Less experienced investors assume the best deals happen off-market on homes that need major renovations. Gurus and infomercials capitalize on this and promise to sell the “secret” to investing.
Experienced investors know there is no secret. Buying good houses for a good price and benefiting from long-term cashflow and appreciation is the “secret” that everyone understands.
Good houses for good prices can be found on the open market and don’t always have to be major rehab projects.
Take this home I came across on the east side of Colorado Springs. It’s a 3-bedroom ranch selling for below market value in the convenient Stetson Hills neighborhood. It doesn’t need major renovations, it isn’t a back-room deal, and you don’t have to buy it for thousands below list price for the numbers to make sense.
Instead, it’s a clean, attractive home listed for below market value. Also, the inexpensive HOA in this area handles lawn maintenance and trash removal, making life a little easier for the landlord.
This would be an excellent option for a first-time investor or someone who doesn’t want to do a major remodel project.
- Near Stetson Hills & Powers
- 3 Bedrooms
- 2 Bathrooms
- 1,155 Square Feet
- Single Family
- Data current as of Nov 23, 2018
- Contact me for address & current status of this property
Financial Analysis for Potential Investor Purchase
Listed for $219,000, comparable homes in this neighborhood consistently sell for $250k-$270k. I estimate the market value at $240,000.
Average rents for a 3-bedroom home in this area are $1,500/month. This home may be able to rent for more because it’s a one-level living ranch home built in the late 80s, but we’ll stick with $1,500 for this analysis.
Assuming 10% monthly operating expenses for repairs and vacancy, 20% down, and $1,500/month in rent, your monthly cashflow would be $289.
The cap rate is 6.74% and the cash-on-cash return is almost 8%. At a very conservative 5% appreciation, the total annualized return after five years is over 30%.
Real estate investing doesn’t have to be dramatic or complicated in order to be profitable.
This home could have great potential as a cash-flow rental. To talk about this home or your investment goals – please email me at JD@TheCircaGroup.com.
You can also set up a search to find investment property in Colorado Springs as soon as it comes on the market.
Disclaimer: Circa Group, LLC, dba Circa Real Estate Group, recommends that you seek the advice of your accountant and financial advisor before making investments. The estimates presented are based on a variety of assumptions, including information from third parties, and may not reflect the actual return of your investment. This information is provided for illustrative purposes only and is not to be constituted as investment, legal, or tax advice.
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