25 min
#90: AMAZING Cash Flow Even at 6% Interest Rates in Colorado Springs Colorado Springs Real Estate Investing Podcast
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- Investing
We have a different kind of deal analysis today: a fourplex in Colorado Springs that’s being run as four medium term rentals. Leah helped our buyers find not just an investment property, but a business, as well. This is a great example of how to pivot when the market shifts.
Three Learning Options! * Listen to the podcast "#90: AMAZING Cash Flow Even at 6% Interest Rates in Colorado Springs" on the Colorado Springs Real Estate Investing Podcast* Watch the YouTube video (at the bottom.) * Read the blog post. Note, the blog is an executive summary. Get the in-depth breakdown from the podcast or video.
Investor Profile
The buyers in this case are a family that invests all over the country; this is their first property in Colorado. They’re experienced investors who bring a lot of knowledge to the table. It’s always fun to work with clients who know more than we do because it’s a great opportunity to learn from them.
Investment Property Details
This is a particularly interesting investment because the buyers aren’t just investing in a property, but a business, too. The property is a fourplex that’s being run as medium term rentals. Medium term rentals have leases over 30 days and come fully furnished for tenants. These types of properties are often run as corporate rentals.
Appealing Features of the Property
This is a fourplex located on the north side of Colorado Springs. Each unit has 2 bedrooms and 1 bathroom and comes fully furnished and stocked with toiletries.
It’s a very in-demand area, both as a place to live, and for corporate rentals, too. Preston and I did a deal together last year for an 8-unit apartment building in the same complex as this property.
Property Contract Details
Contract
The buyers offered $1MM in cash, making it the most expensive fourplex an Envision Advisors client has ever purchased in Colorado Springs so far. The sellers were attracted to the all-cash offer and accepted.
Inspection Issues
While the building is generally immaculate, there were some areas with damaged siding. The buyer and seller split the repair cost for the siding, at $1750 each. It’s on the schedule to be fixed shortly.
Property Financing Details
I used the Rental Property Spreadsheet to run the numbers on this property.
Property Overview
While the buyers offered cash, they’re using delayed financing to take advantage of leverage. They are financing $600K, essentially making their down payment 40%. If you have the capital available, delayed financing is a great way to make a competitive cash offer and then reap the benefits of leverage.
These buyers are also using an Adjustable Rate Mortgage (ARM) with a 5.25% interest rate that’s fixed for 5 years of the 30-year amortization. I don’t typically recommend an ARM for newer investors,
We have a different kind of deal analysis today: a fourplex in Colorado Springs that’s being run as four medium term rentals. Leah helped our buyers find not just an investment property, but a business, as well. This is a great example of how to pivot when the market shifts.
Three Learning Options! * Listen to the podcast "#90: AMAZING Cash Flow Even at 6% Interest Rates in Colorado Springs" on the Colorado Springs Real Estate Investing Podcast* Watch the YouTube video (at the bottom.) * Read the blog post. Note, the blog is an executive summary. Get the in-depth breakdown from the podcast or video.
Investor Profile
The buyers in this case are a family that invests all over the country; this is their first property in Colorado. They’re experienced investors who bring a lot of knowledge to the table. It’s always fun to work with clients who know more than we do because it’s a great opportunity to learn from them.
Investment Property Details
This is a particularly interesting investment because the buyers aren’t just investing in a property, but a business, too. The property is a fourplex that’s being run as medium term rentals. Medium term rentals have leases over 30 days and come fully furnished for tenants. These types of properties are often run as corporate rentals.
Appealing Features of the Property
This is a fourplex located on the north side of Colorado Springs. Each unit has 2 bedrooms and 1 bathroom and comes fully furnished and stocked with toiletries.
It’s a very in-demand area, both as a place to live, and for corporate rentals, too. Preston and I did a deal together last year for an 8-unit apartment building in the same complex as this property.
Property Contract Details
Contract
The buyers offered $1MM in cash, making it the most expensive fourplex an Envision Advisors client has ever purchased in Colorado Springs so far. The sellers were attracted to the all-cash offer and accepted.
Inspection Issues
While the building is generally immaculate, there were some areas with damaged siding. The buyer and seller split the repair cost for the siding, at $1750 each. It’s on the schedule to be fixed shortly.
Property Financing Details
I used the Rental Property Spreadsheet to run the numbers on this property.
Property Overview
While the buyers offered cash, they’re using delayed financing to take advantage of leverage. They are financing $600K, essentially making their down payment 40%. If you have the capital available, delayed financing is a great way to make a competitive cash offer and then reap the benefits of leverage.
These buyers are also using an Adjustable Rate Mortgage (ARM) with a 5.25% interest rate that’s fixed for 5 years of the 30-year amortization. I don’t typically recommend an ARM for newer investors,
25 min