Hey, Everyone I'm Dave Meyer with Bigger
Pockets and join me as we check out this
4 bed, 2 bath, 1/2 duplex in the Park
Hill neighborhood of Denver to see if
it can generate some cash flow.
Hey, you must be Bill.
I am.
Nice to meet you, I'm Andrew. This is my client, Dave.
Good to meet you
Bill, with Madison & Co.
alright well thanks for taking the time
to show us around
tell us what you got.
Sure, so what I have
here is a four-bed two-bath one half
duplex South Park Hill neighborhood
listed at 299 thousand we have 860
square feet above 860 square feet below
the entire basement has been refinished we
took out all the old piping so no
galvanized metal pipe down there we got
rid of the old rusty pipes as well by
the the laundry so we have new pex
piping, brand new granite
countertops a big open-concept and flow
perfect for a rental for students or otherwise
That's what I like to hear.
so can you tell people who might not
know anything about Denver or Park Hill a
little bit about this neighborhood
Sure
Busy man
I am busy man, lots of calls
this neighborhood is great it's a
transitional neighborhood that we're
seeing right now is located just a few
blocks over to the west from Lowry and
the stapleton complex which is fantastic
lot of new commercial developments have
gone in there a lot of opportunity for
students were also just a block north of
Johnson & Wales so it's pretty easy for
the college students if they're looking for
a place to rent or some roommates to
share the rent costs with 4 bedrooms
and 2 baths is an excellent way to cut
down those costs and give them more
money for books.
Absolutely, I'm sure that
we're spending absolutely a lot of
knowledge is power.
So, for people
who are just thinking about getting into
real estate investing this is a really
prime opportunity you have downtown
Denver which obviously is super-high
rants and we have the Stapleton area
which also has high rents in a really
high-end neighborhood we're right in the
middle right here there's obviously nice
housing stock in this area so what I'm
thinking immediately is that this is a
neighborhood that is eventually going to
start to fill in and prices for both the
house and the rental are going to go up
over time
And Bill I also understand
that it's already been divided
so they're separate tax ID numbers for both units
There are, we have separate tax ID's.
Both units are actually for sale we only
have the one listed currently but the
seller ideally wants to give it off to
an investor to buy the entire building
and then you move it from there
Perfect. I love hearing that. I mean it's impossible
to find duplexes in Denver right now so
it seems like a great opportunity
Yeah. Let's do it
Alright guys so let's recap. Today we're looking at a
4 bed, 2 bath, 1/2 duplex that is
selling for $300,000. Its price at about
a $174 per sqft
which is great for Denver
this area South Park Hill is a growing
neighborhood that is between two very
high rent markets of downtown Denver and
Stapleton. It's been completely renovated
and is within walking distance of a
college so we know this will make for
great student rentals.
Lastly, both sides of this duplex are
being so there's an opportunity to
grab both. Something we'll keep in mind
when making our decision. Inside the unit
you walk into a bright and open living
space with hardwood floors, lots of light,
and an open-concept feel. the first two
bedrooms have great space light and
hardwood carried throughout it's
definitely a lot nicer than what I had in
college. I think we can get about $400 to
500 dollars and rent for each
of these bedrooms.
The kitchen is well done with new
countertops and clean appliances, since
this will be a student rental the
kitchen fits right in
it's not too nice, but it's certainly
good enough for college students
probably not doing too much of their own
cooking anyway.
Downstairs is what really makes this
rental great. You have this massive
living space that is just as bright as
the top floor which just doesn't happen
in duplexes of this nature. The
bedrooms in the basement are spacious
and clean and the ceiling height is
unheard of for a basement. To top off the
living space downstairs there's a very
nicely done jack-and-jill bathroom
connecting the two rooms.
Overall, I think we can get about $400
to $500 per bedroom down
here just like the bedrooms upstairs.
Overall, this unit is very impressive and
designed perfectly for its market I
would say we can get between $1,900 and
$2,100 altogether for the four bedrooms.
But we want true numbers to see if this
deals gonna work, so let's see what we got.
The purchase price of this property
is about $300,000
we're going to put 20% down
and that will leave us with the loan
amount of about $240,000
amortized over 30 years. Interest rates
are rising slightly so we'll say we can
get a 4% fixed rate. This will
leave us with a monthly mortgage payment
of $1,145 dollars
the great news is that shortly after our
walk through the current owner leased the
unit for $2,200/mo. That's
10% more than we actually
thought when we were walking through the
place and that means a tenant would
already be there if we bought it which
is a huge bonus. The expenses are pretty
clear. The tenants will pay for their own
electricity, water and internet. As the
owner, we will cover the garbage, sewer,
taxes, and insurance for a total of about
a $175 per
month. We also need to set aside money
for capital expenditures and repairs and
this can vary greatly from property to
property, but given that this place is in
such great condition, has a new roof and
boiler with warranties in place and I
can do a lot of the repair work myself -
i'm going to budget about $350
per month for repairs. So in total we
have $525 in expenses. If you add
that to the $1,145 dollars per month for
the mortgage that will leave us with the
total of $1,670 dollars per month in expenses. To
calculate the cash flow simply subtract
the total expenses from total income. That
will leave us with a very nice cash flowing
property of $530 per month. So far
sounds like a pretty solid deal to me.
The other metric that I care about
besides cash flow is a Cash-On-Cash Return.
We put down $60,000 for
the down payment
we also estimate closing costs will be
around $6,000. So the total
cash invested would be $66,000. Our annual cash flow on
this property would be $6,360.
divide that by our total investment and
we end up with a 9.6%
Cash-On-Cash Return, which is an
incredible deal in Denver these days.
alright so now we're going to walk
through i think this checks off a lot of what you're looking for.
Ya, absolutely. I mean everything is in
great shape, it's a good neighborhood and
most importantly it's cash flowing. So...
...Brace yourself.
I know we look at a lot of places... I
think we should make an offer.
That's what I wanted to hear.
trying to make my man's weekend right now but not every
place that we look at is going to make a
great deal we're not going to offer on
everything but this is actually one of
the best places we've seen in a long
time so let's go do it
I'm Dave Meyer.
I'm Andrew Keal.
We're with BiggerPockets and we'll see you next time.