Our clients wanted to buy a house in an area they could enjoy while living there and hopefully ride the wave of transitioning neighborhoods and therefore appreciation. This case study breaks down a home in a great location just north of City Park on the edge of Whittier and Skyland neighborhoods. Their focus is on accumulating properties through Nomading™ rather than focusing on reducing their current living expenses with house hacking.
This property closed in Q4 2019.
Investor Profile
- Young couple who recently relocated back to Denver
- Wanted to start building a rental property retirement portfolio
- Did not want roommates, so focused on the Nomad™ strategy
- Wanted to live in an up and coming area for personal enjoyment and appreciation potential
- Listen to the podcast “#152: Deal Analysis – Denver Single Family House Nomad™” on the Denver 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.
Deal Quadrant: MLS
Read about the deal quadrant and finding Denver rental properties.
Investment Property Details
- Type: Detached single family house
- 3 bedroom, 2 bathroom
- Location: Whittier neighborhood
- List Price: $395,000
- Purchase Price: $407,000
- Why we liked it:
- Location, location, location
- Updated
- House pushed back on lot
- Lots of charm and character, exposed brick, etc
- Lots of off-street parking in alley
Property Contract Details
- Finding the property: Timed purchase and closing for current lease ending. Looked at multiple properties to dial in area and price point. Great location and great house, so it received multiple offers.
- Under contract: Above ask and secret sauce
- Inspection concerns:
- Roof
- Water heater
- Inspection negotiation outcome:
- New roof through seller’s insurance
- Seller concession for water heater replacement
Property Financing Details
- Lender: Conventional
- Loan Type: 5% down conventional
- Appraisal: Above!
- Seller Concessions: $1,350
- PMI: Monthly
- Interest Rate Buy Down?: Yes
Spreadsheet Analysis – After Move Out
Property Operating Expenses
First Year Returns
Conclusion
Our Denver rental spreadsheet shows a negative cashflow when they move out. Our analysis includes a 10% property management fee ($2,940/yr). If they self manage, that will get the property very close to neutral cash flow while still accounting for a 3% vacancy and 8% repairs and reserves. They plan on holding high cash reserves to handle any unexpected curveballs from life, the property or the market. This is a great fit for their personal living goals and long term investing goals.
Video: Deal Analysis – Denver Single Family House Nomad™
Podcast: Play in new window | Download | Embed
