Deal Analysis – 6 Unit Multi Family w/ Value Add Upside

This awesome 6 Unit in Aurora caught our eye as it had been on the market for a while. After talking with the agent and walking the property, we saw a lot of potential in this one. The units were in good shape but hadn’t been updated for 8 years. With some sprucing up, this multi family will have some upside in rents.

This property closed Q3 – 2020.

Investor Profile

• Out of state investor with experience in multi unit properties
• Looking for a place with value add potential in a good location with strong rents

Deal Quadrant: MLS

Read about the deal quadrant and finding Denver Rental Properties.

Investment Property Details

• Type: 6 Unit Apartment Building
• Four units were 2 bed 1 bath
• Two units are 3 bed 1 bath
• Location: North Aurora near Stanley Marketplace
• List Price: $930,000
• Purchase Price: $840,000
• Why we liked it:
  • Seller maintained building very well
  • Great Location
  • In unit laundry
  • Solar

Property Contract Details

• Finding the property: Sitting on MLS for awhile
• Under contract:  Great communication with Selling Broker. They knew our professional reputation and honest negotiations, secret sauce.
• Inspection Concerns:
  • Sewer line
• Inspection negotiation outcome:
  • Seller concession for sewer line

Property Financing Details

• Lender: Commercial
• Loan Type: 15 year term, 30 year AM, 3 year fixed rate @3.7%, 75% LTV, no prepayment penalty, 1% origination
• Appraisal: Above
• Seller Concessions: Yes
• PMI: N/A
• Interest Rate Buy Down?: No

Spreadsheet Rental Analysis CURRENT

Property Operating Expenses CURRENT

First Year Returns CURRENT

Spreadsheet Rental Analysis PRO FORMA

Property Operating Expenses PRO FORMA

First Year Returns PRO FORMA

Conclusion

This was a great fit for our client as there was the opportunity to turn and update units to increase rent and overall upside. Once the building is stabilized at higher rents, it can be refinanced to pull capital back out. The investor plans on using a non-recourse loan on the refi. A smooth transaction with great cooperation on both sides.

YouTube Video: Rental Property Analysis – 6 Unit Multi Family w/ Value Add Upside