Residential Real Estate Agent · Broomfield, CO · Member since 2013 · 390 posts · 125 votes
Hi all,
I've been at the "education" part of this game for a while, got some marketing capital together, and now am on the cusp of closing on my first real investment property. A friend's mother passed away and he's unloading her rentals. I'm under contract on a condo that's currently being used as a rental. I'm hoping some of you might have some thoughts on what the best way to handle it.
ARV is $150-$160k. Here in the Denver market that's really low - it's in a good part of town in Westminster, Colorado. It's a 2 bed/2 bath in decent shape (could use some updating, but it's ok as is). Would probably need $10k of fix up.
Currently rented for $1025/month, but the lease is up at the end of May, tenants want to stay (they've been good so far), and I think it could be rented at $1150-1200 easily, with significant cash flow.
Would I be better off kicking the tenants and selling on the MLS (or the BP marketplace :) or keeping the tenants in place, bringing rents up to market, and selling?
I've thought of just keeping it as a rental - the numbers are pretty good - but I think at this point I'd rather have the money to use for marketing.
@Adrian Tilley - Congrats on your first buy! That is so exciting!
I'm not going to bother to get into the numbers because it seems like you answered your own question: "I think at this point I'd rather have the money to use for marketing."
If that is the case, go for it! As the long as your numbers work and have a way to reinvest in your business, I'm not sure why you wouldn't. (I'm not familiar with the Denver market, so locals may have another opinion!)
Hey @Elizabeth Wilson thanks for contributing. I guess the question is not really should I sell it, but rather should I leave tenants in place and sell as a rental/investment or sell on MLS. I think Matt answered my question. The only other option I was considering was whether to hold for a year to minimize taxes.
@Matt M. Thanks for the input. How much fix up would you do? Sell as a "sweat equity/fixer" type property or do it up and extract every penny?
@Adrian Tilley congrats on your first deal. IMO if it will qualify for a loan don't do anything but clean it really good and get rid of any stink. Right now it doesn't seem that money spent on rehab in that price point is rewarded. If you want to feel good about "flip" then paint, carpet and appliances are the absolute max I would ever do. If it needs more then sell as-is on the MLS and let the flippers and owner occupants hash it out.
Depends what you're buying it for. You didn't mention asking price, so hard to say how much room you have. But assuming you have a good bit of equity, buy it out right and through it up on the market. Heck, if he has a bunch, do it with the ones you don't want and keep the good ones. You'd be sitting really nice after! I agree with @Bill S., don't waste time rehabbing it.
@Adrian Tilley congrats on your first deal. IMO if it will qualify for a loan don't do anything but clean it really good and get rid of any stink. Right now it doesn't seem that money spent on rehab in that price point is rewarded. If you want to feel good about "flip" then paint, carpet and appliances are the absolute max I would ever do. If it needs more then sell as-is on the MLS and let the flippers and owner occupants hash it out.
We had a "carpet, paint" client once. Made about $150K on a deal. $50K in sewer lateral negotiated to a $5000 allowance. Those were the days. I put a sump pump under that house!
@Adrian Tilley congrats on your first deal. IMO if it will qualify for a loan don't do anything but clean it really good and get rid of any stink. Right now it doesn't seem that money spent on rehab in that price point is rewarded. If you want to feel good about "flip" then paint, carpet and appliances are the absolute max I would ever do. If it needs more then sell as-is on the MLS and let the flippers and owner occupants hash it out.
We had a "carpet, paint" client once. Made about $150K on a short-sale 'flip'. $50K in sewer lateral negotiated to a $5000 seller allowance. Those were the days. I put a sump pump under that house!