Deal Analysis – Under $35k Down to Buy a Rental in Denver!

One bedroom condos are the lowest price point properties that you can find in Denver and Aurora. An investor can buy one for just over $30,000 out of pocket with a 25% down payment. You won’t find other rental properties that need so little down! This rental property came through our network. There was a curveball and unfortunate tragedy during the transaction: the tenant passed away.

This property closed in Q4 2019.

Investor Profile

• In addition to investing in the stock market, the investor wants to build a sizable rental portfolio for retirement planning.
• Not the investor’s first rental property.
• He knew his budget and was able to make a quick decision.

Deal Quadrant: Networking

Read about the deal quadrant and finding Denver rental properties.

Investment Property Details

• Type: Condo1 bedroom, 1 bathroom
• Location:  Aurora
• List Price: $120,000
• Purchase Price: $115,000
• Why we liked it:
  • Low price point with good returns
  • Solid performing cash flow condo
  • Good condition

Property Contract Details

• Finding the property: We are always networking by telling others what our clients need and watching what others are selling. Another investor sent an email to us that he wanted to sell so he could 1031 into a bigger property.  He sent the email to us first because we’ve closed deals together and knows we perform and our clients are ready to go.
• Under contract:  Below ask and secret sauce
• Inspection Concerns:
  • Service and cleaning of HVAC
• Inspection negotiation outcome:
  • Service and cleaning of HVAC

Property Financing Details

• Lender: Conventional
• Loan Type: 25% down conventional
• Appraisal: at value, no issues.
• Seller Concessions: 0
• PMI: None
• Interest Rate Buy Down?: Yes

Spreadsheet Analysis

Property Operating Expenses

First Year Returns

Conclusion

This is a straight forward deal and great rental unit. With condos in this price range, after a few years, we recommend that our investors look at optimizing equity. Since this is some of the most affordable housing in Denver, there’s a chance for strong appreciation. After a few years, it’s wise to look at the potential for a cash-out refinance or to sell, utilize a 1031 exchange and trade up to a better rental property. Regardless of what the investor does, he can enjoy solid cash flow for the next few years.

Video: Deal Analysis – One Bedroom Aurora Rental