DENVER DUPLEX – INVESTMENT ANALYSIS

• PROPERTY OVERVIEW:
• Address: 1247 Knox Court, Denver, CO 80204
• Type: Side-by-side duplex, 2BR/1BA each unit
• Asking Price: $525,000
• Year Built: 1952, renovated 2018
• Neighborhood: Berkeley, trendy area
• GROSS RENTAL INCOME ANALYSIS:
• Current Rents:
• – Unit A: $1,650/month
• – Unit B: $1,595/month
• – Current Total: $_____ /month
• Market Rent Research:
• – Market Range: $1,700-1,750/month per unit
• – Conservative Estimate: $_____ per unit
• – Projected Monthly: $_____ total
• – Annual GRI: $_____ /year
• Vacancy Allowance:
• – Vacancy Rate Used: _____%
• – Annual Vacancy Loss: $_____
• – Effective Rental Income: $_____ /year
• OPERATING EXPENSES ANALYSIS:
• Fixed Expenses:
• – Property Taxes: $4,890/year
• – Insurance: $1,450/year
• – Water/Sewer: $85/month = $_____ /year
• – Trash: $45/month = $_____ /year
• – Total Fixed: $_____ /year
• Variable Expenses:
• – Property Management: ____% = $_____ /year
• – Maintenance & Repairs: ____% of value = $_____ /year
• – Capital Expenditures: ____% of value = $_____ /year
• – Other Expenses: $_____ /year
• – Total Variable: $_____ /year
• Total Operating Expenses: $_____ /year
• Expense Ratio: ____% of GRI
• NET OPERATING INCOME:
• Effective Rental Income: $_____
• – Total Operating Expenses: $_____
• = Net Operating Income: $_____ /year
• FINANCING ANALYSIS:
• Option 1 (20% Down):
• – Purchase Price: $525,000
• – Down Payment: $_____ (20%)
• – Loan Amount: $_____
• – Interest Rate: 7.25%
• – Monthly Payment: $_____
• – Annual Debt Service: $_____
• Option 2 (25% Down):
• – Down Payment: $_____ (25%)
• – Loan Amount: $_____
• – Interest Rate: 7.0%
• – Monthly Payment: $_____
• – Annual Debt Service: $_____
• TOTAL CASH INVESTMENT:
• Option 1 Total Cash:
• – Down Payment: $_____
• – Closing Costs (2.5%): $_____
• – Electrical Updates: $3,500
• – Paint Unit B: $2,200
• – Reserve Fund: $_____
• – Total Cash Invested: $_____
• Option 2 Total Cash:
• – Down Payment: $_____
• – Closing Costs (2.5%): $_____
• – Electrical Updates: $3,500
• – Paint Unit B: $2,200
• – Reserve Fund: $_____
• – Total Cash Invested: $_____
• CASH FLOW ANALYSIS:
• Option 1 Cash Flow:
• – NOI: $_____
• – Annual Debt Service: $_____
• – Annual Cash Flow: $_____
• – Monthly Cash Flow: $_____
• Option 2 Cash Flow:
• – NOI: $_____
• – Annual Debt Service: $_____
• – Annual Cash Flow: $_____
• – Monthly Cash Flow: $_____
• ROI CALCULATIONS:
• Cap Rate Analysis:
• – NOI: $_____
• – Purchase Price: $525,000
• – Cap Rate: ____%
• – Market Cap Rate Comparison: ____% (research local market)
• Cash-on-Cash Return (Option 1):
• – Annual Cash Flow: $_____
• – Total Cash Invested: $_____
• – Cash-on-Cash Return: ____%
• Cash-on-Cash Return (Option 2):
• – Annual Cash Flow: $_____
• – Total Cash Invested: $_____
• – Cash-on-Cash Return: ____%
• Total Return Analysis (assuming 3% appreciation):
• Option 1:
• – Cash Flow Return: ____%
• – Principal Paydown: ____% (year 1)
• – Appreciation Return: ____%
• – Total Return: ____%
• Option 2:
• – Cash Flow Return: ____%
• – Principal Paydown: ____% (year 1)
• – Appreciation Return: ____%
• – Total Return: ____%
• SENSITIVITY ANALYSIS:
• Stress Test Scenarios:
• Scenario 1 – 10% Rent Decrease:
• – Reduced Monthly Rent: $_____ per unit
• – Impact on Cash Flow: $_____ /year
• – New Cash-on-Cash Return: ____%
• Scenario 2 – 15% Vacancy Rate:
• – Increased Vacancy Loss: $_____ /year
• – Impact on Cash Flow: $_____ /year
• – New Cash-on-Cash Return: ____%
• Scenario 3 – Higher Maintenance Costs:
• – Increase Maintenance to 3% of value: $_____ /year
• – Impact on Cash Flow: $_____ /year
• – New Cash-on-Cash Return: ____%
• Scenario 4 – Interest Rate Increase:
• – Rate increases to 8.25%: Monthly payment $_____
• – Impact on Cash Flow: $_____ /year
• – New Cash-on-Cash Return: ____%
• MARKET COMPARISON & ANALYSIS:
• Local Market Research:
• – Denver duplex cap rates: ____% average
• – This property cap rate: ____%
• – Cap rate comparison: Above/Below/At market
• Rent Growth Analysis:
• – Historical rent growth: 5% annually
• – Market rent growth projection: ____%
• – Rent growth sustainability: ________________________________
• Neighborhood Trends:
• – Berkeley neighborhood assessment: ________________________________
• – Proximity to downtown: ________________________________
• – Development/improvement trends: ________________________________
• – Future growth potential: ________________________________
• Competition Analysis:
• – Comparable rental properties: ________________________________
• – New construction impact: ________________________________
• – Tenant demand trends: ________________________________
• RISK ASSESSMENT:
• Primary Risks:
• 1. ________________________________
• 2. ________________________________
• 3. ________________________________
• 4. ________________________________
• Risk Mitigation Strategies:
• – ________________________________
• – ________________________________
• – ________________________________
• Key Opportunities:
• 1. ________________________________
• 2. ________________________________
• 3. ________________________________
• FINANCING OPTION COMPARISON:
• Option 1 (20% Down) Pros:
• – Lower initial cash requirement
• – Higher leverage/potential returns
• – ________________________________
• Option 1 Cons:
• – Higher monthly payment
• – Lower cash flow
• – ________________________________
• Option 2 (25% Down) Pros:
• – Better interest rate
• – Higher cash flow
• – ________________________________
• Option 2 Cons:
• – Higher cash requirement
• – Lower leverage
• – ________________________________
• Recommended Financing: Option _____
• Reasoning: ________________________________
• NEGOTIATION STRATEGY:
• Offer Strategy:
• – Initial Offer: $_____ (____% below asking)
• – Justification: ________________________________
• – Negotiation points: ________________________________
• Contingencies to Include:
• – Inspection contingency: _____ days
• – Financing contingency: _____ days
• – Rent roll verification: ________________________________
• – Other contingencies: ________________________________
• FINAL INVESTMENT RECOMMENDATION:
• Decision: BUY / DON’T BUY / NEGOTIATE
• Key Decision Factors:
• 1. ________________________________
• 2. ________________________________
• 3. ________________________________
• 4. ________________________________
• 5. ________________________________
• Financial Justification:
• Based on conservative analysis:
• – Cap Rate: ____% (market comparison: ______)
• – Cash-on-Cash Return: ____% (target: ≥6%)
• – Monthly Cash Flow: $_____ (positive/negative)
• – Total Return Potential: ____%
• Risk vs Reward Assessment:
• – Risk Level: Low/Medium/High
• – Risk factors: ________________________________
• – Reward potential: ________________________________
• – Risk-adjusted return: Acceptable/Unacceptable
• Alternative Scenarios:
• If BUYING: ________________________________
• If NOT BUYING: ________________________________
• If NEGOTIATING: ________________________________
• IMPLEMENTATION PLAN:
• Next Steps (if proceeding):
• 1. Submit offer at $_____ with _____ day contingencies
• 2. Verify rent roll and expense history
• 3. Complete professional inspection
• 4. Finalize financing pre-approval
• 5. ________________________________
• Due Diligence Checklist:
• □ Verify actual rents and lease terms
• □ Review 3 years of expense history
• □ Inspect major systems (roof, HVAC, electrical)
• □ Confirm property taxes and insurance costs
• □ Research market rents for comparable units
• □ Review city/county regulations affecting property
• □ Analyze neighborhood crime and school ratings
• □ Verify parking and storage arrangements
• LESSONS LEARNED:
• Analysis Insights:
• – ________________________________
• – ________________________________
• – ________________________________
• Key Metrics That Drove Decision:
• – ________________________________
• – ________________________________
• – ________________________________
• Future Analysis Improvements:
• – ________________________________
• – ________________________________
• – ________________________________