Deal Analysis – Rental House in Lakewood, CO

Usually, the properties we buy on the west side of town are for House Hackers and Nomaders™. Our investors wanted to buy an investment property that was near their home. Cash flow was not their main goal as they are buying this for retirement purposes. With Lakewood’s Proposition 200 passing in 2019 (which limited residential growth), there’s potential for solid appreciation.

Usually, the properties we buy on the west side of town are for House Hackers and Nomaders™. Our investors wanted to buy an investment property that was near their home which is on the west side. Cash flow was not their main goal as they are buying this for retirement purposes.

With Lakewood’s Proposition 200 passing in 2019 (which limited residential growth), there’s potential for solid appreciation. Regardless, the west side should have strong demand from renters and buyers for many years to come.

This property closed in Q1 2020.

Investor Profile

  • Looking to build a rental portfolio with single family home rentals
  • No House Hacking or Nomading™
  • Business owners who want to build a rental portfolio for retirement planning.
  • They wanted the west side of town (west of I-25)

Three Learning Options!
  1. Listen to the podcast “#154: Deal Analysis – Lakewood Rental House Analysis” 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: Single Family Detached
  • 5 bedroom, 3 bathroom
  • Location: Lakewood, CO
  • List Price: $400,000
  • Purchase Price: $402,500
  • Why we liked it:
    • Location
    • Property in great shape
    • Bedroom layout is very rental friendly
denver real estate map
Lakewood Rental House Analysis near W Florida Ave and S Sheridan Blvd.

Property Contract Details

  • Finding the property: Normal education and searching process of reviewing properties, doing spreadsheet analyses and then walking them. This was the first property we put an offer on and got it accepted.
  • Under contract:  Above ask and secret sauce
  • Inspection Concerns:
    • Minor electrical
    • Exterior brick work needed
    • Misc. minor items
  • Inspection negotiation outcome:
    • Sellers did everything: Electrical, exterior brick work and misc. minor items

Property Financing Details

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

Spreadsheet Analysis – After Move Out

Home Deal Analysis spreadsheet - Move out
Home Deal Analysis spreadsheet - Move out
Home Deal Analysis spreadsheet - Move out

Property Operating Expenses

Property Operating Expenses analysis spreadsheet

First Year Returns

first-year returns on home sale

Conclusion

The investors added two egress windows to the basement bedrooms to make them conforming and safer. We always recommend to rent out conforming bedrooms with egress windows. It makes it safer for the tenant in the event of a fire and reduces your liability. What happens if there is a fire and the tenant cannot escape through the door? If there is no egress window, they will be in trouble!

This is a great long term rental that cash flows nicely. The investors are one property closer to their retirement goals!

Video: Deal Analysis – Lakewood Rental House Analysis

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Rental Property Spreadsheet • House Hacking Spreadsheet BRRRR Calculator Spreadsheet • Fix and Flip Deal Analyzer Investing Maps • Rehab Pricing Estimator
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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