We’ve written many times that Short Sales are not for the faint-hearted. Nor should they be considered by anyone on a deadline. Short sales are often grueling exercises in negotiation lasting for months that occasionally concludes with neither party getting anything.
So why would anyone subject themselves to such torture? First, because the cagey investor knows that a short sale is a bank’s only alternative to foreclosing on a property that is in default. It is an alternative that can save the bank tens of thousands of dollars, and with adequate information regarding the borrower’s loan, we can we can purchase a property well below list price and market value.
Second, competition for Denver investment properties is fierce. The Fannie Mae and Freddie Mac three-month moratorium on foreclosures has significantly reduced REO inventories, and those that make it to the market are receiving multiple offers within days, driving values upward. Buyer competition for short sale properties, however, is not as cutthroat. Denver REALTORS recognize the challenges that negotiating these properties represents, and they tend to pass them by. The short sale inventory could very well be the best source our investors currently have, until we see the surge from Fannie and Freddie, to acquire assets.
With all that, our pick Denver investment property for today is in the Montbello neighborhood. A lot of my colleagues will admit that they tend to avoid this area because of the less than desirable statistics, but I will tell you that every home that I have listed here sells within a week, and once refurbished, is rented quickly. Many of the properties there are approved for the Section 8 voucher program, guaranteeing the landlord prompt payment of a government-set amount. For a three bedroom property, like today’s pick, that comes to $1200 per month – every month – on time and in the mailbox.
Now, if you happened to purchase today’s pick investment property at its $90k list price, then financed another $15k to bring it back into good condition, this property would cash flow approximately $600 per month. Better yet, if you were to talk with your financial planner about financing this property through your self-directed IRA, it would provide your tax-qualified plan with an annual return of 11%. Kinda beats Wall Street right about now.
At $90K, this property could produce $600/month positive cash flow
So what is this property all about? It a 3 bedroom, 2 bathroom brick ranch that was built in 1970. With a 1000 square foot basement that is only 35% finished, it would seem feasible to finish off another bedroom and bathroom and increase the return on your investment. Remember, this is a short sale, so patience is a virtue, but you can be impatient if you want to take a look.
Hit us up if you’re interested. The professionals at MyH-O-M-E.com are never too busy to look at real estate in the Denver Metro area!
Posted by: Dave Perlowski
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