Deal Analysis – 11 Unit Apartment Building

Our client for this 11 unit apartment building purchase was an out of state, first time investor looking to get into the Denver market as he plans to relocate to Denver in the future and knows  Denver has a strong real estate market. We were able to find a great multi family property in Aurora that had some upside in rents with a little updating and better management. This deal was certainly unique as we navigated the majority of it remotely with our client during many of the COVID restrictions.

This property closed Q3 – 2020.

Investor Profile

  • Out of state investor
  • Realistic expectations for returns
  • Focused on long-term upside with location and good management

Three Learning Options!
  1. Listen to the podcast “#229: Deal Analysis – 11 Unit Apartment Building” on the Denver Real Estate Investing Podcast
  2. Watch the YouTube video (at the bottom.)
  3. Read the blog post. Note, the blog is an executive summary. Get the in-depth breakdown from the podcast or video.

Deal Quadrant: MLS

Real Estate Deal Analysis Quadrant
68% of the rental properties we buy are found on the MLS.

Read about the deal quadrant and finding Denver Investment Properties.

Investment Property Details

  • Type: Apartment Building
  • 11 bedrooms, 11 bathrooms
  • Location: North Aurora near Stanley Marketplace
  • List Price: $1,500,000
  • Purchase Price: $1,400,000
  • Why we liked it:
    • Great Area
    • Strong rental market
    • Lots of new development in the area
    • Potential on rental increases with better management
    • Tenants in place
Denver Real Estate Map
11 Unit Apartment Building near E Montview Blvd and Dayton St

Property Contract Details

  • Finding the property: We found this property through the MLS.  It had been sitting on the MLS for awhile.
  • Under contract:  Below ask and secret sauce as we were able to negotiate a price that worked for both sides
  • Inspection Concerns:
    • Boiler & Balcony
  • Inspection negotiation outcome:
    • Able to negotiate $25k in seller concessions for new boiler and balcony repair

Property Financing Details

  • Lender: Commercial
  • Loan Type: 10 year ARM, 30 year amortization, 1% pre payment penalty
  • Appraisal: Above
  • Seller Concessions: $25,000
  • PMI: N/A
  • Interest Rate Buy Down?: No

Spreadsheet Rental Analysis

Deal Analysis spreadsheet
Deal Analysis spreadsheet
Deal Analysis spreadsheet

Property Operating Expenses

Property Operating Expenses analysis spreadsheet

First Year Returns

Property First Year Returns analysis spreadsheet

Conclusion

For the location and condition of this property this was a solid deal and as you’ll see in the analysis, with a little bit of updating and better management this will be a low 6% CAP in Aurora that will benefit greatly from all of the development and Opportunity Zone work going on in the area.

YouTube Video:

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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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