Pueblo Real Estate Market Tour – 3 Properties Walked and Analyzed
We’re switching things up today. Instead of talking about Colorado Springs, we’re going to go over some highlights of a market tour Leah and Jenny recently went on in Pueblo. Since the price points in Pueblo are significantly cheaper than Denver or the Springs, people are always asking if they should invest down there. To find out, Leah and Jenny went on a tour of the area to see for themselves. Since Leah is from Pueblo, she was able to explain the different neighborhoods and knows all of the changes happening there. Listen to the podcast to hear Jenny and Leah talk about three they saw, look at what the costs and returns would be, and give you their general observations of what investing in Pueblo looks like right now.
Three Learning Options!
  1. Listen to the podcast “#28: Pueblo Real Estate Market Tour – 3 Properties Walked and Analyzed” on the Colorado Springs 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.

Property 1: Belmont 

Belmont 3 bedroom 2 bath single family
Belmont 3 bedroom 2 bath single family

The first property we looked at is in the Belmont area in northeast Pueblo.  It’s close to the CSU campus and would be an attractive rental for college students. In general, Belmont is a well-established neighborhood full of mid-century homes.  This particular house was built in 1961, has three bedrooms and two bathrooms, and is in good shape overall, with an excellent exterior condition but a dated interior.  The house is listed for $220K and we estimated initial repair costs at $7K for new paint, replacing carpets, and other cosmetic fixes.  

Spreadsheet Analysis

3 bedroom 2 bath rental Pueblo Colorado deal analysis spreadsheet

Property Operating Expenses

Property Operating Expenses analysis spreadsheet 3 bedroom 2 bath rental Pueblo Colorado

First Year Returns

First year returns spreadsheet Pueblo rental

Using our standard inputs for all entries, we estimate that the Net Operating Income (NOI) for this property is $10.5K, minus mortgage payments, which would be around break even for an investor.  The capitalization (cap) rate is on the lower end at 4.6%, but this home is located in a more expensive neighborhood in Pueblo.  Overall, this property would perform similarly to what we’re seeing in the Springs, but at a $220K purchase price, the cost to enter is much lower.

Property 2: Lake Minnequa 

Lake Minnequa 2 bedroom 1 bath single family
Lake Minnequa 2 bedroom 1 bath single family

The second property we saw is in the Lake Minnequa neighborhood.  This is a good area that’s close to the hospital and has easy access to I-25.  The home has two bedrooms and one bathroom and was recently renovated.  For those familiar with the Springs, this area and home are reminiscent of the styles found in the Stratton Meadows neighborhood.  The purchase price is $145K, and we estimate $0 for initial repairs, since everything has been updated.  We noticed that the real estate taxes were particularly low at $450, which we believe is standard for this area.  

Spreadsheet Analysis

2 bedroom 1 bath rental Pueblo Colorado deal analysis spreadsheet

Property Operating Expenses

Property Operating Expenses analysis spreadsheet 2 bedroom 1 bath rental Pueblo Colorado

First Year Returns

First year returns spreadsheet Pueblo 2 bedroom 1 bath rental

Again, using standard entries and including the going rate of $1K a month for two bedroom rentals in this area, the NOI for this property is $8200, minus mortgage costs.  The annual cap rate of this home would be 5.5%.  While I expected a little higher cap rate than this, the extremely low purchase price still makes it a solid investment.  

Property 3: Fourplex in West Pueblo 

Pueblo West 4 plex
Pueblo West fourplex

The final property we saw is a fourplex located in West Pueblo.  This is an up and coming neighborhood that is expected to grow even more once they finish the new aquatic center.  The fourplex contains four two bedroom, one bathroom units, each with their own fenced yard.  Three of the units have been recently renovated, but an investor would need to update the fourth after purchasing.  The purchase price is listed at $549K and we estimate the initial repair cost at $10K, what we were told the seller spent on renovations per unit.  The unrenovated unit is currently renting at $950 a month, while two of the renovated units are going for $1025.  The last unit is vacant, and it is possible that the rent for that one could be pushed a little higher.

Spreadsheet Analysis

fourplex rental Pueblo Colorado deal analysis spreadsheet

Property Operating Expenses

Property Operating Expenses analysis spreadsheet fourplex rental Pueblo Colorado

First Year Returns

First year returns spreadsheet Pueblo fourplex rental

Using standard numbers, the cashflow on this property is $12,653 per year with a cap rate of 6.4%.  With a fairly low purchase price and such a high cape rate, it’s no surprise this property went under contract immediately.  This is a great area of town to invest in and is only expected to grow.  

Conclusion 

All together, these properties show that investing in Pueblo could be the right move for you.  Even though the returns on the two single family homes aren’t much more than you would find in Colorado Springs, the cost to enter is much lower.  Someone looking for more of a cashflow play within Colorado, and would like to stay around $200k should definitely look to Pueblo.  The return on the fourplex speaks for itself and would make a solid investment.  We’re excited to learn more about the market and bring you updates as we gather more data. 

Our goal is to find the right investment for you along the I-25 corridor, be it Denver, Colorado Springs, or Pueblo.  Depending your investment strategy and long term goals, we can find the right property for you in any of these areas.  

If you have an interest in investing in Pueblo, reach out:  Jenny@EnvisionREA.com, 719-649-4478.

YouTube Video: Pueblo Real Estate Market Field Trip

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Authors
Jenny Bayless
Jenny Bayless is an investor-friendly agent with Envision Advisors, Colorado real estate investor, and the host of the Colorado Springs Real Estate Investing podcast.
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