Real Estate Investor · Denver, CO · Member since 2017 · 34 posts · 65 votes
I found BP about two months ago and listened to BiggerPockets Podcast 247: How to Buy Your First (or Next) Property by the End of the Year [The 90-Day Challenge!] with @Brandon Turner and thought there was no way I could begin my investing career and purchase a property by the end of the year.
I was wrong. With the help of @Chris Lopez and Charles Roberts at Your Castle Real Estate I was able to find a great condo in Aurora (Denver suburb) and just closed on it a couple hours ago. It's an 8.3 CAP and very typical of the properties Chris and Charles are able to find in the Denver Metro area.
@RickWatt Congratulations!!! I too am new and made my first purchase next month as a result of the challenge!! It's such a great feeling to get the first toe in!!
@RickWatt Congratulations!!! I too am new and made my first purchase next month as a result of the challenge!! It's such a great feeling to get the first toe in!!
Rick. Congrats! Tell us about the deal... how much time spent in spreadsheets ? How'd you find the deal? Negotiations? Project or turnkey ? What's next!
Chris and Charles' strategy (or at least one of them), is to look for single family attached homes that are on the MLS. They have found that in the Denver market these have the best CAP rate and COC returns. I bought into their strategy and decided to go looking one weekend at a number of different properties. I didn't think I'd find anything worth putting an offer on, but the third house in we found a gem.
We found a fix and flip that had been on the market for about a week. It was originally listed for $250k, but had been reduced to $235k. It's 1862 sq. ft., a 3 bed, 2.5 bath condo with a 2-car garage. New carpets, flooring, granite countertops, stainless steel appliances. It has an area that can be easily (and cheaply) converted into a 4th bedroom, which made it a great find.
Chris and Charles use a spreadsheet developed by one of the local lenders in Denver (very similar to the calculators on BP), so we just plugged in the numbers on my phone while on-site. I did look at a number of deals they had closed over the past few months and watched several of their webinars on how they analyze the numbers. So while on site it was extremely easy to plug them in and get an idea of the CAP rate, COC and monthly cash flow.
Annual cash flow should be a bit over $7,000. I'm still debating if I'm going to try and rent it out myself or use a PM company. I travel every week for work, so likely the latter.
Regarding negotiating, we were originally going to put in an offer at $230k, but when my realtor talked to the seller's realtor, they said they were expecting a full price offer to come in. We thought this a great property so I was fine coming in a full price. We went in with a full price offer and the seller came back and said they were expecting a cash offer at nearly full price, but would consider ours if we were at full price and could close by 12/22. We put in the offer and they came back and said they want to take our offer, but wanted us to include an appraisal shortfall clause in case the appraisal came in low. They also mentioned they couldn't get an FHA loan with a previous buyer. This made me nervous, but I went back to the numbers and was ok with it at $235k as it cash-flowed great, so we went ahead with it. They accepted our offer and the appraisal ended up coming in at $255k. Phew!
I think I'll be looking to get another rental as soon as I can find a good one and am also looking at Multi-family Syndication.
Congrats Rick - getting 7-8% Coc roi numbers (after including PiTI and 20% down) on brand new properties is still next to impossible in today’s market.
Considering yours is an older one, it all checked out in your favor.
Funny you should say that. When I was inspecting the property right before closing, I flushed one of the toilets and it flushed REALLY slowly so I'm sure I'll need that very soon. I did have a moment of thinking, "what have I gotten myself into??"
BTW, I do know Charles Roberts at Your Castle Real Estate, great guy and certainly knows his stuff. Good for you. I took that challenge too and we are under contract to close in about a week's time, duplex property in Denver. Going to be house hacking out of current and into that one as I work on a few property improvements. Super excited :)!
Thanks @Anna M. and congratulations to you as well. Glad you've had the pleasure of meeting Charles, he's such a great guy and willing to help us newbies. I attend an Advanced Real Estate Investing class that Charles and @Chris Lopez put on a couple weeks ago and it was so helpful. I'm sure they will have another coming up soon, I would highly recommend it.
Thanks @Joshua Diaz I'm going to be hunting for another soon and hope to find another beauty.
Way to go! Before you know it you'll be owning several more. I started this year to when I bought the house next door to me out of foreclosure then I closed on the house across the street at the same time. Two months later I bought 3 more, now people are calling me with deals.
We bought our first duplex a month ago and we're already under contract with a fourplex. People will tell you real estate is an addiction and that's NO JOKE!
I've got a question for you all who have been around a while. I did a walkthrough before closing and there was a bunch of junk still in the garage (numerous paint cans - some that were very old, an old microwave, and old door, cut drywall, half a bag of grout, and some other junk). My realtor was out of town so his assistant that was there with me called the agent/seller (same person) and asked him if he was going to get the junk out of there. He got pretty upset and said, "you should have brought this up at the inspection" and that it wasn't written in the contract. This went on for a bit and he was being pretty rude to my realtor's assistant. I then got on the phone and said I thought it was pretty unprofessional to leave the property in that condition. The agent/seller thought I was Charles and again was trying to get out of cleaning up the mess. I then told him I was the buyer and his tone changed a bit. He reluctantly agreed to come and clean up the mess after Christmas. I took him up on his offer since I owned a painting company for 10 years and know how tough it is to dispose of 30 cans of paint. Also, it just didn't seem right that I had to haul away a truckload of junk. Hopefully he will make good on his promise to clean it up on Tuesday.
I would never think to leave a property in this condition if I were selling it. The rest of the property was cleaned up ok, not great, but I was alright with that. Am I off base here, or is this normal practice when buying a rental. The agent/seller said in his 17 years of doing this he's never had a problem like this. I was shocked, but maybe I'm being too picky.
Take a look at the pics and let me know your thoughts.
@Matt McConkey, I'm definitely looking for a duplex or fourplex sooner than later. Very tough to find in Denver so I may need to head your way (assuming it's in your backyard).