Denver High-Rise Living’s team of condo experts have strengths across the board — from knowing the ins and outs of specific high-rises downtown to digging up information on new developments popping up around the city.
And there’s one agent who understands the nitty gritty details of the high-risk, but high-reward practice of flipping condos. Broker Associate Bo Peiffer, one of the first members of the team who recently celebrated her one-year anniversary, has an extensive history flipping condos across Denver suburbs, and she has no plans to slow down.
We caught up with Bo to discuss how she got into that side of the business and to pick her brain on what you need to know if interested in finding that perfect condo to flip.
Let’s start with the basics. How did you get into flipping condos?
I first got into this business with my ex-husband, who is a contractor. We really got into it following the housing market crash when so many homes went into foreclosure. Seeing what the market had become, we made an opportunistic approach on a hard situation and decided to fix and flip properties.
Some of the early properties we bought were grossly neglected and essentially needed to be gutted. Sometimes, we would make the decision to buy a property just by looking at its bones, even though the exterior and interior were so badly damaged.
What’s the No. 1 thing you look for when pursuing these opportunities?
I personally look for properties that only need a little cosmetic work. Things like drywall, paint and flooring are easy to fix. Kitchen and bathroom demolitions aren’t too bad, but they are more time-consuming. Those can also open you up to electrical and plumbing issues — especially if you’re taking out walls.
What’s some advice you give to condo-flipping newbies?
You need to have a good contractor for all of this who can let you know what you can and can’t do. This person can also help you identify deeper issues, which could make costs go up and eat into your margins.
What do you look for in terms of margins?
I shoot for the 70% rule, which means you pay no more for the investment property than 70% of the after-repair value price of repairs.
What’s the best way to buy these properties?
Cash is king. A cash purchase is the easiest way to go. Of course, it’s not always an option for all people. So, find a good lender and talk to them about your goals. Some lenders simply won’t fund certain properties or repairs. You may also have to take out a hard money loan for those repairs and renovations, and that money comes with a higher interest rate. You need to make sure to calculate that into your return on investment and see if it makes sense or not. Your main goal is to make a profit. Always keep this in mind.
Real estate can often be an emotional purchase. As an investor, you need to look at your bottom line and not make an emotional purchase.
What’s something that people new to this type of real estate business could forget to do?
Talking with the homeowner’s association (HOA). It’s an absolute must. You need to let them know what work is being done and who’s doing it. The HOA gives you the rules and regulations pertaining to projects — this is especially important with condos. Some key issues you run into is obtaining the proper permits for elevator use, dumpster location and parking. Because of things like this, it is easier doing single-family home flips and condos in the suburbs, as opposed to the high-rises in the city. Anywhere you’re doing work is a little different, so always be respectful of the HOA and make sure you know all of their rules.
Is there one class of property you prefer over the other, i.e., condos versus single-family homes?
I personally like to buy condos — and especially the lower-cost condos. The smaller properties rise at a faster rate than the more expensive properties.
The other reason I prefer condos is the opportunity to hang on to them and use them as rentals, which is much easier than a single-family home. Collecting rental income for a year or two is a great option if your return-on-investment went negative. Instead of selling at a loss, hang on to it for a year or two and — especially in Denver — you should be able to recoup your costs and make a profit.
If you’re interested in working with Bo Peiffer on investment properties, or just a place to call home, you can email her at Bo@DenverHighRiseLiving.com.