Denver I Q

I just sat down with a Realtor friend of mine and she showed me a flyer on a condo she just bought. It was a 2 bedroom, 1 bath condo on the 3rd floor in a neighborhood in between Lowry and Fitzsimons in east Denver area. She asked me to look it over, so I did. When I saw the price on the flyer, my jaw dropped…$29,900, no I did not forget to add another zero to the end of that number. Then she smiled and asked me to guess what her offer was accepted for…$27,000. She plans on renting it for about $500 to $600 a month. She was able to pay cash but even with a loan she would be able to generate positive cash flow right off the bat.

Right now the rental market is appreciating due in large part to the foreclosures that have occurred. It is unfortunate that some home owners have had to lose their homes to foreclosure but they still need a place to live and renting is their only option until they can qualify to buy a house again.

 If you can buy a $50,000 condo and put 20% down, you would have a loan of $40,000. The interest rate on a full income verification, 30 year fixed loan for an investment property is about 6.5%. Assuming about $100 or so for HOA payments and about $50 a month for taxes, your payment would just under $400.00 a month. Now how much you can charge for rent depends on many things but let’s assume that you could get $600 a month on a condo like that. Could you use an extra $200 a month while you hold on to this property waiting for it to appreciate? What if you could find 5 properties like that?

There are currently loan programs that allow for only 10% down and stated income loans to buy income property if you are self employed. The rates on these loans can run form the high 6’s to the low 7’s.

 If you’re new at this (and even if you’re not) you will still want a Realtor to help you find the right property and make sure that the price is a good one but there may not be a better time to look into this then right now.

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