Deal Analysis – Colorado Springs Partial BRRRR

This deal analysis breaks down an elusive Partial BRRRR in Colorado Springs.  I found this property off-market and presented it to the buyer, as it met his deal profile.

This property closed Q4 – 2020.

Investor Profile

• Purchased one rental property prior to this one
• This is the first BRRRR property he purchased

Deal Quadrant: Networking

Investment Property Details

• Type: Single Family Home
• 3 bedroom, 1 bathroom
• Location: Platte and Circle
• List Price: $211,000
• Purchase Price: $211,000
• Why we liked it:
  • Room for equity play
  • In good condition, needs some system work (electric, furnace, water heater)
  • Currently rented with a long-term tenant
  • This is buyer’s first BRRRR, and with the equity room, this will be a fantastic opportunity to learn the process and work with renovations with “room for mistake.”

Property Contract Details

• Finding the property: Secret Sauce- I found this property off-market for this buyer
• Under contract:  Acting fast (2 week close), buyer provided the seller with her wishlist offer and cash/quick close, it was a great match for both buyer’s wants and seller’s wants- everyone was very happy with the win-win!
• Inspection Concerns/Negotiation Outcome:
  • None – Buyer waived the right to object but did not waive inspection termination

Property Financing Details

• Lender: Cash
• Loan Type: N/A- Buyer is exploring cash out refinance options to be able to repeat this process on future properties
• Appraisal: N/A
• Seller Concessions: $1,000- there were a few items of confusion on appliance inclusions upon initial contract and after discovering the tenant owned some.
• PMI: N/A
• Interest Rate Buy Down?: N/A

Conclusion

• Buy: Purchased for $211,000 and ~$2,000 in closing costs, cash purchase
• Renovate: Estimated rehab of $25,000, All In: $238,000
• Rent: Currently rented at $1050/mo.  Current Market Rate Rent at $1450/month. Great tenant residing in the property that Buyer plans to work with to keep him there.
• Refinance:  Estimated ARV at $265,000, New Loan estimated at $199,000 (75%) (not including closing costs)
• Total cash in home: $39,000 (14.7% of appraised home value) with 25% equity in the home.
• Compared to putting down $53,000 (20%) OR $66,250 (25%) or to purchase a fully renovated home at $265,000.  Additionally, the ARV could be upwards of $275,000 depending on level of upgrades.
• Repeat!

For more Colorado Springs Deal Analyses including house hacks and multi family properties, check out our Colorado Springs Deal Analyses page.

YouTube Video: Rental Property Analysis – Colorado Springs Partial BRRRR