Excellent price range for east Colorado Springs, this townhome near Barnes & Oro Blanco is a great cashflow opportunity. For an aspiring investor with limited cash for down payment and reconditioning, this could be a realistic entry point into the benefits of real estate investing. Built in 1983, this 2 bed/2 bathroom townhome with 1,080 square feet has great potential. Listed at $167,000, I used an assumed purchase price of $150,000 for my calculations.
- Near Barnes & Oro Blanco
- 2 Bedrooms
- 2 Bathrooms
- 1,080 Square Feet
- Townhome or Condo
- Data current as of Nov 6, 2018
- Contact me for address & current status of this property
Financial Analysis for Potential Investor Purchase
Based on a comparative market analysis of rents in the area, an investor could take the rent up to $1300 and still be within the realistic range for this neighborhood. I used $1200 monthly rent to be conservative. With $5,000 worth of upgrades and improved presentation, this home could realistically have an after-repaired-value (ARV) of $170,000.
With a $27,250 (15%) down payment, $5,000 for repairs and upgrades, and factoring money for repairs, taxes, and insurance, the purchase cap rate would be 7.21% and the cash-on-cash return would be 8.58% in the first year. By year five, the cash-on-cash return spikes to 19.55% and the annualized total return is 33.96%, assuming a 5% income and value increase, which would be less than half of what we’ve experienced the last five years.
Based on these estimates, the positive cashflow from this property would be $196/month, even when factoring in an 8% margin for vacancy and maintenance. Of course, if you experience a reduced vacancy rate or repair expense, the cashflow would improve.
This townhome has some nice features that are hard to find in this area, such as a deck and covered carport. However, it does need some updating to the carpet, paint, and fixtures, which is why I believe the price is below full market value.
This home could have great potential as a cash-flow rental. I’d be happy to talk more with you about this home or your investment goals – please email me at JD@TheCircaGroup.com.
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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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