Deal Analysis – Rental Property Purchased During COVID-19 Pandemic

This is a condo in one of our favorite investor complexes in Aurora. We originally put an offer in but lost out to a cash offer. It fell out of contract when the stock market tanked due to COVID. I am not sure if the buyer had his cash in the stock market, but regardless, it’s a good reminder to get your money out of anything volatile when looking to buy.

Property Deal Analysis Overview

This is a condo in one of our favorite investor complexes in Aurora. We originally put an offer in but lost out to a cash offer. It fell out of contract when the stock market tanked due to COVID. I am not sure if the buyer had his cash in the stock market, but regardless, it’s a good reminder to get your money out of anything volatile when looking to buy.

The listing agent called us but then later realized that they had taken a backup offer. She was contractually obligated to take that offer. That offer fell out too. She came back to us, and we were able to put the property under contract and close it with financing.

This closed in late April and happened during the COVID-19 lockdown. Fortunately, we know the complex well and had walked it when it initially came on the market. We were not worried about rents, since many tenants in this complex are Section 8 with guaranteed government rent.

This property closed Q2 2020.

Investor Profile

  • Buy and hold investor who wants to diversify his retirement money in the stock market.
  • Repeat client who knows what he wanted.
  • He prefers turnkey properties that property management can handle from day one.

Three Learning Options!
  1. Listen to the podcast “#188: Rental Property Purchased During COVID-19 Pandemic” 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
  • 3 bedroom, 2 bathroom
  • Location: Aurora
  • List Price: $205,000
  • Purchase Price: $205,000
  • Why we liked it:
    • Turnkey property
    • Fully remodeled from a flipper.
    • We know the complex and it’s a great investment.
Denver Real Estate Map
Deal Analysis – Investment Condo in Aurora near E Mississippi Ave and S Buckley Rd

Property Contract Details

  • Finding the property: This property was on the MLS, but fell out of contract twice before we purchased it. The agent regretted not taking our offer initially because of our track record and reputation.
  • Under contract: $205,000
  • Inspection Concerns:
    • Minor punch list items
  • Inspection negotiation outcome:
    • Seller took care of all punch list items

Property Financing Details

  • Lender: Conventional
  • Loan Type: 25% down conventional
  • Appraisal: at value, no issues.
  • Seller Concessions: 0
  • PMI: None
  • Interest Rate Buy Down?: Yes

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

If you’re a regular follower, then you know we buy many of these condos as they generate good cash flow and are solid “base hit” properties for building a rental portfolio. We are big fans of acquiring many “base hit” properties as they are a proven and realistic way of building a rental portfolio.

Our client was able to pick up a great property while many investors were sitting on the sidelines. He wanted to take advantage of the low interest rates and is planning on getting a Section 8 tenant in there. Another great property is added to his portfolio!

Read another deal analysis on a different investment condo in this same complex.

YouTube Video: Rental Property Analysis – Rental Property Purchased During COVID-19 Pandemic

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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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