To start off I have not done any investing as of yet but I have been looking and noting on prices so hopefully in the near future I will pull that proverbial trigger.
When searching Zillow I found this apartment for sale at $149k with an estimated monthly payment of $805. (with 0 down and 5% @30 years)
After living in the area for a while and seeing that there is a 2/2 property very nearby being posted for $1700/month, it would seem like this would be a decent investment with good cash flow.
Barring any kind of MAJOR issues with the property, what are some of the issues that I could not be seeing? It says it has been on Zillow for almost a month and a half so could that possibly be a red flag?
@Chris Shipman Not to burst your bubble, but:
1. This is a "make me move", not a real for sale property.
2. Recent sales in the area are in the 120's to 130's.
3. There are no pics of the interior. Might be a red flag.
4. Where are you going to get 0 down at 5% for 30 years?
5. HOA is $289/mo. That plus your mortgage is 1100. Plus Taxes/insurance, you're over 1200. 50% rule says that won't cash flow.
6. Listen to the podcasts for @Joshua Dorkin 's thoughts on investing in apartments.
7. The "rent zestimate" (for whatever it's worth) is less than $1400.
Thanks for all of the great info. How reliable are any of the "zestimates" that show up on on sites like Zillow and Trulia?
Those automated values on zillow and trulia are not useful for investing. They're in the right ballpark, but if they're actually correct, its just by luck.
If you're looking in Jeffco, the county recorder's web site is pretty good and has details about sales. You won't get seller concession or days on market info, but you will get sales prices.
That said, it is my opinion that there are no deals anywhere in our area. I'd love to be proved wrong.
Z, t & others are notorious for BAD info. Our MLS cut off the feeds to them since they were selling the data back to us. As I tell my friends, clients, etc "Friends don't let friends use Z or T" IIRC they only have about 60-70% of the listings on the market as well.
@Chris Shipman I would suggest speaking with a lender to see where you stand & what you can qualify for if you are looking to purchase. I can refer you one if you want.
@Jon Holdman There are deals to be had here in Denver, but a lot harder to find obviously. I'll be posting up a story as soon as I close on my current project.
An investor I know aims to make $20k on his flips no matter price, costs, etc. The 70% rule is out the window for him. He has been going non-stop this year.
@Matt M. I love that "friends don't let friends use z or t" Nothing makes me cry faster than a client saying "I was on Zillow..."
@Chris Shipman Zillow & Trulia get their data delayed, anywhere from days to weeks which in Denver's market makes it obsolete since most listings will show up after they're already under contract. Price estimates are fine, but they come from an algorithm which just won't know that a block in one direction or the type of property across the street can change your property value dramatically.
FYI Redfin is a great 3rd party app for those not on MLS. I find it to be more user friendly to search on, their mobile app is awesome for looking up properties when exploring a neighborhood, and you can search solds.
@Matt M. I was referring to buy and hold not fix and flipping. Though the hard money broker I work with says that even that is much more difficult now in our area.
And by a good deal I mean one that truly cash flows. Not phoney, "rent-PITI" cash flow. My impression is there are lots of buyers for rentals who believe the rent-PITI myth and are willing to pay prices that aren't really going to make any money, unless our current upward trend continues indefinitely. Maybe it will, but it looks very bubbly to me.
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@Chris Shipman Golden Ridge is in my neighborhood and I know the owners of that unit personally. Its the highest asking price for one of those units in years. Take a look at Redfin's sold prices in the area for the last 2 years. Others are correct that the hoa dues make this a dead deal. My 2/2 rentals in the same neighborhood are good, but not getting anywhere near $1700/mo. Look into the HOA and see that their water/sewer lines are old and the replacement fund account been underfunded for years. It's the closest ownership opportunity to the west line light rail, and I've been trying to make those condos work for a long time, but it's not there. Just my opinion. PM me if you're interested in more details.
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