Deal Analysis – 11 Unit Apartment Building

Our client was an out of state, first time investor looking to get into the Denver market as he plans to relocate to Denver in the future and knows  Denver has a strong real estate market. He is planning for retirement and looking to build up a strong portfolio of properties with good cashflow and appreciation upside.

We were able to find a great 11 unit building in Aurora that had some upside in rents with a little updating and better management. This deal was certainly unique as we navigated the majority of it remotely with our client during many of the COVID restrictions.

This property closed Q3 – 2020.

Investor Profile

• Out of state investor
• Realistic expectations for returns
• Focused on long-term upside with location and good management

Deal Quadrant: MLS

Read about the deal quadrant and finding Denver Investment Properties.

Investment Property Details

• Type: Apartment Building
• 11 bedrooms, 11 bathrooms
• Location: North Aurora near Stanley Marketplace
• List Price: $1,500,000
• Purchase Price: $1,400,000
• Why we liked it:
  • Great Area
  • Strong rental market
  • Lots of new development in the area
  • Potential on rental increases with better management
  • Tenants in place

Property Contract Details

• Finding the property: We found this property through the MLS.  It had been sitting on the MLS for awhile.
• Under contract:  Below ask and secret sauce as we were able to negotiate a price that worked for both sides
• Inspection Concerns:
  • Boiler & Balcony
• Inspection negotiation outcome:
  • Able to negotiate $25k in seller concessions for new boiler and balcony repair

Property Financing Details

• Lender: Commercial
• Loan Type: 10 year ARM, 30 year amortization, 1% pre payment penalty
• Appraisal: Above
• Seller Concessions: $25,000
• PMI: N/A
• Interest Rate Buy Down?: No

Spreadsheet Rental Analysis

Property Operating Expenses

First Year Returns

Conclusion

For the location and condition of this property this was a solid deal and as you’ll see in the analysis, with a little bit of updating and better management this will be a low 6% CAP in Aurora that will benefit greatly from all of the development and Opportunity Zone work going on in the area.

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