We don’t often talk about condos in Colorado Springs, but they can be a rewarding asset class, especially for first time investors. This deal analysis looks at a condo I recently closed with a client that is poised to perform very well for them.
- Listen to the podcast “#62: 2 Bed 2 Bath Condo for Less than $220K in Colorado Springs” on the Colorado Springs Real Estate Investing Podcast
- Watch the YouTube video (at the bottom.)
- Read the blog post. Note, the blog is an executive summary. Get the in-depth breakdown from the podcast or video.
My clients are first-time investors who are very cognizant of having the proper amount for reserves and not overextending themselves. They had a strict budget of $230K or less, which in the Springs means we were only looking at condos.
Investment Property Details
This is a two bed/two bath condo located in the Southgate area. The area is near the South Nevada corridor, which is getting a lot of updates. This location is very central and will attract a wide variety of tenants.
Appealing Features of the Property
With a condo at this size and price point, we would usually expect only one bathroom. The fact that it has two is a great bonus for tenants and increases the rental value.
Property Contract Details
The condo was listed at $218.5K and, believe it or not, we actually got it for that price. I don’t know the last time we were able to lock up a property at list, so this was really exciting.
The inspection went pretty well, which we expected for a condo built in the 1980s. The only substantial issue we objected to was the Federal Pacific Stab-Lok electrical panel. The seller was unwilling to replace the panel, but they agreed to give the buyer a credit so they could replace it themselves before renting out the property.
The credit was for $3K, which is about what it will cost to replace it. Replacement for this panel has gone up in the past couple of months because there are some recent code changes by which electricians have to abide. It used to be about $2K.
We’ve talked about this type of electrical panel before. I tell all of my buyers to replace these panels because they are known not to trip, which causes them to overload and create a safety hazard.
Property Financing Details
I used the Rental Property spreadsheet to analyze this home.
Underwriting rents for this condo was a little difficult because it was hard to find exact comps. Conservatively, we’re estimating $1400 a month, but I wouldn’t be surprised if they are able to get $1450, or even $1500. It’s a very nice unit with an updated, modern kitchen and located in a desirable area.
Property Operating Expenses
The HOA for the condo is $250 a month, which includes water usage for the whole development. We were unable to locate the water heater during inspection and then found out that the condo association owns all of the water heaters. This is great for owners because it means that if a water heater breaks, it’s not their responsibility to fix or replace it.
First Year Returns
Even if this isn’t the best performer we’ve seen in the Springs, these are solid returns. Right now, townhomes at a higher price point are the sweet spot, but this is a great first deal for these buyers.
The location, cashflow, and condition of the property are the perfect example of a good first investment property. My clients are very happy with their condo, and it’s a positive start to their investment journey.
Even though inventory is tight, there are still great deals to be found. This condo shows that being flexible on the type of property you are willing to buy can yield excellent results.
Connect with Us
If you’re interested in starting your own investment journey, reach out to us. We love to talk about the market and figure out which asset class will best meet your goals.