All you can analyze weekend: Colorado Spring SFH

[Steve W.]

I don't need the free BP calc access but hey it's a promo why not have fun with it.

I just scoured the Colorado Springs MLS and yikes pretty much everything I looked at came out negative cashflow even with 25% down payment. Obviously it depends on your underwriting but you can see mine below/in the bp calculator link. I focused on 3 bed and 4 bed units (SFH, Townhome/Condo), $330k max asking price, it's hard for me to believe things would change much for a 1 or 2 bed.

What is everyone else seeing out there? Am I missing something, coming in at the wrong angle/perspective?? Looking in the wrong areas, are my rent estimates low?

BP Calc Report: https://www.biggerpockets.com/...

Underwriting details:

1. Rent: $1,750
   1. Plug the property address into zillow rent estimate ($1,600) and Rentometer (median/75th percentile: $1,850/2094). 
   2. Choosing $1,750; pretty much just going between the Zillow and Rentometer values.
2. Total Expenses: $1,717
   1. Property Taxes: $1,500/yr
   2. Insurance: $1,200/yr
   3. Maintenance: $122/mo
   4. Cap Ex: $140/mo
   5. PM: 9%
   6. Vacancy: 5%
   7. Mortgage: $985/mo
      1. Down Payment: 25%
      2. 4% interest
      3. 30 Years

I also tossed in $10k for improvements, like for the stairway railings, improving the deck, the basement ceiling looks weird, landscaping improvements, other things that might pop up. But regardless it doesn't affect cashflow only cash on cash return which is abysmal to begin with.

Conclusion: I would not buy this deal. IMO, that's a lot of money to park and break even, banking on appreciation. Which, don't get me wrong, I like the Colorado Springs fundamentals but I am not comfortable putting myself in that position. I only do this to understand the going market rate of things.

They only way this could possibly makes sense, to me, is BRRRR, which is my going in strategy for this market.

[James Carlson]

@Steve W.

At the risk of giving away the secret sauce to a buyer who's working with another agent ... ;) ... 

The medium-term furnished rental model has worked well for us in Colorado Springs. We have a 4br/2ba bungalow. Somewhat updated and clean/modern looking. (But not totally remodeled with all new white everything.) It's about a mile east of downtown. We originally bought it at $390,000 as a primary residence with a 5% down payment. (It's probably about $420,000-$430,000 now.) Since we've been renting it, here's what we've seen:

Rents: $3200/month

Repair/maintenance expenses: $127/mo average (That's actual numbers we've seen since renting)

CapX: $160/mo estimate (that's 5% of our $3,200 rents)

Vacancy: $160/mo (again that's a 5% estimate, though we've had only a few days vacancy)

Utilities: $300/mo (you pay for all utilities in this model)

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Net revenue: $2,453

Mortgage (PITI): $2,164

Cash flow: $289/mo (And that's with a 5% down payment)