So Ive got this Deal Right ... What do you think? Need Advice

Colorado Springs, Colorado
Buying & Selling Real Estate
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So Ive got this Deal Right ... What do you think? Need Advice

Robert-Lee Pass
Member since 2023 · 53 posts · 33 votes

So there's this deal right , Class B new build in a growing new community with a k-5 school to boot. I was mainly focused on the Class A but they are 175K more for 2-300 sq ft + garages and only get 200$ more per rent per side (this is a 2023 duplex - No garages 3/2/0 1100sq ft per side. these are day 1 numbers with base case rents (rents on a class b are supportable by section 8 where as the other more expensive units would be too much for the same 3/2 .

So Ive ran about 40 properties so far maybe more and this is the first one where the numbers are looking DRAMATICALLY better than anything else . especially the top tier class a duplex in the same neighborhood. the cash to close is really skewing the returns.. anyways , what do you guys think?

This is my first investment property beyond my primary residence.

I really think im having a problem evaluating property because i feel like its not somewhere i would love to live myself.. does that make sense? my current house fixtures , having a wife and 2 kids , a 3/2 1100 sq ft just seems rough. but there's more than just people like me in the world so i should forget all that right? that fear turns into vacancy fear. the vacancy rate in the neighborhood is 1.7 so i used 2 . if i go to 3 it turns coc to 27 and -25$ cashflow from shown

Overall goal is to hold forever, Cashlow at 66 and beyond with complete debt paydown , pass to kids when i die , they use the cashflow for their primary residences and beyond. (10 of these will do haha... but really)

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  • Chris SeveneyBusiness Member
    Moderator
    Investor · VA · Member since 2015 · 21k+ posts · 19k+ votes
    2y

    @Robert-Lee Pass

    Where can you get an investment loan with that low a down payment ?

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  • Robert EllisBusiness Member
    Developer · Miami, FL · Member since 2014 · 3k+ posts · 1k+ votes
    2y
    Quote from @Robert-Lee Pass:

    So there's this deal right , Class B new build in a growing new community with a k-5 school to boot. I was mainly focused on the Class A but they are 175K more for 2-300 sq ft + garages and only get 200$ more per rent per side (this is a 2023 duplex - No garages 3/2/0 1100sq ft per side. these are day 1 numbers with base case rents (rents on a class b are supportable by section 8 where as the other more expensive units would be too much for the same 3/2 .

    So Ive ran about 40 properties so far maybe more and this is the first one where the numbers are looking DRAMATICALLY better than anything else . especially the top tier class a duplex in the same neighborhood. the cash to close is really skewing the returns.. anyways , what do you guys think?

    This is my first investment property beyond my primary residence.

    I really think im having a problem evaluating property because i feel like its not somewhere i would love to live myself.. does that make sense? my current house fixtures , having a wife and 2 kids , a 3/2 1100 sq ft just seems rough. but there's more than just people like me in the world so i should forget all that right? that fear turns into vacancy fear. the vacancy rate in the neighborhood is 1.7 so i used 2 . if i go to 3 it turns coc to 27 and -25$ cashflow from shown

    Overall goal is to hold forever, Cashlow at 66 and beyond with complete debt paydown , pass to kids when i die , they use the cashflow for their primary residences and beyond. (10 of these will do haha... but really)


     for whatever cash you are doing on this deal you don't need to buy a property full price from a builder. I'd recommend looking at some additional strategies that we post about in the marketplace. You can build with equity and do more of a multifamily product not single family and do much better. Rents are higher, income is better, appreciation is higher, your basis is lower, and you have much more equity to recycle that cash. We build with equity in Columbus OHIO and a few cities in florida we've seen the most interest in Miami suburban market and tampa 

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  • Robert-Lee Pass
    OP
    Member since 2023 · 53 posts · 33 votes
    2y

    @Robert Ellis , The cash im using on this deal is only 10k . Offer sent yesterday at 375 with closing covered so 365. was listed for 430 dec 20th

    Build with equity? you mean buy the land  Collateralize it , construction loan the build, refi out into the next because theres equity in it after completion?

    then you said something about do more of a multifamily product not single family and do much better rents are higher appreciation etc. but that sounds like your saying multifamily appreciation is better and rents are higher..

    im pretty comfortable letting that 10k sit in the house and not needing it to recycle into the next. Right after closing on this im actually looking for another with a normal down payment size lol this is just my second VA home

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  • Robert EllisBusiness Member
    Developer · Miami, FL · Member since 2014 · 3k+ posts · 1k+ votes
    2y
    Quote from @Robert-Lee Pass:

    @Robert Ellis , The cash im using on this deal is only 10k . Offer sent yesterday at 375 with closing covered so 365. was listed for 430 dec 20th

    Build with equity? you mean buy the land  Collateralize it , construction loan the build, refi out into the next because theres equity in it after completion?

    then you said something about do more of a multifamily product not single family and do much better rents are higher appreciation etc. but that sounds like your saying multifamily appreciation is better and rents are higher..

    im pretty comfortable letting that 10k sit in the house and not needing it to recycle into the next. Right after closing on this im actually looking for another with a normal down payment size lol this is just my second VA home


    Yes that's exactly right. 15% equity into the deal typically land is enough to cover it, refinance with construction loan once the permits are finalized and use variance, build, lease up, refinance with DSCR, recycle the same one. I have a YouTube channel I just posted a deal we are doing on if you search pink development you can see the lot.

    on my triplex I don't build a garage so every sq ft is appraisable. on my single family we have to build garages most of the time unless it's our micro home 700 sq ft that we sell for under 200k. the rent price / sq ft of SFR even smaller ones is maybe on average $1.70, on our 650 sq ft floorplan it's closer to $2.43 which is about 40% more efficient. supply and demand. very few multifamily built, higher appreciation, etc. most of the people who do them refinance why go through all that effort just to sell. appreciation in columbus last 3 years averages 8.65%. we only do this in 3 zip codes in columbus close to the urban core where new construction values are about a 15% or 20% premium and where there is already a lot of multifamily and it's easy to get them approved on an infill lot.

    I misunderstood your initial deal structure but it looks good. I'll send you a pm 

    [email protected]786-494-6766
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  • Robert-Lee Pass
    OP
    Member since 2023 · 53 posts · 33 votes
    2y

    @Chris Seveney this would be an owner occ VA loan the numbers will be for year 2 when both sides are full

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