- Listen to the podcast “#26: Deal Analysis – Taking Advantage of Appreciation in Colorado Springs” on the Colorado Springs 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.
- Bought a couple of live-in-flips in Denver.
- Bought my first rental property in Texas in 2020, and I continue to purchase rentals in both Colorado Springs and out of state.
Long Term Real Estate Investing Goals
- Acquire rental properties that generate enough cash flow to cover my family living expenses
Strategy for Achieving Goals
- Currently, I use my side business to accumulate enough for a down payment and purchase mostly off the MLS.
- For my next owner-occupied property, I’m also looking at a house hack or possibly another live-in-flip.
Investment Property Details
- 3 bedroom 2 bathroom, 1600sqft condo
- Southeast side of Colorado Springs, near Peterson Air Force Base and the airport
Appealing Features of the Property
- Priced right: I had hoped to pick up properties with my refi money from my live in flip in Denver.
- Turnkey: the property had just been purchased a few months earlier and renovated.
- Lots of development in that part of town makes it a solid investment.
Investment Business Plan
- Long-term buy and hold
- My agent Jenny found the property on the MLS.
- I didn’t have a great feel for where the hotspots are in the Springs, so Jenny helped me out with this area.
Property Contract Details
- The property was recently renovated, but the furnace was original and I planned to object to that during the inspection, since it was having issues.
- The property was listed at $240K, and I offered $250K with no appraisal gap.
- The property was appraised at $241K, so we worked out a deal that they would sell it at that price, but I wouldn’t object to the furnace. Replacing the furnace cost $3580, so I came out ahead.
- The property had been under contract once and the deal fell through, so we think that is why they were so amenable to negotiating.
- The listing agent liked my financing package, especially the fact that I was pre-approved through a reputable lender.
Property Financing Details
Plan vs. Reality
- I was under the assumption that condos and townhomes were the same in terms of financing. I found out I had to put down 25% instead of the 15-20% I was hoping for. Ultimately, this works out great in terms of cashflow on the backend.
- I planned to list the unit at $1600 a month after running the numbers at $1500 and $1550. There were two other units in the building that were not as nice as this unit that were renting at those numbers. I got a good response and was able to rent at $1600 to good tenants within a week.
- This was my first experience with an HOA. So far, there have been no issues beyond tracking down who to contact.
- Currently, I’m self-managing the property. I’ve only had to go down there 2 or 3 times, about an hour drive each way.
- My reserve percentage is 5%; we’ll see how it plays out in the long term because the unit is newly renovated and because it’s a condo, the outside is maintained by the HOA.
Property Operating Expenses
First Year Returns
Photos of Colorado Springs Rental Condo
Exit Strategy/Long Term Plan
- I plan to hold this property for the long term, or until it makes sense to cash it out or do a 1031 exchange to turn it into something better.
I am currently under contract for a smaller 3 bedroom 1 bathroom single family home near Fort Carson in the Springs. We’re working through some inspection items right now, but I’m hopeful this will work out. Given the extremely low inventory, I feel very fortunate to be in this position.
After this, I will most likely go back to targeting properties in Texas for a couple of reasons. The first is that it’s a little cheaper than Colorado, and the second is that I like to have the option of playing in two markets. Being able to bounce between a cash flow and an appreciation market allows me to pull out equity from the Springs so that I can invest in the cashflow market in Texas.
Braden is a contributor to our 2021 Colorado Real Estate Investment Guide due out in May. If you’d like to connect with Braden to discuss real estate investing, you can reach him here: firstname.lastname@example.org, 575-308-3630, or via LinkedIn.
Interested in checking out more Colorado Springs rental properties? Find more Colorado Springs Rental Property Analyses here.