Deal Analysis – Denver Single Family House Nomad™

Our clients wanted to buy a house in an area they could enjoy while living there and hopefully ride the wave of transitioning neighborhoods and therefore appreciation. This case study breaks down a home in a great location just north of City Park on the edge of Whittier and Skyland neighborhoods. Their focus is on accumulating properties through Nomading™ rather than focusing on reducing their current living expenses with house hacking.

This property closed in Q4 2019.

Investor Profile

• Young couple who recently relocated back to Denver
• Wanted to start building a rental property retirement portfolio
• Did not want roommates, so focused on the Nomad™ strategy
• Wanted to live in an up and coming area for personal enjoyment and appreciation potential

Deal Quadrant: MLS

Read about the deal quadrant and finding Denver rental properties.

Investment Property Details

• Type: Detached single family house
• 3 bedroom, 2 bathroom
• Location: Whittier neighborhood
• List Price: $395,000
• Purchase Price: $407,000
• Why we liked it:
  • Location, location, location
  • Updated
  • House pushed back on lot
  • Lots of charm and character, exposed brick, etc
  • Lots of off-street parking in alley

Property Contract Details

• Finding the property: Timed purchase and closing for current lease ending. Looked at multiple properties to dial in area and price point. Great location and great house, so it received multiple offers.
• Under contract:  Above ask and secret sauce
• Inspection concerns:
  • Roof
  • Water heater
• Inspection negotiation outcome:
  • New roof through seller’s insurance
  • Seller concession for water heater replacement

Property Financing Details

• Lender: Conventional
• Loan Type: 5% down conventional
• Appraisal: Above!
• Seller Concessions: $1,350
• PMI: Monthly
• Interest Rate Buy Down?: Yes

Spreadsheet Analysis – After Move Out

Property Operating Expenses

First Year Returns

Conclusion

Our Denver rental spreadsheet shows a negative cashflow when they move out. Our analysis includes a 10% property management fee ($2,940/yr). If they self manage, that will get the property very close to neutral cash flow while still accounting for a 3% vacancy and 8% repairs and reserves. They plan on holding high cash reserves to handle any unexpected curveballs from life, the property or the market. This is a great fit for their personal living goals and long term investing goals.

Video: Deal Analysis – Denver Single Family House Nomad™