aside money for capital expenditures and repairs and this can vary greatly from property to property, but given that this place is in such great condition, has a new roof and boiler with warranties in place and I can do a lot of the repair work myself – i’m going to budget about $350 per month for repairs. So in total we have $525 in expenses. If you add that to the $1,145 dollars per month for the mortgage that will leave us with the total of $1,670 dollars per month in expenses. To calculate the cash flow simply subtract the total expenses from total income. That will leave us with a very nice cash flowing property of $530 per month. So far sounds like a pretty solid deal to me. The other metric that I care about besides cash flow is a Cash-On-Cash Return. We put down $60,000 for the down payment we also estimate closing costs will be around $6,000. So the total cash invested would be $66,000. Our annual cash flow on this property would be $6,360. divide that by our total investment and we end up with a 9.6% Cash-On-Cash Return, which is an incredible deal in Denver these days. alright so now we’re going to walk through i think this checks off a lot of what you’re looking for. Ya, absolutely. I mean everything is in great shape, it’s a good neighborhood and most importantly it’s cash flowing. So… …Brace yourself. I know we look at a lot of places… I think we should make an offer. That’s what I wanted to hear. trying to make my man’s weekend right now but not every place that we look at is going to make a great deal we’re not going to offer on everything but this is actually one of the best places we’ve seen in a long time so let’s go do it I’m Dave Meyer. I’m Andrew Keal. We’re with BiggerPockets and we’ll see you next time.

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