Deal Analysis – Fourplex Rental in Longmont

This property is an updated fourplex fourplex in Longmont, CO. It is a great location, only a few blocks off Main Street. Our client wanted a fourplex in an up-and-coming area with strong rental demand and upside for appreciation and rent increases. Acquiring this property is a big step in helping our client reach his early retirement goal.

This property is an updated fourplex in Longmont, CO. It is a great location, only a few blocks off Main Street. Our client wanted a fourplex in an up-and-coming area with strong rental demand and upside for appreciation and rent increases. Acquiring this property is a big step in helping our client reach his early retirement goal.

This property closed Q4 2019.

Investor Profile

  • Currently house hacking where 50% of his mortgage is covered. Does not want to move.
  • Has a 10 year goal to hit a certain cash flow for early retirement.
  • Sizable down payment from selling a previous property with a disciplined monthly savings rate

Three Learning Options!
  1. Listen to the podcast “#165: Deal Analysis – Fourplex Rental in Longmont” 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: Networking

Real Estate Deal Analysis Quadrant
32% of the rental properties we buy are from networking.

Read about the deal quadrant and finding Denver Investment Properties.

Investment Property Details

  • Type: Multiunit
  • 4 units
    • 2 – 2 bedroom,  1 bathroom
    • 2 – 1 bedroom, 1 bathroom
  • Location: Longmont, CO
  • List Price: $950,000
  • Purchase Price: $925,000
  • Why we liked it:
    • Great location in last affordable town in Boulder County
    • Rehabbed property
    • In unit washer / dryers
    • Separately metered utilities
    • 3 Garages
Denver real estate map
Fourplex Rental in Longmont near E 21st Ave and Main St

Property Contract Details

  • Finding the property: Our routine is to constantly network with investors and other agents to know what properties are available. This came across our desk at the right time for our client.
  • Under contract:  Below original ask
  • Inspection Concerns:
    • Lots of punch list items from rehab
    • Sewer repair
  • Inspection negotiation outcome:
    • Punch list items completed
    • Sewer repaired

Property Financing Details

  • Lender: Local Bank
  • Loan Type: 5/1 ARM, 20% down payment
  • Appraisal: At value
  • Seller Concessions: $0
  • PMI: None
  • Interest Rate Buy Down?: No

Spreadsheet Analysis

Multifamily Deal Analysis spreadsheet
Multifamily Deal Analysis spreadsheet
Multifamily Deal Analysis spreadsheet

Property Operating Expenses

Property Operating Expenses analysis spreadsheet

First Year Returns

first-year returns on multifamily rental

Conclusion

A big advantage of using a local bank for multis is the lower interest rate and the lower downpayment than conventional mortgages offer. Putting down 20% on a fourplex is a great way to maximize leverage. The property’s strong cash flow and estimated 6% cash on cash return is a great deal. Using an adjustable rate mortgages (ARM) or 30 year fixed conventional loan is a common conversation with clients. Ultimately the client’s goals and risk tolerance are the determining factors. The owner opted for the ARM for the lower rate with an estimated payoff time of around 10 years, so there is less long term interest rate risk. This is a great long term hold due to the favorable location near Main St. in Longmont, CO!

Video: Deal Analysis – Fourplex Rental in Longmont

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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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