Deal Analysis – Aurora Rental Condo With Value Add Play

Aurora condos are typically the best cash flowing investment properties in the current Denver metro real estate market. Our clients picked up their third rental property in Aurora. This is a great property because it’s fully remodeled and ready to go. Also, there is a relatively easy value-add play of turning a second living room into a fourth bedroom by adding a door and some drywall work. More bedrooms = more rental income.

Aurora condos are typically the best cash flowing investment properties in the current Denver metro real estate market. Our clients picked up their third rental property in Aurora. This is a great property because it’s fully remodeled and ready to go.

There is a relatively easy value-add play of turning a second living room into a fourth bedroom by adding a door and some drywall work. More bedrooms = more rental income.

Investor Profile

  • Business owners looking to build a rental portfolio for long term retirement planning
  • Also wanted diversification from the stock market
  • Fast decision makers, which helped them win this deal

Three Learning Options!
  1. Listen to the podcast “#158: Deal Analysis – Aurora Rental Condo With Value Add Play” 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 Rental Properties.

Investment Property Details

  • Type: Condo, End Unit
  • 3 bedroom, 2 bathroom
  • Location: Aurora
  • List Price: $259,973
  • Purchase Price: $259,000
  • Why we liked it:
    • 3 bedroom, but 4th bedroom buildout
    • Fully remodeled, rent ready
    • End unit
    • Near the pool
denver real estate map
Aurora Rental Condo With Value Add Play

Property Contract Details

  • Finding the property: Team and clients were watching MLS searches for potential rental properties. This condo popped up. It looks great and in a complex we like.  We acted fast, wrote a strong offer and tight contract. Clients moved quickly which helped us win it.
  • Under contract:  Under list price and quick close.
  • Inspection Concerns:
    • None
  • Inspection negotiation outcome:
    • None

Property Financing Details

  • Lender: Conventional
  • Loan Type: 25% down conventional
  • Appraisal: Above list price!
  • Seller Concessions: 0
  • PMI: None – 25% down
  • Interest Rate Buy Down?: No

Spreadsheet Analysis

Home Deal Analysis spreadsheet
Home Deal Analysis spreadsheet
Home Deal Analysis spreadsheet

Property Operating Expenses

Property Operating Expenses analysis spreadsheet

First Year Returns

first-year returns on home sale

Conclusion

Since this condo is a high quality (not a ”lipstick on a pig”) remodel, this rental should have minimal repairs for the first few years. It’s a great Aurora complex which will always be in high demand from both renters and first-time buyers.

The investors have the option of keeping it as a rental (and increasing cash flow with a fourth bedroom) or potentially selling it in 5 to 7 years to maximize their return on equity by trading up into a bigger and better rental property.

Either way, it’s a great long term investment! We’ll sit down with our clients on a regular basis to help them determine the best plan for this property based on the market and their needs.

Video: Deal Analysis – Aurora Rental Condo With Value Add Play

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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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