BRRR Alive and Well in Denver

It’s been 6 months since I purchased a townhome from Kyle Doney, and yesterday I successfully closed on the refi. 

Backstory - Late October 2017 I received word about a townhome in a very popular development among investors that I’d been following thanks to a heads up by Travis Sperr. I immediately reached out to Kyle and Josh at LVN Real Estate to check out the deal. They mentioned that they were setting up showings, etc for later on in the week.

Since I was already very familiar with the complex, I told them I’d take it sight unseen. They had a few photos, and it didn’t look like there were any major issues. I figured carpet and paint at a minimum. If there was much more, then it would still be a deal since the comps where already in the high $230s. I knew that prices were increasing in the complex due to a lawsuit that had just been settled. My game plan was to take it down with private financing, rent it, and refi it at APPRAISED value in 6 months. And that is exactly what happened.

I took possession of the unit, and it was better than expected. While there was trash, clothes, etc, that was easy to remedy. I have a gal I call the Church Lady, who comes to my flips and cleans out everything that can be donated. I trashed the rest. The unit was a model unit from the builder. It has higher finishes, tile throughout the main floor(great for a rental), speakers in the ceiling, window coverings, and more. The appliances were decent. I painted 1 room, replaced the carpet, and had the unit cleaned. That was it!

I got it rented for $1948 a month via Section 8. About a month ago I contacted a lender of mine at Commerce Bank (portfolio lender) after she had mentioned her 3.875% ARM product. Since this was an investment, I ended up with 4.25%. I used an ARM since it was the lowest rate, and I don’t expect to hold on to this unit for more than 10 years.

Numbers:
ARV: $265k
Purchase Price: $215k
Loan Amount : $200k
Cash in Deal: Approx $20k
Rent: $1948 a month
Loan : 4.25% 10/1 ARM

My total payment is around $1,350 which includes HOA, taxes, and insurance. With that $1948 a month income, it provides about $600 a month in CF. Not bad for a $20k investment.

This was my first purchase from Kyle and Josh at LVN Real Estate, and it was a smooth process. It was also my first personal purchase of a unit out at First Creek. While I don’t recommend buying sight unseen for my clients, I was comfortable buying in this complex after seeing so many properties there. These units are already trading in the high $260s, and I expect to see high $200s or even $300s in a year with the way the market is going.

On to the next deal!