Cowboy Statue,
Denver, CO
Investors
Denver Bank Owned, HUD, and Fix-up Properties
There are an abundance of distressed homes, including bank-owned, HUD's, fix-ups and short-sales, in the Denver and suburban real estate market. Whether they are a good value depends on location, amount of fix-up, and numerous other questions to explore.
Over the past 18 months I have visited hundreds (possibly thousands?) of these properties and there is an enormous range in terms of required fix-up. I have seen homes with bindweed growing in bedrooms, properties infested with snakes, and the all time nastiest: a property that housed 100 plus cats. On the other extreme, I have shown million dollar plus mansions that simply need cosmetic fixes such as paint, appliance repairs and a good cleaning.
Are Denver distressed properties a good match for you?
Consider the following before you make that decision:
Bargain Hunters and First Time Home Buyers:
- Do you have financial resources for the due-diligence phase of the contract? Out of pocket expenses can include a property inspection, sewer scope, radon testing and the need for a structural engineer's inspection.
- Do you have money set aside for fix-up costs?
- Is the property's condition livable?
- What is your level of fix-up expertise in relation to the scale of the project? Can you do most of the work yourself or will you need to hire contractors?
- Can you get a loan on the property?
- What does the comparative market analysis state?
- What is the ARV (after repair value)?
- Do you have the time available for the repairs and fix-up?
- How long do you plan to owner-occupy? If you use the home as your primary residence for over two years - tax free gains apply when you sell.
- How many distressed properties surround the home?
Investors:
- Are you planning to buy and hold or fix and flip properties? If your choice is to fix and flip, what kind of return on investment are you looking for and is it realistic in this market? What is your exit strategy in the event you are unable to sell the property?
- What are the days on market in your target neighborhood?
- What are the comps for your specific sub-area?
- What is your scope of fix-up expertise and how much are you willing to do yourself?
- Do you have adequate financial resources to farm out to contractors?
- Are you comfortable with properties that have structural problems or are you looking for cosmetic fix-ups?
- Do you have a trusted team of inspectors and contractors who can give accurate estimates on repairs?
- Have you calculated "holding costs" into your ARV (after repair value)?
- If you are financing the project, have you checked with your lender to make sure you qualify for investor financing programs?
- What do you expecting in terms of monthly cash flow? Do you need to hire a property management company or will you manage renters yourself (buy and hold)?
