Today, Leah and I are looking at a townhouse-style fourplex in Pueblo. A lot of investors ask us what multi family properties in Pueblo look like, so Leah and I are walking through a great option. This is a property we found on the MLS, not one purchased by a client, but it’s a great example of the opportunity in this area.
- Listen to the podcast “#71: New Build Pueblo Fourplex with Amazing Returns” 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.
Investment Property Details
This is a fourplex that features 2 bed/1 bath side-by-side units. It is a new build property and each unit has its own A/C, a big plus in this area.
The property is located in the northwest area of town, which has a lot going on development-wise. Tenants will enjoy being close to city parks and hiking trails.
The property is listed at $600K. We’ve recently seen a few new build townhome-style products in the Springs that are well over $1M, so this is a steal in comparison.
We plan on checking in with this builder to see if they have plans to build any more of this type of property.
Property Financing Details
I used the Rental Property Spreadsheet to run the numbers on this deal.
Looking at nearby comps, monthly rents of $1350 is the most conservative estimate for this property. One fourplex built in the same style has $1200 rents, but that property is much older and a lot more dated. While we ran the rents at $1450 in this analysis, it’s possible they could go as high as $1500.
As we’ve done with other properties in Pueblo, we estimate vacancy a little higher in this area. In this case, we ran it at 6%.
Monthly Operating Expenses
The building is already separately metered for gas and electric. We recommend that clients who are the first owners of a property institute a utility bill back on top of rent. This is much easier to implement from the start and gives the owner an additional income stream.
First Year Returns
Even though we ran the numbers as conservatively as possible, the results are still phenomenal. At rents of $1350 and no utility bill back, the annual cashflow is $12K a year and the cap rate is 6.4%. Generally, we would expect to see stronger numbers in older buildings, but this brand new one is reflecting some great return projections.
If we play around with the numbers a bit and include a utility bill back and bump rent to $1450, the cashflow increases to $15,600 a year and the cap rate jumps to 7%. We usually tell clients it’s impossible to see these kinds of returns, but the Pueblo market is strong.
Since this is a new build, we have confidence in these numbers. People love being the first to live in a property.
This and other properties we’ve featured show that the opportunities in Pueblo are exciting. Keep in mind, though, that Pueblo won’t be like this forever. Now is a great time to get involved and take advantage of this growing market.
Connect with Us
If you want to learn more about available properties in Pueblo, reach out to Leah. She is very knowledgeable about the area and has a great track record there. Her email address is Leah@EnvisionREA.com.