1% Rule with Aurora 1 Bedroom Condo- Case Study

This case study was discussed in the March monthly round up.

Property Details:

  • 1 Bedroom
  • 1 Bathroom
  • Purchase price: $100,000
Aurora Property Location

Despite popular opinion, low-cost properties can still be found in the Denver market. This is a great example of a basic condo that needed some cosmetic work to get it rent ready. The new owner is going to put in new carpet, paint, and give it a thorough cleaning before getting a tenant in place. This buyer was required by the lender to put down 25% to close on the property due to the investor to the owner-occupant ratio in the complex. This is very common with condo complexes around town. A benefit of this is that the higher percent down reduces the closing cost and interest rate.

March2019
March2019 deal
March

This property does meet the 1% rule. This is not something that I advise my clients to worry about but many online forums and articles often quote this along with the 2% rule to justify a good investment. In a market like Denver its difficult to find properties that match these criteria. However, this property was found on the MLS and had been listed for over 100 days. If you know what you are looking for and are confident in the numbers that you run low-cost investments like this can still be found here. This property is going to cash flow about $232 per month and provide an 8% cash on cash return with property management.

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Authors
Chris Lopez
Chris Lopez is a Denver area real estate entrepreneur and investor, as well as the host of Bigger Pockets’ House Hackerz and the Denver Real Estate Investing Podcast.
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