I'm looking at a 4 unit in Arizona that the owner would like $450,000 for. It is fully occupied for a grand total of $3475/month in rent. It is a 3bd/2bth, a 2bd/2bth and 2 - 1bd/1bth. The owner pays $255/month for water, sewer, trash. It has a pool (I know it's a liability but it's AZ) that is $85/month for maintenance. Management would be about $350/month. Taxes should be about $1800/yr. Insurance should be about $1200/yr. The current owner did put in a new pool liner, painted the exterior, and separated the electric for independent metering. I know he got a bargain on the property in 2017. It was listed for $350k then and he got it for around $280k. I realize he added to the value, I don't think it's a great deal at $450k. What do y'all think? What should I offer? Thank you in advance.
@Brian Stockdale A couple of items, Pool Liner, please tell more re this item? Most pools in Arizona are either plaster or some form of pebble finish with concrete as the underlying form. Liners are not very common in AZ and something I would look hard at, it would seem they would be prone to vandalism and or deterioration due to the sun.
Where is this as the rents seem low for 3 bedrooms if it's in metro Phoenix and has a pool?
I actually like the pool, it would be a great assest and really increase tenant demand.
Hey Brian! You should put this in the Biggerpockets deal calculator and then share the report with us!
@Jake Stuttgen suggestion is good, but fist glance price vs rents is not a chance.
For a quick answer, have your agent pull the recently sold comps. That will tell you what the property's approximate market value is. And that's probably pretty close to the number you're going to pay for it.
As for what to offer, that depends on lots of factors. The comps are the first thing, as that's what other potential buyers and their agents are considering as well. But then also time on market, seller motivation, and how this property will meet your investing goals which are unique to you.
If it's been on the market a long time, it's a surefire indicator that either something is wrong with the property that has prevented others from buying it, or it's overpriced. And it's usually the price.
But the main thing is seller motivation. If he's experienced, he's already aware of the comps and his agent should be too. So they already have a rough idea of what they can sell it for and what it's worth.
All in all, the forever answer to this question is that you should offer an amount that's the least you can get this property for without insulting the owner, and the highest it needs to be to beat out competing offers, as long as your numbers work for that offer price.
If you send me the property details and it's here in the Phoenix Metro Area I can pull the comps for you and try to give you a rough idea of what it's worth.
Just for fun, i ran the numbers in the calculator, at $450k, assuming 20% down 5% 30yr loan
COC ROI is 2.33%, monthly cashflow is $183.69.
no deal in my mind, would also say to make sure you get more details on the numbers, i.e. what was actual rent roll for the past year.
@Brian Stockdale It can be difficult to find comps for a MF unless it's in an area where there are a plethora of them.
Just make sure to compare apples to apples in that area.
...yes, I'd love to see what the numbers show running it through the BP calculator!
Cheers to your success!
Yay @Marcus B Hsu Good job!!!! ;))